Gopinath Varahamurthi
Mindhour Partner, Ass.professor/adm. Officer,
Assistant Manager Human Resources
Insolvency N Gst Professional
Cite Contribution
Community Manager
+2 Others

It is the employerís worst nightmare. What will you HR do in this case? Please share your opinions and experiences in the comments below.
From Vietnam, Hanoi
Dear Ms Yen Tran,
Is this a real life situation or you are asking it hypothetically? An employer not being able to pay the salary, is insufficient information for us to suggest solution.
Assuming you know the employer very well, how long have this situation been? What are the corrective actions that the employer have taken? Have the employer discussed this with the employees before?
There are other crucial information that you might need to share before we can suggest you doable solution.
Looking forward to hear from you.

From India, Mumbai
It's the situation of a partner of my company and HR department asked us for help. It's a manufacturing company with about 200 blue-collar workers and 30 white-collar workers. The company is getting trouble with large inventory stemmed from a box of faulty items in a major export order.
The worst thing here is the time it happen at the end of year. They have some overdue accounts receivables with this client and debts with some suppliers. Board of Directors have announce the situation to all of workers, and they did fire a production line who make the faulty goods. Employer couldn't afford salary for workers in this month and there's no year-end bonus. Workers are bewildered by this situation and couldn't keep the normal productivity. The board of directors don't want to lay off more, but they can't give an exact time to bound back.
What HR should do to soothe workers?
Thanks for your help!

From Vietnam, Hanoi
Dear Friend,

It is perceived, the export order executed with the production of faulty goods. This has resulted in firing of production line.

1) What was the quality check procedure at the company?

2) This was the failure of the quality inspection and not the production line.

3) This is an export order and utmost care should have been taken by the manufacturer.

4) Citing these procedure failure is not a good procedure for a manufacturing company.

5) There are some receivables with the client and debts with the suppliers. Thus there is a line of function exist and there is no stand still.

6) Approach the financial institutions with the receivables for financial ease and the workers can be paid, relatively the suppliers debt can be met out with future production.

7) There is no say about cancellation of future orders, certainly, with all help the production line can prove their worthy in making the orders fruitful. Letting down is not the option.

8) I am not touching your laid statutory laws.

However, with the input provided, never let the workers down, the HR department having the financial, production in confident can make the situation a good deal of company to the higher levels. The Board of Directors can find out a way out rather than put off the issue. Initiation is the innovation....

best of luck.......

From India, Arcot
Dear Yen Tran,

As mentioned the organization is running from financial crisis. This happen with many organization irrespective of reasons, some organization overcome the situation and some doesn't.

Here the management and employees plays a vital role for overcome or shutdown. Here we need to know that salary is the only source of livelihood for employees family for most of the case. Employee's family is dependent on employee's income and have many financial liability. If he/she doesn't receive salary in time then whole system will collapsed. We kneed to keep us in their shoes then only we will get to know their problems.

Here we have to make clear and open communication with the employees over the current situation of the organization. So that they will be aware about the happenings. If the situation is not going to improve in near future then ask them to look for other options and they will look for other.

If there is a hope then ask employees to support the management during this tough situation and I believe engaged employees will support and together they will overcome.

Here there employees should be well communicated about all happenings within the organization. Trust me employees will not harass employer if they are well taken care up by employer in past.

From India, Bhubaneswar
When an organisation runs into a financial crisis,the top bosses need to come into action-speak with employees,address employees about the problem and measures taken to sort out problem and likely timelines.
What effect it will have on employees?
Whether some employees will be sent on unpaid leave?
HR plays an important role in bringing the facts and figures to stake holders,smoothening interaction between employees and top management.
Jet Airlines faced a serious crisis in 2008 where they fired 1900 employees due to poor finances and then reinstated them also.
This link: XIMB-Best MBA (erstwhile PGDM) Management Institute in Bhubaneswar, India <link outdate - home link added>
True leadership or lack of it can be seen when a crisis of this proportion arises.
Open communication without barriers,a history of fair dealings with employees(all stake holders) will help come out of crisises.

From India, Pune
As you have mentioned that the company is going into liquidation, there is a relevant decision by the Supreme Court [Bank of Maharashtra v. Pandurang Keshav Gorwardkar & Ors.], wherein:
The Honourable Court held that: "Where a company is in liquidation, a statutory charge is created in favour of workmen in respect of their dues over the security of every secured creditor and this charge is pari passu [at par] with that of the secured creditor. Such statutory charge is to the extent of workmenís portion in relation to the security held by the secured creditor of the debtor company."
Full judgement can be obtained from the Judgement Information System [ The Judgment Information System ] by entering "Pandurang Keshav" in the field "Petitioner or Respondent's Name"; "From Date" : 1/1/2013; and "To Date" : 1/1/2014.

From India,
1st you raising the above question you should search for job for your self. 2nd May seniors may give various suggestion referring the HR law book, but simple things is no body work any company without salary & their is Zero chance for retaining these employee. My suggestion is back your bag move for new company.
From India, Mumbai
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