Hello,
Our team manages the workers at a garment factory in Coimbatore, India and due to recession we were thinking of making the work week to 5 days, instead of 6 days, temporarily, to reduce the burden of wages on the company. Is it possible to do this? Will we need to pay the workers as per 5 days work week (40 hours), or 6 days work week(48 hours)? How should we move forward?
Best,
BIC
From India, Ahmedabad
Our team manages the workers at a garment factory in Coimbatore, India and due to recession we were thinking of making the work week to 5 days, instead of 6 days, temporarily, to reduce the burden of wages on the company. Is it possible to do this? Will we need to pay the workers as per 5 days work week (40 hours), or 6 days work week(48 hours)? How should we move forward?
Best,
BIC
From India, Ahmedabad
If you aim at reducing the cost by cutting the one day wages of daily rated workers, then it is okay, but if you aim at total reduction in cost of manpower then you have to do a lot of home work before proceeding further on it. Because the former one will give you direct result but the quantum of reduction will be very meagre since it is going to reduce only four days pay and that also when it is the one of daily rated people, you can imagine how big it should be. In addition to daily rated workers, if you want to make the salary of all including Executives reduced by 4 days a month, then you have to issue a notice under section 9A of the ID Act before 21 days of implementing the decision and take the staff in to confidence.
Normally, cost reduction by reducing salary for the days declared as holidays, even as a measure of cost cutting, will not be welcomed by the employees. This will create lot of mismatches in their family budgets and will the result will be total disappointment among workforce. Therefore, it is practically not possible to get employees concurrence.
By reducing the working days from 6 to 5, you are also getting benefits of saving in electricity costs, vehicle running expenses and many other costs. You can just aim at such costs and declare 5 days week. The pay bill of daily rated employees who are paid on the basis of days worked will automatically get reduced.
Legally speaking you are not expected to reduce salary of employees due to any reason including financial losses or cancellation of orders or accumulation of stock. These all are the head ache of the employer and not the workers. If you keep the workers pay as per existing pattern and ask them to work for 5 days so that at least some components of salary like tea allowance, heat allowance, shift allowance etc can be saved along with lots of savings on power and fuel, and ask the managers to sacrifice 4 days pay per month or take LOP for one day a week, then you can see the response. The persons who regularly complain about workers and show PPts in Management Reviews as part of company and very positive towards any changes will turn hostile and they would be the first to object the move. You can test it NOW.
Regards,
Madhu.T.K
From India, Kannur
3891Normally, cost reduction by reducing salary for the days declared as holidays, even as a measure of cost cutting, will not be welcomed by the employees. This will create lot of mismatches in their family budgets and will the result will be total disappointment among workforce. Therefore, it is practically not possible to get employees concurrence.
By reducing the working days from 6 to 5, you are also getting benefits of saving in electricity costs, vehicle running expenses and many other costs. You can just aim at such costs and declare 5 days week. The pay bill of daily rated employees who are paid on the basis of days worked will automatically get reduced.
Legally speaking you are not expected to reduce salary of employees due to any reason including financial losses or cancellation of orders or accumulation of stock. These all are the head ache of the employer and not the workers. If you keep the workers pay as per existing pattern and ask them to work for 5 days so that at least some components of salary like tea allowance, heat allowance, shift allowance etc can be saved along with lots of savings on power and fuel, and ask the managers to sacrifice 4 days pay per month or take LOP for one day a week, then you can see the response. The persons who regularly complain about workers and show PPts in Management Reviews as part of company and very positive towards any changes will turn hostile and they would be the first to object the move. You can test it NOW.
Regards,
Madhu.T.K
From India, Kannur
Madhu, thanks for your advice. Our problem is that as a staff, we have 1 engineer/designer, 1 hr manager and 1 accounting person for a workforce of about 90 workers. So in our case, the admin/office overhead is less, as compared to having 90 people working 6 days a week, when the company has only 3-5 days a week of work in recessive times.
BIC
From India, Ahmedabad
BIC
From India, Ahmedabad
In such scenario, it is advisable to reduce the manpower gradually and then come to an optimum level. Once your situation improves, you can think of adding more. If the workers cooperate you can take a call of either laying off an operation where there is no work or retrenching the workers. Both are very sensitive and involve a lot of legal complications. The latter one is a permanent solution to reduce manpower cost though you have to spend a good amount by way of retrenchment costs.Lay off is only a temporary arrangement.
If the workers agree, you can have 5 day week or even 4 day week. alternatively, you can ask the workers to work for 4/5 days and 2/1 day will be taken from the PL.
Madhu.T.K
From India, Kannur
If the workers agree, you can have 5 day week or even 4 day week. alternatively, you can ask the workers to work for 4/5 days and 2/1 day will be taken from the PL.
Madhu.T.K
From India, Kannur
Dear BIC
I would like to understand how you would redcue wage burden by reducing one working day in a week ? What are premisis on which you have evolved this idea?
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
I would like to understand how you would redcue wage burden by reducing one working day in a week ? What are premisis on which you have evolved this idea?
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
Dear Friend.
I endorse the views and suggestions of Mr. Madhu.
Your motive is to reduce overheads of your company temporarily to manage the shortfall in business. You need to reduce your wage bill and also other overheads to manage the present crisis. More over idle sitting of people will create evils in the company.
Please see two options.
1) From your query, it is understood that most of your employees are on daily rated basis. If so one day wage bill for 40-50 people will be considerable. In this case after taking them in to confidence you can plan five days work in a week. Due to this some may quit during this period by looking better one. If these people are trained and skilled in their work –like cutting/garmenting area-. That should be looked into. Even though, you can take this as an opportunity and to manage the shortfall you can shift part of the work of garmenting thru outsourcing. There are plenty of opportunities in Tiruppur like area. Seasonal business can be mana
From India, Calicut
I endorse the views and suggestions of Mr. Madhu.
Your motive is to reduce overheads of your company temporarily to manage the shortfall in business. You need to reduce your wage bill and also other overheads to manage the present crisis. More over idle sitting of people will create evils in the company.
Please see two options.
1) From your query, it is understood that most of your employees are on daily rated basis. If so one day wage bill for 40-50 people will be considerable. In this case after taking them in to confidence you can plan five days work in a week. Due to this some may quit during this period by looking better one. If these people are trained and skilled in their work –like cutting/garmenting area-. That should be looked into. Even though, you can take this as an opportunity and to manage the shortfall you can shift part of the work of garmenting thru outsourcing. There are plenty of opportunities in Tiruppur like area. Seasonal business can be mana
From India, Calicut
Hi Madhu & other contributing member,
to save cost, can we run 05 days working with 10 hours working on daily basis which includes 30 minutes interval so in a week the total working hours would be less than 48 hours (09:30*5=47:30). if so, then what are the legal formalities?
From India, Calcutta
to save cost, can we run 05 days working with 10 hours working on daily basis which includes 30 minutes interval so in a week the total working hours would be less than 48 hours (09:30*5=47:30). if so, then what are the legal formalities?
From India, Calcutta
The concept of 48 hours a week is designed to suit six day working. Legally you can engage workers for 9 hours a day and the spread over including hours of rest can be 10 hours and 30 minutes. But by extending working hours beyond 8 hours and 9 hours you will not get the required output. Therefore, it is always desirable to fix working hours to 9 hours per day which will give 45 hours a week. The shortfall has to be ignored or made up by reducing the holidays (if you have been following more than what is provided under your state's Industrial Establishments National and Festival Holidays Act)or permitted leaves
Madhu.T.K
From India, Kannur
Madhu.T.K
From India, Kannur
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