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LETTER | As Malaysia was in the process of reopening all activities to reactivate the country’s economy, the country encountered record daily spikes in Covid-19 cases in October 2020. Due to the sudden increase in Covid-19 cases, the government implemented the conditional motion control order (MCO) in Kuala Lumpur, Putrajaya, Selangor, Labuan and Sabah.
The resurgence of Covid-19 cases has caught the nation’s capital off guard and will potentially flood the already shaky economic climate. Most businesses may not be prepared for the abrupt loss of cash flow or business contraction so soon due to this conditional MCO.
While this second conditional MCO, implemented with less stringent movement regulations and only in certain areas of the country, may not have caused the high number of layoffs like the first wave, but the second round can still have a considerable economic impact.
A “right time” for downsizing?
Companies have yet to recover from the financial impact of the country’s first MCO and are still struggling to cope with the turmoil. Thousands of small and medium-sized businesses are on the sidelines, as they may need to stop parts of their operations again in response to the recently implemented conditional MCO.
Most likely, companies are losing their financial resources and the hands of employers are tied. Companies on the brink of collapse may have no choice but to release their employees to avoid insolvency. At times like these, the “threshold” and expectation for responsible downsizing could be lowered, as the drive by companies to cut costs is understandable.
Can you shoot?
The law recognizes that employers have the right and prerogative to manage their workforce, subject to the implementation of fair labor practices. Employers must meet necessary selection criteria and fire staff based on objective criteria such as “last in, first out (Lifo)” and preserve those with skills to support business sustainability.
A company that is actually facing financial difficulties due to the Covid-19 outbreak has legitimate reasons to reduce its workforce. Employers must exhaust other means, that is, reducing working hours, reducing or freezing the hiring of new employees, reducing or limiting overtime before laying off employees.
While reducing pay is one of the recommended steps to take to avoid downsizing, employee consent must be obtained for any reduction in pay. A unilateral pay cut can be viewed as a breach of contract that can potentially lead to a constructive layoff claim.
As responsible employers, companies must help affected employees find alternative positions or jobs at partner companies or other companies. Employers should endeavor to meet their obligations in the area of redundancy benefits due to employees.
Despite the new Covid-19 situation, it is no less pertinent that employers observe proper procedures. This is to prevent unnecessary money from being spent on resolving wrongful termination disputes with employees amid the troubling Covid-19 situation.
Employers shouldn’t be in a rush to cut back on their workforce, as the flip side of the coin is that it can take time and effort to rehire when business recovers.
Going forward
To the dismay of all Malaysians, a second wave of layoffs and job losses is sure to follow if the number of Covid-19 cases continues to rise. The financial pain during the second wave will certainly extend beyond the food and beverage, aviation, retail and hospitality industries. History has favored those who are prepared, being prepared for new blockages or breakouts will be a prerequisite for prosperity.
The final wild cards in the job outlook are how many companies could remain resilient during the second wave of the Covid-19 outbreak and how long it will take for job opportunities to recover. Some may not even survive the second wave of the Covid-19 outbreak, making rehiring employees completely impossible.
The government will be struggling on how to finance or support the unemployed and businesses on the cusp of insolvency. People will face an uncertain future.
“Everything will be okay in the end. If it’s not okay, it’s not the end.” – John Lennon.
LEONARD YEOH is a partner and PUA JUN WEN associate of the Tay & Partners law firm.
The opinions expressed here are those of the author / contributor and do not necessarily represent the views of Malaysiakini.
