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LO3 Analyze internal and external factors that affect Human Resource Management

decision-making, including employment legislation

5. Analyze the importance of employee relations in respect to influencing HRM decision

Employee relations is refers to a organizations efforts to build and manage relationships
between employees and employers. A good employee relations program not only bringing out
the fair and consistent treatment to all employees but also preventing problems arising from
situations in workplace.

The areas covered by employee relations policies are: trade union recognition ,collective
bargaining, employee relations procedures; participation and involvement, partnership, the
employment relationship, harmonization of terms and conditions of employment for staff and
manual workers, working arrangements
(Source: ARMSTRONG, M. and TAYLOR, S., 2014)

Four approaches to employee relations policies have been identified by Industrial Relations
Services (1994):

Adversarial: the organization decides what it wants to do, and employees are expected to fit in.
Employees only exercise power by refusing to cooperate.

Traditional: a good day-to-day working relationship but management proposes and the
workforce reacts through its elected representatives.

Partnership: the organization involves employees in the drawing up and execution of

organization policies, but retains the right to manage.

Power sharing: employees are involved in both day-to-day and strategic decision making.

Adversarial approaches are much less common than in the 1960s and 1970s. The traditional
approach is still the most typical but more interest is being expressed in partnership, as discussed
later in this chapter. Power sharing is rare.

Employee voice is defined as a whole variety of procedures or means by which employees

communicate their perspectives to the employer. It is the main method employees can directly or
indirectly influence matters which affect their job.
The framework for employee voice has been modelled by Marchington et al (2001) as shown in
Figure 53.1. This framework identifies two dimensions of voice: first, individual employees, and
second, collective; that is, union and other representation. The shared agenda of involvement and
partnership is a form of upward problem solving. This is on the same axis as the contested
agenda of grievances and collective bargaining. These are not absolutes. Organizations will have
tendencies toward shared or contested agendas, just as there will be varying degrees of direct and
indirect involvement, although they are unlikely to have partnership and traditional collective
bargaining at the same time. As Kochan et al (1986) point out, one of the strongest factors
affecting the choice of approach to employee voice is the attitude of management towards
unions. (ARMSTRONG, M. and TAYLOR, S. 2014)

Definition and the difference between employee participation (EP) and employee involvement
Although EP and EI appear to be similar in meaning, they are not. Involvement means that
management allows employees to discuss with it issues that affect them but that management
retains the right to manage. It is primarily a management-driven concept. Participation is about
employees who take part in the decision making process. Therefore, it is closer to the concept of
employee voice systems, that is, arrangements for ensuring that employees are given the
opportunity to influence management decisions and to contribute to the improvement of
organizational performance.

Employee participation Employee involvement

EP is is a collective process. It give an EI is a kind of a responsibility of the employer
opportunity for the employee to take part in the to provide opportunities for the employees to
decision - making process. It includes all the get involved in the organization's activities. EI
activities that matters in the organization which is individual basis attachment and a one-on-
is more or less supported by regulations or one approach between the employee and
legislations where employment rights matter management. Management takes the initiative
for participation is practised. In EP, with individual employees by assigning the
employees ideas and attitudes are concerned tasks for them. eIts main purposes are to bring
in the decision-making process. forth employee empowerment and
commitment. There is no hard and fast rule to
grow involvement. In EI, all the employees
contribution is taken together in achieving a
particular objective on behalf of the
(Source: Author)

There is a number of reasons companies are concerned about employee relation. A success
employee relations program will bring out many advantages for organization, especially in HRM
decision making. Firstly, it creates a pleasant and productive workplace for both employees and
management which has a strong impact on employees trust and loyalty to the organization. In
other words, it encourages a loyal workforce. The owning of such a workforce will decreases
both the cost and time of recruitment and training while it still maintains the quality of labour.
Secondly, it decrease conflicts and fights among individuals. Instead of wasting their time in
meaningless disputes, they focus on adjusting and improving theirself to perform better.
Employees rarely get stress because of several problems related to the behaviors in the company.
The relationship between all the staffs will be closer and it generates effective team-work.
Sometimes we may miss out on some important points, but our colleague might come out with a
brilliant idea which would help us to achieve our targets more quickly. You also need people
who can act as critic and correct you wherever you are wrong. Nobody is willing to support you
if you do not have a good relation with them. Besides, employee relations will generate an
effective communication and solving problems network. Information is conveyed quickly and
obviously, so it is beneficial for quick resolution when problems occur. Hence, human resource
management decisions are made easier.


(Source: CMG.Asia, 2017)

We will analyzes California Management Group, owner of California Fitness & Yoga and other
well known brands. CMG.Asia was establish by Randy Dobson American. The company is the
combination of the professional working style and the Vietnamese factors. With the motto Best
place to work, CMG.Asia has create many activities to build their member relation programs.
They have an employee training programs which can help workers learn to work efficiently and
increase productivity as well. CMG has many soft skill class for their employees to enroll in and
it will help them improve theirself, always be ready to be promoted since nobody want to stay in
a position forever. Moreover, every month, they celebrate birthday party and rewards fot their
employees. It will help the company keep exist good loyal employees. A lower employee
turnover creates an experienced and trained workforce, which produces higher quality work than
new hires or untrained employees.CMG can reduce the recruiment cost and the training fee and
time for the newbies .Besides, decision on personnel transfer will be more simple when the
management know more about the abilities of each member of the team by interview their co-
worker. Company efforts to improve employee relations can improve the overall quality of the
work. Just as high employee morale encourages increases in productivity, it also encourages
quality work.
6. Identify the key elements of employment legislation and the impact it has upon HRM
decision making.

6.1.Main employment legislation and standards such as minimum wages, equality, health
and safety, redundancy, dismissal and the like.

Minimum wages have been defined as the minimum amount of remuneration that an employer
is required to pay wage earners for the work performed during a given period, which cannot be
reduced by collective agreement or an individual contract. The minimum wages in each country
or region are different. It can be set by statute, decision of a competent authority, a wage board, a
wage council, or by industrial or labour courts or tribunals.

The purpose of minimum wages is to protect workers against unduly low pay. Moreover, it helps
ensure a just and equitable share of the fruits of progress to all, and a minimum living wage to all
who are employed and in need of such protection. Minimum wages can also be one element of a
policy to overcome poverty and reduce inequality, including those between men and women, by
promoting the right to equal remuneration for work of equal value.

The minimum wages in Viet Nam in 2017 and 2018 (intendent)

Region 2017 2018 Increasing level

1 3.750 3.980 230
2 3.320 3.530 210
3 2.900 3.090 190
4 2.580 2.760 180
Unit: 1.000 million/month

(Source:, 2017)

(Source:, 2017)

According to two diagrams above, the minimum wages in Viet Nam tend to increase annually.
However, if we compare the minimum salary in Viet Nam to other countries in Southest Asia, it
remains lower. The low wage will has a strong influence on HRM decision making. It reduces
the the cost of inputs so the price of products will decrease. In the early years of the integration
process many foreign investors have recognized low labor costs in Vietnam and have invested
heavily in Vietnam (though with medium or low technology) . However, as Vietnam integrates
deeply and broadly into the world and regional economies, the level of product competition is
increasing. Therefore, cost savings, improved labor efficiency and improved product quality are
vital requirements for enterprises. This, in parallel with investment in technology innovation,
requires the improvement of labor quality, the amount of gray matter in product quality must
increase. Increasing the value of Vietnamese products in the global value chain requires
employment positions with high professional and occupational skills. Cheap labor will gradually
decrease in the total labor force of the enterprises and instead there will be skilled workers. Thus,
creating a skilled force through education and training, especially vocational education, is the
objective demand of the economy in the context of integration and high competition. Cheap
labor is no longer the advantage of Vietnam in the near future and if not quickly have appropriate
training strategy, this cheap labor will become a barrier and the risk of high unemployment,
impact negative for the national social security system.


Equal Employment Opportunity

Individuals covered under Equal Employment Opportunity (EEO) laws are protected from illegal
discrimination, which occurs when people who share a certain characteristic, such as race, age,
or gender, are discriminated against because of that characteristic. People who have the
designated characteristics are called the protected class. Federal laws have identified the
following characteristics for protection:

Race, ethnic origin, color (for example, African American, Hispanic, Native American, Asian)

Gender (women, including those who are pregnant)

Age (individuals over 40)

Individuals with disabilities (physical and mental)

Military experience (Vietnamera veterans)

Religion (special beliefs and practices)

The main purpose of the EEO laws is to ensure that everyone has an equal opportunity of getting
a job or being promoted at work.

Health and safety

Written health and safety policies are required to demonstrate that top management is concerned
about the protection of the organizations employees from hazards at work and to indicate how
this protection will be provided. They are, therefore, first, a declaration of intent, second, a
definition of the means by which that intent will be realized, and third, a statement of the
guidelines that should be followed by everyone concerned which means all employees in
implementing the policy.

The policy statement should consist of three parts:

The general policy statement;

The description of the organization for health and safety;

Details of arrangements for implementing the policy.

The general policy statement should be a declaration of the intention of the employer to
safeguard the health and safety of employees. It should emphasize four fundamental points:

The safety of employees and the public is of paramount importance;

Safety takes precedence over expediency;

Every effort will be made to involve all managers, team leaders and employees in the
development and implementation of health and safety procedures

Health and safety legislation will be complied with in the spirit as well as the letter of the law.

Redundancy is defined as a particular occupation and cannot be offered suitable alternative

work. Employees may be surplus to requirements because changes in the economic
circumstances of the company mean that fewer employees are required, or because changes in
methods of working mean that a job no longer exists in its previous form. An employee who is
given notice because he or she is unsuitable or inefficient is not regarded as redundant and would
be dealt with in accordance with the usual disciplinary or capability procedure.(Armstrong, M.
and Taylor, S., 2014)

A genuine redundancy arises only when either there has been or there is going to be:

A cessation of business
A cessation of business at the employees site
A reduction or cessation of work
In other words, the work that the employee does no longer needs to be done at all, or not in the
same place


The objectives of the procedure are to ensure that:

Employees who may be affected by the discontinuance of their work are given fair and
equitable treatment;

The minimum disruption is caused to employees and the company;

As far as possible, changes are effected with the understanding and agreement of the unions
and employees concerned.

Selection of redundant employees

In the event of impending redundancy, the individuals who might be surplus to requirements
should be selected by the departmental manager with the advice of the manager responsible for
personnel on the principles that should be adopted.

The manager responsible for personnel should explore the possibilities of transferring affected
staff to alternative work. The manager responsible for personnel should inform management of
proposed action (either redundancy or transfer) to obtain approval.

The union(s) will be informed of the numbers affected but not of individual names. (Armstrong,
M. and Taylor, S., 2014)


In order to be lawful, the dismissal of an employee must be substantively justified, and must be
conducted in a procedurally fair manner. In order to be substantively justified, there must be a
genuine reason for a dismissal. The requirements of procedural fairness may vary depending on
the circumstances; for example, in serious cases the employer will be justified in dismissing the
employee without first giving a warning (see below).
If an employer issues a warning or dismisses an employee unlawfully, an employee can lodge a
personal grievance claim with the Employment Relations Authority. The employee can be
awarded lost wages and damages for distress. See how to defend a personal grievance claim
brought by an employee. The test of whether the dismissal was justifiable and the procedure was
fair is an objective one - namely, whether it meets the standard of what a fair and reasonable
employer would have done.

Dismissal without notice for serious misconduct ("summary dismissal")

If there has been serious misconduct, a summary dismissal will be justified that is, the
employee can be dismissed without receiving any earlier notice or warning. However, the
dismissal must still be procedurally fair (see below for the general rules of procedural fairness).
Examples of serious misconduct include: theft or some other act of dishonesty fighting in the
workplace or assaulting an employer or co-worker breaching work rules deliberately disobeying
a lawful and reasonable instruction from the employer possessing illegal substances at work.
Even if an employee is dismissed for serious misconduct, he or she is still entitled to outstanding
wages, holiday pay and any other entitlement under the employment contract. (,

6.2.Definition of 3 main types of employment relationship contracts: relational,

transactional, and psychological contracts.

The relational contract is a long-term contract that focuses on support and loyalty rather than
on monitory issues, it is a more emotional contract.

The transactional focuses on short term and specific monitory agreements with little
involvement of the parties where employees are more interested in good benefits and

The relational contract The transactional contract

Short-term monetizable exchanges Open-ended relationship and time-frame
Specific economic conditions as primary Considerable investment by employees
incentive (wage rate) (company skills, career development) and
Limited personal involvement in job employers (training)
Specified time-frame High degree of mutual interdependence and
Commitments limited to well-specified barriers to exit
conditions Emotional involvement as well as economic
Limited flexibility exchange
Use of existing skills Whole-person relations
Unambiguous terms Dynamic and subject to change
Pervasive conditions (affects personal life)
Subjective and implicitly understood

A psychological contract can be understood as a deal between employer and employee

concerning the perception of the two parties, employer and employee, of what their mutual
obligations are towards each other.

Psychological contracts are a set of promises or expectations that are exchanged between the
parties in an employment relationship

Psychological contract expresses the combination of beliefs held by an individual and his or her
employer about what they expect of one another.
6.3. Main terms and conditions and contracts of employment
A labor contract should include the following:

+ Name and address of the employer or his / her legal representative;

+ Full name, date of birth, gender, address of residence, people's identity card or other legal
papers of the employee;

+ Work and place of work;

+ The term of the labor contract;

+ The wage level, form of wage payment, time limit for payment of wages, wage allowances and
other supplements; In case of late payment of 15 days, the employer will have to pay extra

+ Graduation regime, salary increase;

+ Working time, rest time;

+ Labor protection equipment for laborers;

+ Social insurance and health insurance are stipulated in the Regulations on salary and allowance
for social insurance in 2016.

+ Training, upgrading skills

If the laborer is directly involved in business secrets or technological secrets as prescribed by

law, the employer shall have the right to agree in writing with the laborer on the contents and
time limit protection of business secrets, technology secrets, interests and compensation in the
event of violation by the employee.

If laborers working in the fields of agriculture, forestry, fishery and salt-making work, depending
on the type of work, the two parties may reduce some of the main contents of the labor contract
and supplement the internal agreement. The method of settlement in cases where contract
performance is affected by natural disasters, fires or weather.

ARMSTRONG, M. and TAYLOR, S. (2014) Armstrongs Handbook of Human Resource
Management Practice. 13th Ed. London: Kogan Page.

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