Handling redundancies: lessons from Silicon Valley


Since the deal completed on 27 October, Elon Musk's acquisition of Twitter has provided an interesting case study for HR teams and business owners, according to reports.   Having notified staff of mass redundancies via email on 4 November, the company reportedly then had to backtrack and try to persuade key staff to rejoin.   Mr Musk is also reported to have notified staff that remote working would be scrapped and staff required to work in Twitter's offices (although he has subsequently indicated that some flexibility will be allowed).  In another unusual move, Mr Musk is reported to have sent an email to remaining staff, inviting them to opt-in via a Google form to "Twitter 2.0", which he described as an "extremely hardcore" working culture involving long hours at high intensity - or be treated as having resigned.  Staff were reportedly given less than 3 days to decide.  

It's fair to say that employment law and practice in California is very different from the UK, with employment "at will" being the default.  But there are some valuable lessons here for UK employers faced with making redundancies. 

1.  Communication:  All communications to staff about changes need to consider several audiences; the employees who will leave, the employees who will stay and other stakeholders - investors, trade unions, advertisers and the world at large.   Employers need to consider how to reassure remaining employees (and potentially customers and investors) while being humane and respectful to those who are leaving (and not undermining their legal position in relation to any redundancies).   This can be a tricky balance to strike, so plenty of planning is needed.  Where possible, employees being made redundant should be told in person and under UK law consulted with over proposals. 

2. Changes to working practices:  Tough times might call for a change in approach, but unilaterally announcing that long-standing working practices are to be changed could expose the business to constructive unfair dismissal or discrimination claims, as well leading to staff attrition. Again, it's preferable to consult with staff before making such changes. 

3. Multi-country redundancies:  If your business is global, you need to ensure that you fully understand how redundancies need to be handled in different jurisdictions.  It can be very challenging to coordinate dismissals when different legal regimes apply.  Paying employees off with a severance package doesn't remove all the legal risks:  in the UK (as in many EU states) employers need to notify the Government when they propose to make 20 or more redundancies at one establishment in 90 days or less and consult collectively with employee representatives.  Ordinary settlement agreements do not prevent UK employees pursuing claims for failure to consult; this right can only be waived under an ACAS COT3 agreement. 

While it can be challenging to consider all these factors when a business is in crisis mode, investing some time in handling the process well can prevent the crisis spiralling out of control. 

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