Elon Musk’s Twitter layoffs: How NOT to handle UK redundanciesby
Elon Musk’s terrible dealings with employees at Twitter are a frank reminder of how NOT to deal with layoffs. Samantha Dickinson, Partner at leading law firm Mayo Wynne Baxter, explores the processes redundancies should follow under UK employment law.
A week after Elon Musk took over Twitter, it is being reported that more than half of its 7,500 employees have been laid off, apparently having received the news by email on Friday afternoon.
Some of the senior leadership team in the US were sacked immediately following the Musk takeover a fortnight ago and a class action lawsuit has already been filed in San Francisco.
It is likely that those dismissed from Twitter’s UK entity were offered enhanced redundancy payments conditional upon them signing settlement agreements.
Companies not owned by the world’s richest man will want to make sure they comply with the law, so they avoid having to make unnecessarily large payouts to staff.
It is essential that employers carry out all necessary preparatory work before the consultation process begins.
The law on redundancy in the UK
Employees, with at least two years of continuous employment, have a number of rights in a redundancy situation and they may be able to seek compensation for the termination of their employment if those rights are not respected.
If a decision to make an employee redundant is not made on objective business grounds that employee may also have a discrimination claim for which compensation can be uncapped.
HR professionals will also be aware of the tribunal’s power to award up to 90 days' actual gross pay in respect of each employee where there has been a breach of the collective consultation duty. This is known as a protective award and is one of the most expensive liabilities that an employer can face in employment law where there is no discrimination in play.
Where 20 or more employees are being made redundant over a period of 90 days or less, an employer has duties under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) to (amongst other things) inform and consult representatives of ‘affected employees’.
The timing of this obligation varies in that if 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal takes effect. For redundancies ranging from 20 to 99, the consultation period is 30 days.
It is essential that employers carry out all necessary preparatory work before the consultation process begins. Detailed planning is the key to a successful consultation exercise.
Getting the prep work right
The first stage of this preparatory work is to consider who might be an affected employee. The relevant group can include those affected by any measures associated with the redundancies, not just those immediately at risk of dismissal by reason of redundancy. This extended group could, therefore, include employees who may have to adopt a new system of work or a new reporting line that will be in place if a restructure takes place.
An employer should also consider whether those affected employees already have appropriate representatives in place because, if not, the employer must arrange an election. Getting nominations for representatives and conducting the election itself can be time-consuming.
Care will also need to be taken to make sure different areas of the workforce are properly represented. A breach of the rules governing the election of representatives can in itself give rise to a claim for a protective award, in the same way as for any other breach of the collective consultation obligations. While the employer has some discretion as to the election arrangements, TULRCA allows employment tribunals to scrutinise the appropriateness of the outcome of the election.
Make sure your proposal is not going to unfairly disadvantage a particular group of employees.
Informing and consulting
Once representatives are in place, the employer can commence the information and consultation process, but employers should think through the content of that information at the very outset of this process.
Section 188(4) TULRCA sets out what information must be provided, which includes the reasons for the proposed dismissals, the numbers and descriptions of employees who may be dismissed and the proposed method of selecting employees who may be dismissed. Remember, simply giving the required information directly to the employees is not in compliance with the law. The information must be provided to employee representatives only, unless having invited employees to elect representatives, they fail to do so within a reasonable time frame.
The consultation process, which must be consultation with a genuine view to reaching agreement, should look at ways of avoiding the dismissals, reducing the number of employees to be dismissed and mitigating the consequences of the dismissals. This applies where collective consultation is taking place and where only individual consultation is required due to the number of redundancies being 19 or fewer.
Consultation must take place ‘in good time’ but this is not defined. There is no minimum period of consultation except where collective consultation obligations must be followed.
Formulate your process as soon as you can and then critically analyse that process, or even better, have another HR professional or employment lawyer troubleshoot your plans so as to help anticipate where problems may arise
Make sure your proposal is not going to unfairly disadvantage a particular group of employees
Think about your timetable and ensure you give yourself some flex so that you can deal with the suggestions that will arise during the consultation phase
Always consult with an open mind and don’t be afraid to change your original proposal. As with most things clear communication is crucial so make sure you focus on this
Elon Musk’s approach at Twitter is the perfect example of how NOT to manage redundancies in UK organisations. Not only is the law here vastly different, but also leaders should treat their people with greater respect and care, and move through the process with far more compassion.