Billion Dollar Brain

Over the last few days, Elon Musk’s takeover of Twitter and the ensuing announcement of mass redundancies has been in the news, with mostly negative headlines. Businesses often restructure and reduce staff numbers after a takeover or other major ownership changes, so what (apart from the reputation of Mr Musk) makes this one particularly newsworthy?

Firstly, unlike the recent P&O case where the employer took a deliberate decision to break the law, it’s become clear as more news has emerged that this is more cock-up than conspiracy.  Twitter seem to have taken the view that the approach to redundancy in the US would apply throughout the world without any reference to local employment laws or expectations.

In the UK for example, there is a duty to consult staff in advance of redundancies taking effect, with specified time limits when more than 20 redundancies are planned. There’s also a requirement to notify the Government (via the Insolvency Service) of redundancies at the same time. It appears from reports that Twitter announced the mass redundancies and then realised they needed to consult so are hastily trying to put together consultative arrangements. However, consultation must also be meaningful, and it’s hard to see how it could be so in this case if the decisions have already been made.

Secondly, the method of announcing the decision was crude and arbitrary – staff seem to have found out in advance of a formal announcement when they were locked out of work email and social media channels (as another example of the US-centric nature of the exercise, announcements were made at 9am California Time – after the end of the working day for most of Europe and at the end of it for the UK)

Thirdly, it now appears that at least some of the people who were made redundant are actually needed by the company, with a number being asked to return. Having been treated in such a manner, it’s unlikely that many will.

It’s a salutary lesson that even if you are a ‘successful billionaire tech business person’ you can still make major mistakes – and ones that play havoc with people’s lives. It’s little surprise that goodwill towards the company is in short supply.

If you do need to consider redundancy in the UK, and sadly they are a fact of life for many businesses at one time or another, remember these key points.

  1. Think carefully and plan where and when redundancies need to be made, allowing for consultation and other periods – including legal minimum timescales
  2. Remember your legal obligation – in the UK – is to avoid redundancy if you can so give thought to possible redeployment of affected staff
  3. Inform staff face to face if you can, but if that is not possible then an email explaining the situation and the reasons for redundancy
  4. Your decision will have a major impact on people’s lives – bear that in mind and show some empathy for what they are going through. And don’t expect people to always behave ‘rationally’ in the circumstances. (Even if you don’t have any fellow feeling for specific individuals, remember that other staff in your business will be watching how you treat their colleagues and their subsequent goodwill may depend on how you deal with the situation)
  5. Make sure you know what people are entitled to in terms of notice and redundancy pay, and pay them promptly after their employment ends.

The restructuring of Twitter is proving to be something of a case study in how not to reduce your workforce. And while Elon Musk has bottomless pockets which will allow him to buy his way out of employment litigation, most businesses don’t, so make sure you do it right!

Handling Redundancies during Covid

ACAS – the independent employment advisory service, the employer’s organisation (CBI) and trade unions (TUC) have issued a joint statement today about handling redundancies during the COVID pandemic, especially with the UK’s furlough scheme set to end in October and what, if anything, will replace it still to be announced.

The full statement is here https://www.acas.org.uk/joint-statement-acas-cbi-tuc

The key principles it outlines are something which I would always recommend to employers, no matter how big or small:

  • Be open about why you need to make redundancies
  • Give people as much information as they need to be able to respond properly
  • Consult genuinely – listen to what people have to say and give it proper consideration
  • Do it fairly – legally correctly and in a way that is ‘felt fair’ by everyone in the business
  • Handle it with dignity – a person is losing their job through no fault of their own. They aren’t just a ‘human resource’ to be disposed of.

If you need help or guidance with handling redundancies both legally, and with professionalism and integrity, please don’t hesitate to get in touch

Relocation, Relocation, Relocation

One query that I receive regularly from my SME clients is how to handle the people aspects of moving business location. Below are some of the common issues and some suggestions on how to deal with them.

a) Can staff refuse to move – even if they have a mobility clause in their contract?

In a word, yes. What many employers don’t realise is that relocation is legally a form of redundancy, since redundancy is defined in law as no longer requiring a particular job role at a specific location. So, you need to comply with the normal rules on consultation (in practice, since companies rarely move at 24 hours’ notice, you will probably have been consulting with staff about the move for some time anyway).

In most cases you will be offering employees an alternative – the same job on the same pay, just in a different location. But in a redundancy situation the question is whether it is ‘suitable’.

If you are relocating from Liverpool to Leeds, the extra travel time and costs, or the need to move house, may mean that it’s not suitable for many employees. Even if they have a mobility clause requiring them to work from ‘company locations’, suitability will still depend on a lot of factors.

Even a small move, which doesn’t appear to have the same issues, can still fall foul of this suitability issue. A move from Manchester City Centre to Salford Quays (roughly 3 miles) probably wouldn’t inconvenience many staff. But an employee with primary school age children, who lives in a commuter town outside Manchester, for example Buxton, may need to get an earlier train to get to work on time, causing problems or increased costs with getting children to school, as well as the extra cost of travel across Manchester. It may not be a ‘suitable alternative’ for them.

So, factor in potential redundancy costs when planning a business relocation – while most of your staff will not have a problem, there may be some who do.

b) Do we have to pay relocation expenses and if so for how long?

There’s no legal requirement to. You may want to, as a gesture of goodwill and to smooth the transition – especially if there are significant extra costs (e.g. having to cross a bridge and pay toll fees). If you do, you can decide or agree how long it is for – some companies will do for between 6 and 12 months.

c) Do we have to replicate facilities e.g. car parking or a canteen?

Only if it is a condition of individuals’ employment that you provide these benefits. If it is then you must do so – or if it isn’t possible provide an equivalent benefit, e.g. a car-parking allowance. If it’s not, then you’re not required to do so.  You might want to take the facilities you currently have into account when choosing your new location.

Remember, moving is disruptive and unsettling for many people – even if they can see the rationale for doing it – and so taking their welfare and personal circumstances into account after a move makes good business sense.

Office buildings as seen from Pall Mall, Liverpool

Left Holding the Baby (and other employment problems)

There are certain questions that crop up regularly among my small business clients, and while every circumstance is slightly different, here’s some advice on how to approach some of these common issues if they occur in your organisation

I’ve an employee who always seems to need time off because of problems with her toddler. Last week she took two days off because he had an upset stomach. Her colleagues are getting a bit fed up with covering for her.

First of all, your employee has a legal right to take unpaid time off if an emergency situation arises with a dependant. This right is restricted to genuine emergencies (for example, if nursery ring to say the child is sick and needs to be collected) and not known issues (such as a hospital appointment for the child), and is also restricted to the time required to put in place alternative arrangements – which depending on the circumstances might be anything from an hour to a day – not to provide the care itself. It would be unusual for an ‘emergency’ to last more than a day. If the individual does need more time off, you may be prepared to allow them to take holidays or some other arrangement, but this is at your discretion.

If the employee seems to have ‘emergencies’ regularly, you can discuss with them the situation and look at ways of resolving it. Current case law suggests that the employee is not entitled to an unlimited use of this right. Consider ways that you might be able to get around the situation – for example short-term changes to working hours, or some other flexible arrangement. In the case of childcare particularly, you might want to discreetly find out if the employee’s partner could assist more (often in these cases it is the mum who ends up dealing with the problem every time, not the dad).

My business trades a lot with the EU and we’re badly affected by Brexit. A few members of our staff are vocally pro-Brexit. Can I sack them for promoting something which is damaging their employer?

Probably not. Although political views are not a ‘protected characteristic’ under the Equality Act, if someone feels they have been dismissed for holding a political opinion they can make an unfair dismissal claim even if they don’t have the normal two years’ service. You would have to have to show that dismissal was a reasonable response – and given that it’s unlikely that you can directly blame your employees for the current situation, it would be difficult to substantiate this.

What you can do is make it clear that people should not be using the workplace to promote political views. Someone who repeatedly broke this rule could be taken through the disciplinary procedure and ultimately dismissed. Make sure you apply the rule consistently though, not just against views that you disagree with!

I’m closing down part of my business in a few months and told the one employee in this area he’d be losing his job, and that he would be doing lower paid work somewhere else in the business. He got very irate and walked off the job, and has never returned. Now he’s threatening constructive dismissal – does he have a case?

Unless you were particularly abrupt or unpleasant in the way you told him or did it in a humiliating way (announcing it unexpectedly in front of colleagues for example), it’s unlikely. You are however putting him at risk of redundancy and needed to consult with him – including on whether the alternative work is suitable (if lower paid, it’s unlikely to be). That could leave you at risk of an unfair dismissal claim if the employee has more than 2 years’ service. As he’s walked off before you could undertake proper consultation, or even give him his legal notice, you are likely to have a defence against a claim, but it could get messy and time-consuming. If he does make a claim, consider settling through ACAS early conciliation or via a Settlement Agreement.