Twitter redundancies – why cutting costs could prove more costly

Unless you actively avoid the news, you’re probably familiar by now with the headline-grabbing controversy caused by entrepreneur and Twitter’s new owner Elon Musk, after he announced that half of the company’s workforce were to be ‘laid off’ as part of cost cutting measures.

The number of workers affected has grown by the day, with entire teams shut down, and news this week that the social media platform’s Brussels office had been disbanded.

The move has already resulted in legal action in some countries, with reports suggesting that some ex-employees were not provided with enough notice about the redundancies, and others saying that suggested changes to working conditions did not make reasonable adjustments for disabled staff.

While redundancies are, sadly, a common feature in any company restructure - especially following an acquisition, management buyout or merger – businesses that fail to follow the correct procedure under current employment law legislation will inevitably find themselves in hot water.

Here Katie Ash, head of employment law at Banner Jones, explains what the correct process is when proposing job losses, as well as the importance of factoring in a thorough consultation period before any final decisions are made and notices are given.

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“Twitter is a global company. It has offices in in a number of jurisdictions, including the US, Europe and here in the UK. While the employment law in each of those countries and regions does differ, there tends to be a common emphasis on protecting the rights of employees,” Katie explains.

“Certainly, here in England and Wales, that includes protecting employees from unfair redundancy, discrimination, and from redundancies made without adequate consultation with staff.

“While the details surrounding the job losses at Twitter are yet to fully come to light, there have been many, many headlines suggesting that a lot of current employment law processes were simply not followed.”

In one example, Twitter employees were reportedly told that they need to work "long hours at high intensity" and be "extremely hardcore" if they decide to stay with the company, with one former employee now said to be taking legal action amidst allegations that new work demands forced disabled workers to resign.

Katie added: “The social media giant also reportedly fired around 4,400 of 5,500 contractors that track hate and other harmful content.  Some of the contractors said they didn't realise they were sacked until they weren't able to log onto work.” 

“From what the headlines suggest, Twitter’s plans to cut costs could very well have resulted in some pretty costly legal action.”

So where did things go wrong?

Katie explains: “We don’t know the specifics yet fully, but from what is being reported Twitter may have breached employment law in a number of ways.”

“When making redundancies in England and Wales, it is the role that is being made redundant, as opposed to the employee.”

“Once the need to make redundancies has been identified, a proper and meaningful redundancy process needs to be planned, with sufficient time given to communicate the proposals to staff before commencing consultation.”

“Depending on the number of employees affected, consultation may have to last a minimum or 30 days and take place between the employer and an existing trade union or elected employee representatives. If there is no trade union or existing employee representatives, then an election process will need to be undertaken; and this can add a significant amount of time to the process before any consultation has actually taken place.”

“With 19 or fewer redundancies, there is no minimum requirement for the length of the consultation period. However, where 20 or more redundancies are proposed within a 90-day period, then the consultation period must be at least 30 days before any dismissals can take effect. This increases to 45 days where 100 or more redundancies are proposed.”

Why does it matter?

Katie says that following the correct redundancy process is important for a number of reasons.

“Firstly, because it is the law, and businesses and business owners could face considerable claims for compensation where they get it wrong; and in the case of a failure to consult for the minimum period of time where 20 or more redundancies are proposed, could also face criminal penalties, including fines, as well as compensation claims for up to 13 week’s actual pay per employee.”

“Secondly, a fair consultation process allows employers and employees to discuss other options that could avoid redundancy entirely, whilst also giving workers time to prepare and begin searching for alternative employment.”

Katie adds that by communicating meaningfully with staff, it also allows them to understand:

• The reasons for the proposed redundancies;
• If redundancies can be avoided;
• How the impact of redundancy can be mitigated, for example, through alternative roles or retraining.

 

“It’s important to remember that when making an employee redundant that it is not a fast and easy way to solve problems within your business,” Katie cautions. “Without a genuine reason for redundancy, businesses could face legal proceedings for unfair dismissal, which not only costs money, but your reputation, too.”

“Finally, it’s also important to remember the wider reputational damage that goes with managing redundancies badly. In the case of Twitter there are reports that an engineer who had publicly disagreed with the Elon Musk’s tweets was said to have been laid off publicly, with Mr Musk tweeting “he’s fired”.”

“Needless to say, there must be a genuine reason behind why a member of staff loses their job, not simply because a business wants to get rid of someone that is a bit troublesome.”

“He also appeared to mock staff who were fired, tweeting in reply to a link to the story that he would like to ‘apologize for firing these geniuses’, but that their ‘immense talent will no doubt be of great use elsewhere’.”

“Of course, running a business can be challenging, and never more so than when decisions need to be made that potentially affect the lives and livelihoods of employees, so it’s not uncommon for tensions to run high.”

“However, the wider impact on the morale of other employees, future recruitment efforts, and even client and customer relations could be significantly affected if done badly, so it’s worth taking the time to get things right.”

If you would like advice on the redundancy process, get in touch with the Banner Jones employment law team on 0344 558 4104.