Twitter’s cost cutting measures – Lay-off or Dismissal?

Anyone who has a Twitter account or reads the news will be well aware that since Elon Musk took over Twitter, there have been many changes including ending remote working and rest days and citing the expectancy of “intense” work to enable the Company to succeed. Part of the shake-up and cost-cutting measures has seen over 4000 “lay-offs” as referred to in the media. The reality is however those employees have been dismissed not laid off under UK law.

Twitter is a global company and while the employment laws may vary from country to country, Elon Musk appears to have simply taken a one size fits all approach and sent out a mass email dismissing employees. There will be various claims to be brought against the Company.

With the uncertainty in the economic climate, utility bills increasing and difficulties with the supply chain, businesses are unfortunately having to take stock and reconsider the best way of navigating the business through this period of time successfully. There are a number of options open to businesses to consider and below we have given a quick snapshot of some of the routes a business might take when facing financial and operating difficulties to keep the business sustainable:-

Contract changes: Subject to the terms of the employee’s employment contract an employer cannot unilaterally change the terms and conditions of an employee’s contract. To safeguard lay-offs and redundancies reducing employee benefits, pay and hours is a good starting point. Businesses will want to retain their best talent and be transparent about the business difficulties and the need to make these cutbacks (with a view to them being temporary) are likely to be better received by employees than simply enforcing the changes.

Where a business takes the stance that there needs to be a reduction in benefits, pay and/or hours as a result of a downturn in business demand then it can take steps to make changes by essentially giving the employee notice that their current contract will end (leaving the employee open to pursuing an unfair dismissal or breach of contract claim) and offering new terms of employment under a new contract. Legal advice should be sought in these circumstances to enable the business to understand the risk and prospect of potential claims based on its circumstances.

Lay-offs, Short time working and Guaranteed payments: Where a business experiences a temporary downturn in work, it could take steps to:

– Lay staff off. This means no work and no pay for a temporary period.

– Place staff on short-time working. This is where an employee is provided with less work and paid less than half of his/her usual salary.

– Pay a Guaranteed Payment to an employee where he/she has up to 5 workless days in any 3-month period.

Where an employee has been laid off or placed on short time working for 4 or more consecutive weeks or a total of 6 weeks in any 13-week period, then the employee, subject to eligibility, could then claim a redundancy payment.

Employers should ensure that there are express rights covering lay-off, short-time working and guaranteed payment in their employment contracts to guard against claims of breach of contract.

Strict rules apply to lay-offs, short-time working and guaranteed payments and businesses should ensure that they understand the procedures to enable them to manage the situation fully.

Redundancy: A Redundancy situation can occur in three different ways:-

1) A business closure

2) A workplace closure

3) The type of work carried out by employees ceasing or diminishing

Reasonable procedures should be followed when dealing with redundancy situations. Should 20 or more employees be made redundant within a 90-day period then statutory rules will apply in connection with the time period for consulting employees about the risk of redundancy.

Where a redundancy situation is borne from a reduction in the work and the need to reduce the amount of staff then it is important that a thorough and objective selection criteria process is followed and the employees are adequately consulted at each stage. It is also good practice to have more than one manager score each employee to safeguard arguments of bias and unreasonableness and care should be taken to ensure that the scoring matrix doesn’t result in discrimination against particular groups of employees with protected characteristics. For example, scoring employees based on attendance records is likely to result in disabled employees who have had to take time off work scoring less and thus suffering less favourable treatment.

Redeployment: When looking at business reorganisations and staff retention redeployment should not be overlooked. Quite often employees have a number of transferrable skills and may thrive in new areas of the business.