People professionals have urged employers to consider the wellbeing of staff being made redundant, after it was reported that the boss of a US firm terminated the employment of 900 members of staff over the same video call.
Earlier this week, a video emerged of Vishal Garg, chief executive of mortgage firm Better.com announcing redundancies to staff over a mass video call, explaining that a number of issues including the market, efficiency and productivity were the cause of the cuts.
Prefacing the announcement by saying that last time he had to undertake a similar exercise, he had cried, Garg said: “We are laying off about 15 per cent of the company… If you're on this call you are part of the unlucky group that is being laid off. Your employment here is terminated. Effective immediately.”
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Garg, who came under fierce criticism, later apologised for the way he went about making the redundancies. “I failed to show the appropriate amount of respect and appreciation” for the staff losing their jobs, he said in a statement on the company’s website.
There are practical reasons why, in this day and age, employers might choose to conduct redundancy procedures remotely, said Rachel Suff, senior employment relations adviser at the CIPD. “In the current climate when Covid infection rates are high, it can be a sensible health and safety measure,” she said.
But, Suff added: "Whether an organisation is delivering this type of news in person or remotely, the health and wellbeing of those affected must always come first and their dignity respected.
“Employers should act with compassion and empathy, and offer individuals wellbeing support throughout,” she said.
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Suff added that in the UK, there are “vital statutory protections” for workers facing redundancy, including the right to be consulted individually as well as collectively – depending on the numbers involved.
This was echoed by Kate Palmer, HR advice and consultancy director at Peninsula, who said it was unlikely that the Better.com employees signing onto the video call were expecting to be made redundant. In the UK, she said, this would be unlawful.
“UK laws dictate that redundancy procedures should take particular steps in order for the dismissals to be fair and, while an initial announcement will always be needed, there are several other steps needed both before and after which involve the employees in the process,” she explained.
In the UK, all the processes for making redundancies happen revolve around employee consultation, said Palmer, who also noted that an employee “might come up with an idea that you hadn’t thought of that will help to save some jobs”.
Employers that fail to follow the proper processes in the UK risk opening themselves up to claims of unfair dismissal and financial penalties, said James Froud, head of employment at McCarthy Denning.
“Failure to comply with the consultation requirements would likely lead to unfair dismissal claims due to lack of process, plus penalties of up to 90 days’ actual pay for each affected employee for failure to collectively consult,” Froud said. “The exposure is therefore significant if large numbers of employees are affected.”
There could also be reputational fallout from mishandling a redundancy process, he said. The process by Better.com was “crass and reflects poorly on the culture of the organisation; something which may have longer-term consequences for the business if or when it needs to secure talent in the future.”
Chris Deeley, employment solicitor at JMW Solicitors, added: “Even notwithstanding the legal position, employers finding themselves in such a situation should also ensure they act with caution and compassion, to avoid further alienating retained staff or indeed customers.”