Earlier this month, Twitter decided to dismiss around half of its employees (around 3,700 people) due to cost-saving reasons. Staff received a memo from the company stating that there would be mass layoffs, and then an hour later, employees were denied access to their work systems. This happened around 3am UK time, so most of Twitter’s UK employees were asleep.
The number of workers employed by Twitter in the UK is thought to be between 250 and 500 people. The trade union Prospect, which represents tech workers, stated “Twitter is treating its people appallingly. The government must make clear to Twitter’s new owners that we won’t accept a digital P&O and that no one is above the law in the UK, including big tech barons.”
The reason for comparing Twitter’s actions with those of the UK ferry operator P&O Ferries, is that the latter had informed around 800 of its employees that they were fired with immediate effect, with no prior warning. It had also resulted in the Government’s intervening with mention of plans to introduce a new statutory code on fire and rehire tactics. To read more on this, see our article Legal implications of P&O Ferries shock firing here.
What are the legal implications of the recent Twitter case?
The duty to consult
Twitter is already facing a lawsuit in the US for not complying with federal laws on giving employees advance notice.
In the UK, section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA) places a duty to consult on employers that propose to make 20 or more employees redundant within a 90-day period. The employer must collectively consult with representatives of the affected employees, and an affected employee is anyone who is at risk of being made redundant or whose work is impacted as a result of the redundancies.
If an employer fails to carry out its duty to consult, this can result in a protective award being made by an employment tribunal. The limit is 90 days’ gross pay for each employee covered by the award, resulting in a costly liability for employers. The aim of the award is to punish employers for not complying with their obligations. In addition, employers risk a public judgment against them which could lead to reputational damage.
Consultation must begin at least 30 days before the first redundancy takes place in cases where less than 100 redundancies are proposed. Alternatively, where there are 100 or more proposed redundancies, as is the case with Twitter, consultation must begin at least 45 days prior to the first dismissal. Although Twitter’s HR department emailed staff informing them to nominate an employee in order for the company to inform and consult with them, this was done the week before redundancies were announced. As well as the minimum timeframe for consultation, the process is in place to warn employees about the proposed redundancy and adopt a fair basis on which to select employees. It must also consider any suitable alternative employment. In this case, it is clear that Twitter has failed to comply with the consultation process. This has led Prospect to describe the process as being a ‘sham’.
Additionally, employers must notify the Department for Business, Energy and Industrial Strategy (“Department for BEIS”) where there is a proposal to dismiss 20 or more employees as redundant at one establishment within a period of 90 days or less. It is currently unknown if Twitter has notified the Department for BEIS.
There are further risks in a mass redundancy scenario. As well as the potential risk of claims for procedural unfairness, an employer may be faced with claims for unfair dismissal because the redundancies may not be genuine.
No claim has been brought against Twitter in the UK at the time of writing, however, we will be monitoring this for developments.
Damage to the employer-employee relationship
There have been reports that Twitter is now asking some of the employees it had recently made redundant to come back to work for the company again. The reasons stated are that some employees were laid off by mistake whilst others were dismissed before it was realised that their work and experience may be necessary to build new features on the platform.
Carrying out mass redundancies with no warning sends a clear message to the dismissed employees that their employer does not value their work and loyalty. Instead, employers should comply with their duty to consult and discuss potential alternatives to redundancy with their workforce. When selecting workers for redundancy, it is good practice to refer to objective criteria that can be supported by data such as training records or appraisals.
Reputational damage
This case demonstrates that businesses that do not comply with legal processes may face reputational repercussions. Twitter’s employees have been vocal about their negative experiences on social media and have started a hashtag on Twitter (which is a way for tweets to become more widely viewed) and one former employee posted a video on TikTok describing the way he was let go. He received an email from Twitter’s new HR director with a meme (an image, video or text that is typically humorous in nature). It was a picture of Elon Musk with the phrase “Time to leave the nest. You’re fired”. If people sympathise with the employees, they could decide to leave the social media platform, leading to financial losses for Twitter. This could also deter candidates from working there in the future. Before carrying out redundancy or other employee processes, it is important for businesses to consider the reputational risks. If news of an inappropriate redundancy process comes to light, this will likely paint an employer in an unfavourable light.
Other tech-related redundancies in the news
Meta, the owner of Facebook and Instagram, has since announced on Wednesday 9 November 2022 that it would cut more than 11,000 jobs. The company has been struggling financially and would like to focus its resources on the Metaverse. Unlike Twitter’s new owner Elon Musk, Meta’s founder and CEO Mark Zuckerberg has informed Meta’s staff via email that he wanted to take accountability for the redundancies where he had wrongly overestimated the growth potential of Meta.
Tech companies have been significantly impacted by inflation and rising interest rates. Last month, Microsoft laid off 1,000 employees as part of a restructure, and in the latest tech giant redundancies, Amazon has announced that it will be laying off 10,000 jobs. Amazon had warned of a slowdown in growth for the busy holiday season which is when it usually generates the highest sales. As a result of rising prices, consumers and businesses have had less money to spend on Amazon’s services, which may be perceived as a “luxury”. This has subsequently led to Amazon’s decreasing sales and may have also played a role in the reason for the proposed redundancies.
Message to employers
Amid the difficult climate we are currently living in, restructures and redundancies may be inevitable for a business. However, it is crucial for employers to make decisions in a way that complies with the law. This includes taking reasonable steps to avoid making redundancies, but where redundancies are required, ensuring that a fair process has been undertaken. A redundancy process must be fair and the adverse impact on affected employees should be minimised to avoid reputational and financial repurcussions.
If you require any support with undertaking a redundancy process, please contact a member of our Employment team who will be happy to assist.