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Associate: Anđela Marković
Considering the global mass redundancy trend, we continue with the series of blog posts concerning legal issues in such a process.
If, after going through the 13 solutions we listed for the employer to consider before decreasing the workforce, redundancy is the only light at the end of the tunnel for your company, make sure to be compliant and avoid costly mistakes. Recently, we have discussed this topic with Netokracija, which is available here.
In this text, we focus further on the implementation of the appropriate strategy for the companies that decided to go down this route.
To determine which steps should be taken, the company shall first assess what is the optimal way to organize its business, and what are the crucial roles and departments in their long-term and short-term operations. Consult the management and the department heads, and make sure to plan changes small and carefully.
If your company is going through the redundancy procedure for the first time, consider designing the reorganization in phases, where the new phases of layoffs shall start only when the first one has proven not comprehensive enough.
Also, keep in mind that the company should never be limited by the current organizational scheme but driven by the idea that similar, or related departments sometimes make a good combination, and that also applies to the work positions within them. This approach may be sufficient to avoid or limit the redundancies.
So, you identified the tasks that are vital for the company, and the result is the same organizational plan that currently exists. What now? This means that your focus should be on reducing the number of employees in the work position which requires fewer employees than it currently has.
On the other hand, if this cost-optimization process implies that some work tasks and work positions should be adjusted and combined, a new organizational scheme with new positions and duties should be prepared.
Due to the social impact, it may have, the redundancy process is highly regulated in the Serbian Labor Law (hereinafter: Law), and you should have in mind the 8 most common mistakes with technological redundancy before it commences. Whether the redundancy is caused by economic, technological, or organizational reasons, the procedure is very similar.
The redundancy should be localized to the most expensive and least productive sectors and work positions. If you take this minimalist approach, the chances that you will need to hire someone for the same job in the next three months are highly unlikely. Why is that so important?
If you violate this three-month ban on employment for the affected work position, note that you might be facing court proceedings due to breach of said obligation, and the employee can also request to be returned to work.
When only one employee is redundant, or only one work position is removed, it is not that hard to supervise the process and this ban. But, if we are talking about a bigger scale redundancy, this may cause serious issues.
Namely, the courts will analyze the similarities between the old and new work positions, which means that, even though the title of the work positions is different, that will not keep your company safe – you need to make sure that these work positions have substantially different duties.
For example, if you determine that you no longer need a “customer service representative”, and during the period of 3 months from declaring its redundancy, you open a new position of a “client excellence agent”, note that may represent a high risk, if job obligations are comparable (under the condition that your previous employee wants to initiate a lawsuit).
Besides following these special rules about redundancy, always act under the general legal principles such as:
and adhere to any policies, procedures, and provisions of the general act/collective agreement.
In other words, make sure that there is no unequal treatment, and in particular, exclusion, limitation, or priority, about persons or groups of persons based on real or assumed personal characteristics. But do not forget that there are situations where unequal treatment is allowed, and necessary – in the cases of positive discrimination (treating different vulnerable groups, as it will be explained concerning the period of evaluation of the work performance).
In case you previously adopted or concluded any act which regulates this matter, you mustn’t make any exceptions from its provisions. This particularly refers to criteria for determining the redundancy, and the calculation of severance pay, as they represent the most common issue in the redundancy case law.
What if you don’t have any documents regulating redundancy?
If you didn’t adopt any documents on redundancy, part of the burden that is connected with it will be transferred to the company’s management. For that reason, you should inform and train them about all the details, rules, and consequences of their decision. As it will be shown below, their behavior may determine the company’s future.
The redundancy procedure is never easy, and it can be highly stressful and emotional for both the employer (its management) and employees. In this situation, good leaders can make a difference and prove to the employees that the redundancy results were not predetermined, but a consequence of an impartial and well-justified analysis.
The company needs to make sure that all the managers who will be involved in the evaluation of the employees, and eventually decide who will be determined as redundant, are abiding by the internal rules and principles – from objectively applying the relevant criteria to treating the confidential information as it is prescribed.
Additionally, it is crucial to familiarize the management with the weight of the decision they will make, and how important it is to form and strictly follow the criteria for determining redundancy. Personal relations must be set aside because just one mistake in this process can cause a snowball effect and undermine the whole employment termination process.
For example, if you determined the need to lower the number of employees in one job position from 3 to 5, you cannot simply decide which two employees will be redundant. On the contrary, you will need to undertake the procedure of evaluating the previously set objective criteria (such as work performance), followed by the appropriate documentation, based on which you will be able to adopt a legally adequate decision. If you fail to comply with these steps, your decision can be challenged in court by redundant employees.
It is not rare to open the question of discrimination in situations where the employee’s work performance is a key criterion, due to potential partiality that some superiors may have when evaluating the performance of their team.
Make sure that all the evaluation is covered by relevant facts and documents, as it may be used as a basis for terminating the employment relationship.
What will be the observed period for determining the work performance is also something that should be discussed in advance. The employer needs to make sure that the periods are long enough so that it will not discriminate against those who were absent for a longer period of that time, due to justified reasons (such as sick leave, maternity leave, leave for nursing a child, etc.).
In some cases, the employer must adopt a Redundancy Program. Before enforcing such a program, the Proposal of the Redundancy Program must be submitted for consideration to the competent National Employment Service and the representative trade union at the employer.
So, when does your company need to adopt a Redundancy Program?
The Law explicitly states that the employer is obliged to take appropriate measures for the new employment of surplus employees, in cooperation with the employer’s representative union and the republican organization responsible for employment, before adopting the Redundancy Program. So, if your employees are not organized in a representative trade union, does that mean that they should not be consulted in this process?
The practice shows that, even though there is no obligation to consult the employees not organized in the representative trade union, this action is highly valuable for the whole process and shows the employees how much effort the employer invested to find the best solution for everyone.
Individual consultations will enable each employee to be fully informed about the objective causes of the redundancy, the needs of the business, and their rights and obligations related to it. Besides reputation and employer branding, keeping a good relationship with your employees is beneficial in terms of preventing any potential dispute and avoiding unnecessary costs of legal proceedings.
Another thing that should be considered is the adoption of the Proposal of the Redundancy Program and the Redundancy Program even if that legal obligation does not apply to you. By publishing such a detailed program, even when that is not obligatory, your employees will get the big picture of the changes occurring, and show more understanding regarding this undesirable situation.
And, there is more thing you can do for them – discussing and supporting them in their potential new roles. Referring your employees to your business partners and providing them with valuable recommendation letters can enable some of them to transition smoothly to their new position. Furthermore, you can check the employment opportunities at National Employment Service and invite them to cooperate with you in the interest of the employees.
In the redundancy procedure, the role of the National Employment Service is to suggest alternatives for the employees who are determined redundant and provide them with employment options and other support that is adequate for them.
If the adoption of the Redundancy Program is not mandatory for you, you are also not required to communicate and cooperate with the National Employment Service. Nevertheless, this can show your employees and state authorities that you are devoted to helping your employees find new employment as soon as possible, and even stronger your position in case of any dispute.
Namely, based on the employees’ professional education and qualification, the National Employment Service can suggest positions that are currently vacant in the labor market, and even organize workshops for developing new skills or how to start a business as an entrepreneur.
Therefore, your employees may appreciate these additional steps that you made for their benefit, which will also reflect the company’s future business operations and reputation in the community.
Even though, as seen above, the legal obligations may differ depending on various circumstances, good practices explained in this article should be applied to each case.