Session 1

Speakers: Philipp Maier, Peter Reinert, Steffen Scheuer and Julia Wilson

Workforce Transformation and Disruption: Deep Dive Central Europe
Wednesday, 18 January 2023

In this webinar, our discussion focused on the latest labor and employment law updates and trends impacting workforce transformation and disruption in Germany, Austria and Switzerland.

Session 2

Speakers: Massimiliano Biolchini, Ester Maza, Kim Sartin and Olivier Vasset

Workforce Transformation and Disruption: Deep Dive Southern Europe
Wednesday, 25 January 2023

In this webinar, our discussion will focus on the latest labor and employment law updates and trends impacting workforce transformation and disruption in France, Spain and Italy.

Session 3

Speakers: Mirjam de Blécourt, Margarita Kozlov, Michał Lisawa and Carl Richards

Workforce Transformation and Disruption: Deep Dive Northern Europe
Wednesday, 1 February 2023

In this webinar, our discussion will focus on the latest labor and employment law updates and trends impacting workforce transformation and disruption in Sweden, Netherlands and Poland.

Our key takeaways

It's a mixed picture - attracting and retaining key talent creates tensions with cost cutting

Inflation has put significant pressure on wages; employers are grappling with increasing employee activism and general discontent while managing rising business costs more generally.

We are seeing various responses with many organizations taking steps to reduce labor costs and reallocate resources. Many employers have pulled back on previously ambitious hiring projects, particularly in the tech sector. Some organizations have already announced proposed redundancies and the number is growing week by week.

Despite the economic turmoil, unemployment rates in many jurisdictions remain low and the market for key talent is still very competitive. Employers are having to balance recruitment and retention of this talent with the need to make costs savings.

The post-pandemic era presents new challenges

The increasing number of employees working remotely means more complex legal and practical challenges. An employee's location will often determine which employment rights apply; it could also impact local headcount and trigger additional obligations for the employer, for example in relation to collective consultation.

On a practical level, workplace communication can be much more difficult where the workforce is based in multiple locations and perhaps different time-zones.

There is also a steadily increasing population on family leave. Whilst this is due in part to expanding entitlements, there are also greater numbers of employees with potentially enhanced (as well as competing) rights in a redundancy situation, for example, and this can become even more complicated when managing redeployment obligations cross border.

Cost-cutting measures that stop short of redundancies are not risk-free

While potentially less contentious than redundancies, recruitment freezes, changing terms and conditions and ending the use of contingent workers still carry legal and reputational risks; these are greater in some jurisdictions over others.

Voluntary exit programs can be very helpful in achieving the desired headcount reductions in some locations, but in others they are impractical because they are expensive and local regulatory constraints can limit their effectiveness.

Local regulatory requirements on redundancies vary significantly across Europe

Although EU legislation requires all member states to adhere to certain common standards on collective redundancies, these are minimum requirements only and local rules vary widely. Depending on location, it can take from a few weeks to several months to implement redundancies depending, for example, on the required works council consultation procedure and local labor authority approvals. Costs can vary from a few months to two or more years' pay in some circumstances.

In some jurisdictions, certain groups of employees enjoy very strict protection in redundancy scenarios; these include works council members, disabled employees and those on family or sick leave. There are also market specific requirements that limit an employer's flexibility on selection and redeployment and by extension, its control over the composition of the workforce post restructure.

The shape of the workforce post restructure

Reputational factors now play a much bigger role in decision making with the views of investors, customers and existing and future workers much more significant and influential. Employers need to be mindful of whether treatment of its workforce and post restructure composition aligns with previously stated values on I,E&D and ESG.

A blanket approach to restructuring cross-jurisdiction could limit options

A tailored jurisdiction-specific approach taking account of local market factors may appear to be more complex to manage at the outset, but could lead to a smoother process overall and enable organisations to take advantage of approaches available in some jurisdictions that may not be possible in others.

Practical tips

• Investing time in planning and identifying project risks upfront will save time and money  planning is key!
• At the outset, determine whether a harmonised cross-jurisdiction or market-specific approach is appropriate for the business.
• Assess likely costs including severance packages for each impacted jurisdiction.
• Build a strong economic rationale justifying any contemplated economic dismissals.
• Involve local internal and external advisers early on in the process to gather local insights.
• Prepare a well-coordinated cross-border communication strategy across jurisdictions that includes handling of press coverage and market/investor perceptions, as well as communication with the workforce, works councils and other representatives. We recommend use of a communication 'control center'.
• Build out a strict time schedule for negotiations with representatives; manage this tightly.
• Build in contingency plans, for example, to deal with possible leaks to the media or the workforce prior to formal announcement and be ready to jump in to deal with these consistently.