In December 2021, Vishal Garg, CEO of Better.com, a US-based mortgage firm, fired nearly 900 of his staff on a single Zoom call. The move sparked widespread criticism on social media, with comments calling it "cold," "harsh," and "a horrible move," particularly during the holiday season. Garg cited staff performance and productivity, as well as market changes, as reasons for the mass-firing, which accounted for 15% of Better.com's workforce.
However, such a move would not be legal in the UK, where employers are required by law to enter a consultation period with workers of at least 30 days, or 45 days if more than 100 people are being made redundant. This period allows employers to ease employees into the situation, prepare them for the news, and provide them with the right phrasing and explanations for why the decision was made. UK employers are also required to search for alternative roles for workers, and they must be able to show that they have exhausted every possible alternative before making redundancies.
The Better.com situation highlights the importance of following proper redundancy procedures, even in difficult times. While US law may allow for such mass-firings, it is important to consider the long-term impact on both employees and the company as a whole. Existing employees may view the way the company treats its staff as a signal of how it will treat them in the future, which could have a significant impact on employee morale and retention.
Employers in the UK should also be aware that a mass-firing could result in multiple claims being made in the employment tribunal by disgruntled employees. In this scenario each employee could claim for both unfair dismissal in respect of the failure to follow a redundancy procedure and protective awards where 20 or more employees have been made redundant in a single workplace and the employer fails to properly inform and consult about those. Such Employment Tribunal claims can be a costly and time-consuming – the amount of a protective award payable to each affected Claimant can be up to 90 days’ pay.. To avoid this, employers may offer enhanced terms subject to the employee signing a settlement agreement.
At Winston Solicitors, we can provide expert advice on redundancy and HR matters, as well as other employment law issues. Our team of experienced employment law solicitors can help you navigate the legal requirements and ensure that you follow proper procedures when making redundancies. We understand that making redundancies can be a difficult and emotional process for both employers and employees, and we are committed to providing empathetic and practical advice to help you through this challenging time.
If you are facing redundancy or need HR advice, please contact us today on 0113 320 5000 to schedule a consultation with one of our employment law experts.
