Introduction to economic and organisational dismissals
Employment relationships come to an end for a range of reasons, some of these relate to the employee as an individual – such as poor performance - other reasons, such as economic or organisational change, are independent of the employee. Dismissal for economic or organisational reasons is variously described as reduction in force, redundancy or more euphemistically as downsizing, rightsizing, delayering or rationalising. Because the end result is that employees lose their livelihood without personal fault or responsibility, many countries provide a level of social protection. This guide explains the processes and matters to be considered if carrying out such dismissals globally.
In many countries, there is a significant distinction between the rules applying on individual redundancies and on large-scale or collective redundancies. In this guide, we cover the rules on individual redundancies in points 1 to 5 and the rules on large-scale redundancies in points 6 to 10. We also cover the kinds of challenges that are possible and what the courts have power to rule.
Rules relating to individual redundancies are determined on a country by country basis and vary substantially – though often covering the matters mentioned above. Although rules on large-scale redundancies also vary, there is greater consistency at least within the European Union. Under European Union law, there is an obligation to provide information to employee representatives and to consult those representatives with a view to reaching agreement on the approach to be taken and measures to avoid or reduce the impact of job-loss.
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