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Global HR Hot Topic—June 2013: Reductions-in-Force and "Collective Redundancies" Outside the United States

June 2013
Donald C. Dowling, Jr.

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Challenge: Conducting a reduction-in-force or "collective redundancy" is much more heavily regulated overseas than in the United States.


Doing cross-border reductions-in-force (which abroad are called "group dismissals," "mass layoffs," "retrenchments," "restructurings" or "collective redundancies") always seems to implicate higher costs, longer delays and more problems than US headquarters ever seems to anticipate at the outset. Multi-country RIFs can become hugely complex and expensive, with set-asides for "restructuring" costs reaching millions of dollars.

The other side of this coin is that reductions-in-force are less regulated and less expensive in the employment-at-will United States as compared to much of the rest of the world, which explains why RIFs are more common stateside than abroad. It has been said RIFs are "so ubiquitous in the American corporate landscape" because "[t]here are few options when business levels no longer support the size and scope of company operations." ("Your Next Reduction in Force: The Dirty Little Secret," Employment Law 360, Aug. 11, 2008.) Of course, even group layoffs in the United States can become complex and expensive— US RIFs can "cost money rather than save money in the short run," "monopolize scarce management resources and cause significant hardship," and "in the worst circumstances" cause "enormous legal liability" and "professional humiliation and financial ruin" for the "responsible executives." (Id.)

Jurisdictions abroad regulate individual terminations far more comprehensively than the United States does (see our Global HR Hot Topic for May 2013), and jurisdictions overseas regulate RIFs substantially more, too. While challenges to doing a RIF domestically in the United States can be significant, the challenges are substantially greater abroad. To address all the issues that arise when a multinational embarks on an international reductionin- force, we break our discussion of overseas RIFs into three topics: (A) reconsidering whether to do a RIF abroad (B) accounting for eight tiers of laws that regulate overseas RIFs and (C) crafting a local country RIF plan or "field guide."


Best practices tip: Account for eight different types of laws that can reach a mass layoff internationally.


A. Reconsidering whether to do a RIF abroad

American employers operating abroad (as compared to their foreign local domestic competitors) often prove quick to resort to layoffs in response to an overseas economic downturn, internal restructuring or merger/acquisition/divestiture. A US employer that hits a rough patch in its overseas business operations might consider RIFs as a first resort, whereas that company's overseas domestic local competitors—native businesses that understand their local environments intimately—might keep RIFs as their option of last resort. Because RIFs abroad tend to be more expensive and heavily regulated than stateside, the first step in considering whether to do any mass layoff overseas is to re-examine the threshold decision to do a RIF at all.

Within the United States, a RIF is often a logical response to economic pressures and organizational change precisely because the chief laws in America that regulate RIFs are comparatively benign—the US W.A.R.N. Act (29 USC § 2101 et seq.), state equivalents and American discrimination laws (disparate impact analysis; Older Workers Benefit Protection Act age disclosure mandates (29 USC § 621 et seq.). By contrast, outside the United States, laws that regulate RIFs tend to be, from an employer's viewpoint, much more intrusive, and they tend to make RIFs much more expensive. At the same time, some laws overseas offer cheaper and more streamlined alternatives to RIFs, such as incentivized voluntary RIFs, incentivized voluntary retirements, hiring freezes, and (most notably in Germany) governmentsubsidized work-hours-reduction and furlough programs.

Even so, American multinationals often decide they need to forge ahead and do overseas layoffs. At that point a US employer should let go of its stateside approach to conducting a RIF and shut its toolkit of American RIF practices, because these tools mostly get in the way overseas. For example, statistical adverse-impact-selection models, Older Workers Benefit Protection Act age disclosures and American nondiscriminatory RIF selection tools are all but worthless in countries such as France and Germany where laws still affirmatively require factoring in age, marital status or number of children. And American RIF strategies are equally worthless in jurisdictions such as Sweden that require a last in, first out RIF selection approach regardless of disparate impact. So when project-managing a RIF that affects employee populations both in and outside the United States, bifurcate the RIF plan with a dual US versus rest-of-the-world approach. Handle the US prong like any US RIF while simultaneously engineering distinct yet aligned strategies for each foreign jurisdiction.

B. Accounting for eight tiers of laws that regulate overseas RIFs

Over the years many US-headquartered multinationals—small and large, for-profit and non-profit—have taken a "shoot first, ask questions later" approach to conducting cross-border reductions-in-force. They publicly announce a layoff of, say, 10 percent of their worldwide workforce. The business press covers the announcement and the border-crossing RIF commands attention of the local, sometimes even the national or international, business community. A company's stock price may even bump up as investors and markets reward aggressive cost cutting— although it has been argued that this "Wall Street effect" to RIFs is waning. (See e.g. Franco Gandolfi, "The Mean and Lean Firm: The Latest in Reductions-in-Force," Ivey Business Journal, Jan./ Feb. 2009 available at iveybusinessjournal.com.)

But then what? Too many multi-country RIFs, even many launched with panache, get executed sloppily and devolve into slow, reactive, over-budget, non-compliant, even chaotic morasses riddled with labor/human resources and public relations strife. (See generally Franco Gandolfi, id.) To avoid this fate and to pull off a streamlined, successful cross-border RIF, manage the project proactively. Budget for costs. Set a realistic timetable. Craft a detailed plan that sets out, on a jurisdiction-by-jurisdiction basis, compliance steps and employee consultation strategies. In crafting a border-crossing RIF plan, account for the following eight tiers of laws (in each affected jurisdiction) that might reach the RIF.

1. Laws reaching individual terminations. In project-managing any cross-border RIF, the first step in the legal analysis is understanding how each affected jurisdiction regulates no-cause individual dismissals. When investigating RIF laws, too many multinationals skip over this step to focus only on regulations that expressly affect mass layoffs. Yet, of course, a RIF by definition is a collection of individual terminations; indeed, many employment law regimes do not even distinguish RIFs from individual dismissals—examples of jurisdictions that do not separately regulate RIFs include Costa Rica, Hong Kong, India, Indonesia, Malaysia, Saudi Arabia, United Arab Emirates and Uruguay. In these countries a RIF is just the sum of its individual layoffs. Meanwhile, even those jurisdictions that do impose collective dismissal laws—examples include the US W.A.R.N. Act, the European Union's "collective redundancy" directive and emerging Brazilian case law imposing consultation obligations in the RIF context—impose their RIF regulations as overlays modifying but not replacing local law on individual no-cause dismissals.

So in analyzing laws that regulate RIFs, first understand how local law treats individual layoffs. We have already looked at laws around the world that regulate individual employment dismissals. (See our Global HR Hot Topics for February 2013 and May 2013.) Each employee dismissed in a collective layoff presumptively enjoys all the individual rights we discussed unless some special RIF-context or economic necessity exception applies. When project-managing an overseas RIF, begin by accounting for the rights local law bestows on individual employees dismissed for no cause or laid off for so-called "economic, technical and organizational" reasons, as modified by local laws that carve out special exceptions for the RIF context. The rest of our discussion examines those RIF-context-specific special exceptions.

2. RIF thresholds. We mentioned that many jurisdictions impose no specific rules on RIFs (examples mentioned include Costa Rica, Hong Kong, India, Indonesia, Malaysia, Saudi Arabia, United Arab Emirates and Uruguay). But many other jurisdictions do impose specific regulations on conducting RIFs. For example:

  • China: Employment Contract Law article 41; Labor Law article 25
  • European Union: EU Collective Redundancies Directive, originally passed in 1975, as amended by EU Directive 98/59/ EC and, in turn, adopted or "transposed" in each EU member state, for example:
    • Austria: Labour Market Improvement Act § 45a and the Labour Constitution Act §§ 108, 109
    • Cyprus: Collective Redundancies Law of 2001, law number 28 (1)/2001
    • Czech Republic: Labour Code § 62
    • Denmark: Collective Redundancies Act 1994
    • Finland: Employment Contracts Act 53/2001 and Act on Cooperation within Undertakings 334/2007
    • Greece: Law number 1387/83
    • United Kingdom: Trade Union and Labour Relations (Consolidating) Act 1992, sections 190-96
  • Switzerland: Code of Obligations article 335d et seq.
  • Turkey: Labour Law number 4857 and Collective Bargaining Agreement, Strike and Lock-Out Law number 2822
  • US: W.A.R.N., 29 U.S.C. § 2101 et seq.
        

In RIF-regulating jurisdictions like these, inevitably the first question an employer conducting a group layoff asks is: How does local law define a RIF? That is: What threshold number of layoffs, over what period of time, triggers the local RIF law? This question is vital where the local RIF regulation complicates RIFs or makes them more expensive, and where an employer is flexible enough either to keep its number of local layoffs below the threshold trigger or else to spread its layoffs out beyond the local RIF-definition timetable. So always understand the local RIF threshold, if only so as to understand how to avoid triggering it. The RIF threshold, of course, differs by jurisdiction. For example:

  • In Belgium, the Czech Republic, Poland and much of the rest of Europe, the RIF threshold is 10 employees at workforces 21-99, 10% of employees at workforces of 100-299, and 30 employees at workforces more than 300, laid off within 30 days. This particular RIF threshold is common in Europe because it aligns with the EU Collective Redundancies Directive's threshold, at article 1(1)(a)(i) (EU Collective Redundancies Directive, 98/59/EC (Aug. 12, 1998) (modifying EU directives 75/129/EEC; 92/56/EEC)), but some EU jurisdictions impose lower thresholds.
  • In China, a "massive workforce reduction" is a RIF of either 20 or more employees or 10% of the workforce, without a specific time frame.
  • In Ireland, a RIF is five or more employees dismissed at workplaces of 20 to 49 employees, 10 or more at workplaces of 50 to 99, 10% at workplaces of 100 to 299, and 30 or more at workplaces of 300 or more, laid off within 30 days.
  • In Italy, a RIF is five or more employees dismissed at workplaces of 15 or more, laid off within 120 days.
  • In Korea, the RIF threshold is 10 employees at workforces of up to 100, 10% at workforces of 100-999 and 100 employees at workforces of 1000 or more, laid off in a month.
  • In Luxembourg, a RIF is seven or more employees dismissed in 30 days or 15 or more employees in 90 days.
  • In the Netherlands, a RIF is 20 or more employees laid off within 3 months in one geographic area, and as of March 2013 this includes terminations by "mutual consent."
  • In Norway, a RIF is a dismissal of 10 or more employees in 30 days.
  • In Peru, a RIF is a dismissal of five or more employees in workforces up to 50, 10% of the employees at workforces of 50-500 and 50 or more employees of workforces more than 500, without a specific time frame.
  • In Portugal, a RIF is two or more employees dismissed at workplaces up to 50 employees, or five or more dismissed at workplaces more than 50, laid off within 3 months.
  • In Slovakia and the United Kingdom, a RIF is 20 or more employees laid off within 90 days.
        

Obviously, where an employer lays off a small enough team (or where an employer spreads out its layoffs over a long enough time) so as not to trigger the local RIF threshold, then under applicable law that layoff amounts to mere serial individual no-cause dismissals—not a regulated RIF.

3. RIF selection mandates. When an employer decides to do a RIF that is less than a complete shut-down, the issue becomes: Who to lay off? Absent a collective bargaining agreement that requires applying a rule like "last in, first out," a rational business will always want to lay off those employees least vital to its business operations. US law, of course, prohibits discriminating in RIF selection based on membership in protected groups, so US employers often run "adverse impact" analyses. But otherwise, US law outside the labor union context leaves employers free to lay off whoever they want to dismiss. Most other countries, too, prohibit discrimination in RIF selection but otherwise impose no hard-and-fast selection rules, leaving employers free to lay off who they want, absent illegal discrimination (and case law in these countries tends not to focus on "adverse impact"). Examples of countries in this category: Austria, Cyprus, Denmark, Portugal, Romania, Slovak Republic, Switzerland. Other countries (for example, Finland and Norway) also impose no statutory RIF selection rules, but their local collective bargaining agreements commonly do. Yet many other countries impose specific regulations, dictating to employers doing RIFs who to lay off first and whose jobs to preserve. For example:

  • In France, an employer making layoff decisions must favor long job tenure, "family situation" (married with children trumps single with no children), old age, disability and "professional qualities." This means a newly hired, young, single, childless, healthy Frenchman is a prime layoff target. But this longstanding French layoff priority rule seems inconsistent with France's own developing discrimination law (French age discrimination law protects the young), and so is in flux.
  • In Germany, an employer doing a layoff must use a "social selection" process that favors long job tenure, old age, support/maintenance obligations (dependents), and disability. Paralleling France, a newly hired, young, single, childless, healthy German gets targeted first. But again, this longstanding policy conflicts with developing German discrimination law (German age discrimination law protects the young) and so is in flux.
  • ¦ In Greece, an employer doing a layoff must account for employees' financial situation and family situation (dependents). Poor Greeks with lots of children enjoy a legal preference over rich, childless Greeks.
  • Japan and Korea require that RIF selection be "objective," "reasonable" and "fair." But case law interprets this in wildly unpredictable ways. One Japanese case held it reasonable for an employer to select for layoff all employees more than 52 years of age. (Mitsui Sekitan Kogyo, 621 Rodo Hanrei 33 (Fukuoka Dist. Ct. 11/25/92.) One Korean case held it unreasonable for an employer shutting down one of several facilities to lay off only staff at the targeted facility—the Korean court required the employer to lay off staff across its various locations and transfer workers from the targeted facility to vacancies elsewhere.
  • Russia lets employers lay off, first, employees who produce less and who have weaker skills. Where productivity and skills are equal, law requires laying off those with fewer dependents, those without wage-earning spouses and the physically able.
  • Sweden requires employers first to lay off the recently hired (last in, first out). Where tenure is equal, Swedish employers must first lay off the young. But this is in flux as it discriminates against the young, now illegal in Sweden.
  • Turkey requires that an employer's RIF selection procedure be "reasonable," and Turkey recognizes "last in, first out" as per se reasonable. Turkish law favors preserving the jobs of employees who are near retirement and pregnant.
  • Ukraine lets employers lay off, first, staff with low productivity and weak qualifications. Where productivity/ qualifications are equal, other factors come into play: Law favors Ukrainian staff with long tenure, sole wage earners in a family and victims of work-related injuries/diseases.
        

4. RIF-specific severance pay mandates. Law in some jurisdiction somewhere might impose extra liquidated (fixed-amount) severance payments on employers doing RIFs. Conversely, law in some other jurisdiction somewhere else might discount RIF-context severance pay by liquidated amounts. But contrary to a common misperception, any such jurisdictions are rare. In the real world, laws tend neither to raise nor discount individual severance pay liability by liquidated amounts just because an employer conducts a RIF. Rather, many jurisdictions impose RIF procedure requirements that force employers to negotiate with worker representatives or government agencies over a RIF; some jurisdictions require negotiating to a so-called "social plan" (RIF plan). These plans, which we discuss below, often alter an employer's severance pay obligations. But the operative laws here are procedural requirements, not mandates modifying RIF-context severance pay obligations by liquidated amounts. If an employer agrees (or feels coerced) to modify the amount of individual severance "indemnities" paid in a RIF, that is a negotiated outcome, not a statutory mandate.

Employers launching overseas RIFs often reduce their severance pay liability by invoking laws that discount severance pay when a layoff is because of "economic necessity" or so-called "economic, technical and organizational" reasons. And so the "economic necessity" doctrine is vital to any discussion of severance pay exposure in a cross-border RIF. But in most legal systems, "economic necessity" is not unique to RIFs— most countries extend "economic necessity" to all dismissals, even "economic" layoffs of just one or two workers. Because most jurisdictions impose a heavy proof burden to establish "economic necessity," employers tend not to bother with this except when launching big RIFs. Even so, conceptually "economic necessity" tends to be a doctrine of individual severance pay not specific to RIFs. We discuss "economic necessity" in addressing individual dismissals in our Global HR Hot Topic of February 2013.

5. Worker representative involvement and "social plans." Many countries prohibit employers from unilaterally deciding to launch RIFs. Laws in these jurisdictions make a RIF a mandatory subject of bargaining and require that any employer pondering the possibility of a RIF first negotiate, bargain, inform or consult with worker representatives—usually about both the threshold RIF decision as well as its effects. In Nicaragua, the United States and other jurisdictions, a mandatory bargaining obligation only exists where an employer already has an existing workplace bargaining relationship with a standing union, but there are actually jurisdictions such as Brazil and India where even a standing union does not necessarily enjoy a right to bargain over a RIF. The most challenging jurisdictions are the ones at the other end of this spectrum, such as China and the European Union, that impose a mandatory employee RIF bargaining/consultation obligation even where no union or employee representative body yet exists in a workplace. In these cases employees might elect ad hoc representatives with the sole mandate of consulting over a possible RIF, or else the employer might consult with the entire staff, as a body. In China (under Labor Law article 25 and Employment Contract Law article 41), an employer must, in effect, inform and consult all employees as a body regarding a proposed RIF, if there is no union. The EU Collective Redundancies Directive (supra) at article 2(1) requires consulting with "workers' representatives." The directive is silent on scenarios where no existing "workers' representatives" bodies are up-and-running in a workplace, but law in the member states usually allows "workers" to elect "representatives" for purposes of consulting over a RIF.

In Europe, an employer that merely considers a RIF must first sit down and inform and consult (in Germany, "co-determine") with staff representatives—the very constituency that the proposed RIF most threatens. Failing to consult, in effect, amounts to an unfair labor practice. The EU Collective Redundancy Directive (at articles 2(1)-(2)) requires EU states to mandate good faith "consulting," in "good time," with staff representatives, "with a view to reaching an agreement" on "ways and means of avoiding," "reducing" and "mitigating" a contemplated RIF. EU states including France, Germany, Luxembourg, Poland and Spain require memorializing employer concessions made during these consultations in a written "social plan" or RIF plan, although other EU states (for example, Ireland, Portugal, Romania, the UK) require consultations but not necessarily written plans. Some countries outside Europe (for example, Taiwan and Venezuela) also in effect require RIF plans in some situations.

  • Semantics: RIF plans go under various other names, depending on the jurisdiction. The phrase "social plan" is used mostly in Europe, although France now calls these "job savings plans" (French acronym "PSE") or "majority collective bargaining agreements" if negotiated with French employee representatives and "unilateral documents" if imposed after impasse and approval by French government labor authorities. Taiwan calls RIF plans "mass redundancy plans."
  • Overseas headquarters: Particularly relevant to US-based multinationals, the EU Collective Redundancies Directive extends the RIF consultation obligation to an overseas headquarters' RIF decision, even if headquarters keeps its own local European management in the dark as to the impending layoffs. This means the European RIF consultation obligation reaches right into a US multinational's boardroom.
  • Analogy to W.A.R.N: Americans sometimes compare overseas RIF consulting obligations including the EU Collective Redundancies Directive to the US W.A.R.N. Act, speaking in terms of foreign "W.A.R.N. local equivalents." But this is a rough, even false, analogy, because W.A.R.N. merely requires RIF notice to affected employees whereas other countries tend to require meaningful consultation/bargaining up to a social plan.
        

Mandated RIF consultations take time—at least 75 days, in Italy—and can be document-intensive. Enforcement can be serious. In a 1997 cause célèbre, Belgium and France both launched criminal proceedings against Renault executives who shut down a plant in Vilvoorde without consulting workers. Courts in Spain are quick to invalidate and unwind RIFs on the ground that the employer cut corners or engaged in what Americans call "surface bargaining" —in 2012, Spanish courts invalidated 75% of challenged RIFs. (Sonia Cortés, "Developments in Collective Redundancies," ABA International Labor & Employment Law Committee Newsletter, April 2013.)

Outside Europe, the same core issue applies: Bargain over a RIF where mandatory and heed bargaining obligations with employee representative bodies at all levels—not only trade unions and works councils, but even workplace health and safety committees (which increasingly argue RIFs affect employee health).

6. Notice to and permission from government agencies. Just as the US W.A.R.N. Act requires notifying "State" agencies about a RIF (29 U.S.C. § 2102(a)(2)), other countries also impose government RIF notification steps. But in contrast to W.A.R.N.'s fairly benign government notice mandate, many foreign jurisdictions empower government labor agencies with an active role, sometimes even with the power to reject a RIF. The EU Collective Redundancies Directive requires at least notifying the "competent public authority in [a] writing" that details six specific topics about the scope of the proposed RIF. (EU Collective Redundancies Directive, supra, at articles 3(1) and 2(3) (b).) Spain goes on to require RIF approval from its "Autonomous Community" labor agencies. Argentina requires approval from its Ministry of Labor. China, Colombia Venezuela and other countries also impose government approvals in the RIF context. Check for, and comply with, these mandates. Expect an initial government RIF notice to open a dialogue in which the local labor agency seeks to temper or avoid job cuts. For example:

  • Germany: The local "employment office" in Germany has power to increase the notice period before layoffs can begin.
  • Nicaragua: Without applying any RIF threshold, Nicaragua requires that employers doing layoffs for "organizational" or "economic" reasons get approval from the government Ministry of Labor. This Ministry has power to reject a RIF.
  • Taiwan: Where a proposed RIF triggers Taiwan's threshold under its Mass Redundancy Act, the employer must apply to Taiwan's labor agency 60 days before layoffs begin. Then, within 10 days, the employer must begin negotiating with employees. The government plays a conciliation role in the employee negotiations, driving employer and employees to agree on a "mass redundancy plan."
  • Turkey: Where a headcount reduction meets Turkey's RIF threshold, the employer must give 30 days' notice to the Turkish "Employment Agency," "Labour Institution" or "Local Directorate," as well as to the union, which begins the so-called "administrative notification period."
  • Venezuela: Venezuela requires an employer contemplating a RIF to submit a petition to the government labor inspectorate and then to undergo a government-supervised conciliation board process that involves employee representatives.
        

In addition to government RIF approvals, some countries impose monetary penalties owed to the government when an employer does a RIF, although these penalties are rare. One example is the "financial contribution" an employer in Spain owes to the social security system if in a RIF it lays off anyone more than age 50. (Spain Royal Decree 1487/2012 (29 Oct. 2012).)

7. RIFs in the M&A context. Where an overseas RIF anticipates or results from a divestiture or acquisition, or where an employer lays off staff recently taken on through a merger or acquisition, the M&A context itself can impose special legal rules on a RIF. The European Union makes M&A-driven RIFs virtually impossible because it flatly prohibits dismissals motivated by a merger, acquisition or divestiture by asset sale or outsourcing. (EU Transfer of Undertakings Directive, 2001/23/EC, at article 4(1).) Outside Europe, though, few if any jurisdictions impose separate regulations on M&A-context RIFs—but parties to M&A deals often do. Many M&A transaction (purchase) agreements impose contractual terms curtailing RIFs. While some M&A agreements require the seller do a pre-closing RIF or deliver the business free of employees, other M&A agreements contractually constrain post-merger RIFs by the buyer: As a farewell gift to the workforce, a seller sometimes negotiates post-merger layoff restrictions into the M&A agreement that restrict the buyer from conducting RIFs of transferred staff, sometimes for years. And change-in-control clauses can get triggered when a buyer lays off executives after an M&A deal closes. Post-merger RIFs, therefore, need to account for RIF and change-in-control provisions in recent stock or asset purchase agreements.

8. RIFs in the insolvency/bankruptcy and plant/facility shut-down contexts. Where economic pressures push an employer into insolvency or bankruptcy, local bankruptcy/ insolvency law may impose special RIF rules. (See generally Donald C. Dowling, Jr., "The Intersection Between U.S. Bankruptcy and Employment Law," 10 ABA The Labor Lawyer 57 (1994).) Separately, where an employer decides to shut down an entire facility, different special rules can apply. Check for these special rules when doing an overseas RIF in either the bankruptcy or facility shut-down context.

C. Crafting a local country RIF plan or "field guide"

After doing a jurisdiction-by-jurisdiction inventory of these eight types of laws that reach a particular overseas RIF, a best practice is to craft a local RIF "field guide" or "step plan" for executing the RIF in each affected country. The field guides or step plans should align across countries, in a consistent format, and should align with the multinational's cross-border RIF project plan. Each local jurisdiction RIF "field guide" might address these topics:

  • Internal directory: Compile a directory of the company's own on-the-ground local human resources staff and in-house local labor liaisons.
  • Employee representatives: Put together a list of local employee representative groups that might have a voice in a layoff (unions, works councils, ombudsmen, health and safety committees), with local representative contact information.
  • Local laws: Summarize the local laws that reach RIFs in the jurisdiction—the local laws on the eight topics discussed above.
  • Local agreements: Inventory applicable local individual and collective employment agreements and policies, including industry-wide "sectoral" collective agreements, company HR policies addressing severance and past M&A agreements with post-closing RIF provisions. List precisely what these agreements require as to a RIF, and individual terminations.
  • Selection criteria: Decide on what RIF selection rules to apply, subject of course to local legal and collective bargaining mandates.
  • Timetables: Correlate the local timetables and required processes for conducting a RIF: Who must be consulted? Whose approval is required? When and how early? A global RIF may launch on a single start date, but inevitably local issues will cause timing to differ radically by jurisdiction.
  • Local consultation strategy: Devise a local consultation strategy. Decide how to confer with employees, representatives and government agencies. Inventory the worker representative bodies that must be consulted. Comply with consultation/ bargaining obligations with each.
  • Public relations and employee communications strategy: Devise a communications strategy for how headquarters will communicate with local human resources, and for how the employer will communicate with local employee representatives and workforces, as well as communicating with the business media and for dealing with social media, bloggers and the online "commentariat." In making these communications, never announce a downsizing as a fait acompli before completing legally required consultations/ negotiations with employee representatives.
  • Quantify costs: Quantify severance pay, separation pay/ benefits and outplacement packages to be offered locally. Determine whether the RIF context or demonstrable economic necessity allows for employer credit under local law.
  • Alignment: Synchronize each country RIF "field guide" with the global RIF project plan.
        

In the reduction-in-force/"collective redundancy" context, jettison any US-honed approach and craft a comprehensive project plan that accounts for overseas local laws and for local labor relations realities.


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