Reorganization and dismissal due to labor shortage
Leading a company through a major change
Leading a company through change is generally a demanding project, especially when it takes the form of a reorganization resulting in staff redundancies.
The employer's ability to handle labor law, leadership, negotiation, communication skills, business acumen and tactics are put to the test. But there is a recipe for how to do it successfully.
We divide the project into before, during and after.
What is labor shortage?
Termination due to lack of work can be said to be anything that is not personal reasons. For example, closure, outsourcing, cost-cutting programs, etc. Everything that stems from the organization. Terminating a salesperson with reference to poor sales is an example of personal reasons and not lack of work. The fact that the salesperson is not selling well is linked to the salesperson personally and not the organization, although the result may lead to less work.
The three phases
Before the reorganization
This is the most important phase, this is where the employer lays the foundation for the reorganization and who may be dismissed as a result of the change. This is also where the employer draws up the documents that will form the basis for the reorganization and which will then be shown to the union. Namely the reorganization plan, the risk analysis, the priority list and the relocation investigation, the last two documents are drawn up in case the reorganization leads to dismissals.
Reorganization plan
The work begins with what I usually call a reorganization plan. It doesn't have to be complicated.
The plan should state:
1. What the organization looks like before the reorganization and
2. What the organization looks like after the reorganization
The plan will be sent to the union together with the notice of negotiation. If it can illustrated with an organizational chart it can be an advantage.
Risk analysis
In the event of reorganizations, the Swedish Work Environment Authority's regulation on systematic work environment work requires that the employer investigates risks in the event of changes in the business. For example, if the company's financial function is to be outsourced, the risk to the work environment for remaining staff is small, since an external company will handle the finances. Remaining staff will not have more to do.
Order of precedence list
LAS states that the employer determines who may be dismissed through a last-in, first-out order. An individual order of precedence is established for each operating unit. An operating unit is a geographically separate unit within the employer's operations. Workplaces in housing do not only mean that this constitutes a separate operating unit
Contract tour list
For employers who are bound by collective agreements, the union and employer can agree on the timetable and deviate from the legal rules.
Exception
All employers may exempt three employees from the priority list who are of particular importance to the continued operation. It is the employer who makes that assessment, but like everything else in this world, it is a good thing if the employer has a reasonably reasonable basis for their assessment.
Example of what a sequential list might look like.
|
Name |
Social security number |
Position |
Period of employment |
|---|---|---|---|
|
Ove Andersson |
123456-1234 |
Technician |
7 years and 3 months |
|
Anna Anderson |
123456-1234 |
Technical salesperson |
6 years and 10 months |
|
Anders Persson |
123456-1234 |
Economist |
6 years and 1 month |
|
Peter Nilsson |
123456-1234 |
Economist |
5 years |
|
Lisa Karlsson |
123456-1234 |
Marketer |
4 years 9 months |
|
Per Haraldsson |
123456-1234 |
Receptionist |
4 years and 5 months |
|
Ingvar Larsson |
123456-1234 |
Seller |
4 years and 1 month |
|
Anna Bengtsson |
123456-1234 |
Administrator |
3 years and 5 months |
Notify the employment agency
If there is a risk that five or more employees may be dismissed, the employer is required to notify the employment agency.
- If a maximum of 25 people are affected, you must give at least two months' notice before the first person affected ends their employment.
If 26 - 100 people are affected, you must give at least four months' notice before the first person affected ends their employment.
- If more than 100 people are affected, you must give at least six months' notice before the first person affected ends their employment.
For fixed-term employees:
- If employment is terminated prematurely, you need to give notice at least six weeks before the first person affected ends their employment.
Relocation investigation
Section 7 of the Employment Protection Act requires that dismissal be based on objective reasons. A dismissal is not based on objective reasons if it is reasonable to require the employer to arrange for the employee to work elsewhere. The employer therefore carries out a relocation investigation. The investigation must answer two questions.
- Whether there are any job vacancies and, if so, test the employee's qualifications against the vacant position.
- As well as whether there are vacant positions that the employee, assuming their qualifications and length of employment, can get, hence "last in, first out". In this case, a position held by someone else.
Example:
Look at the order of precedence list above. We say that the company is to close down its finance department. Anders and Peter's jobs will disappear. Then their qualifications will be tested against Ove and Anna's jobs as Technician and Technical Salesperson. If it turns out that they have the qualifications for those positions, they will be offered those positions and if they do not, there are objective reasons for dismissal.
Obtain union membership for those who may be affected
The employer is obliged to negotiate reorganizations and collective redundancies with one or more trade unions. On the one hand, the employer is obliged to negotiate with the trade union to which the employer is bound by its collective agreement, which it has through a suspended agreement or through its possible membership in an employer organization. Sometimes, however, the staff is a member of a trade union to which the employer is not bound by a collective agreement. In such a case, the employer is also obliged to negotiate with that trade union in accordance with Section 13, paragraph 1 of the Act on Codetermination in Working Life if the reorganization may affect them specifically.
During the reorganization
In phase two, the negotiations begin by the employer calling the unions, carrying out and concluding the negotiations, fulfilling any agreements arising from these negotiations and carrying out any dismissals, and finally the new organization comes into effect. If the work during the first phase has been done well, this second phase will also go well. Sometimes the negotiations can go more or less smoothly, it depends a lot on how experienced the employer's negotiator is. It is not uncommon for one party, for example, to delay the negotiations or claim that things are in some other way than they are, for example, according to current law.
Send a summons to a hearing
There are several reasons why employers are required to issue a physical notice stating that the union has been called to a negotiation. On the one hand, it is a culture in the labor market that unions and employers use notices to indicate that there is a negotiation. But also from an evidentiary point of view, it is important that the employer uses a physical notice.
The notice must state the time and place at which the negotiation is to take place. It must also state what the negotiation is to be about, in this case it is to be about reorganization with possible dismissal due to a shortage of work. The reason why we write "possibly" is precisely because of the co-determination in working life that the union has the right to participate in. This does not mean that the union can contradict itself or in any way put obstacles in the way of implementing a reorganization. It is the employer who decides what the organization should look like. However, the union has the right to be involved and try to influence decisions before a decision is made.
Conduct and conclude the negotiation
During the negotiation, which either takes place physically, usually at the employer's premises, or digitally, the parties usually follow an agenda. The first is to appoint one party to draw up minutes and the other to adjust the minutes.
It is always an advantage to have the minutes drawn up in this way, so you can have them drawn up the way you want them. It is important that the minutes state that the negotiation has been concluded and that the employer has fulfilled its obligation to negotiate. If either party has a different opinion, this can be added.
Then begins The employer presents their case, that is, what they want to do and in this way goes through the reorganization plan and if there is redundancy, that is, if someone needs to quit, the employer describes why these particular people need to be dismissed due to a lack of work.
The negotiation must be recorded. Either it is agreed that the union should draw up the negotiation minutes or that the employer should draw up the negotiation minutes. It is always an advantage to have the minutes drawn up in this way, so you can have them drawn up in the way you want them. It is important that the minutes show that the negotiation has been concluded and that the employer has fulfilled its obligation to negotiate.
Apply
Implement the new organization and terminate those affected, or fulfill agreements from the negotiation
After the reorganization
Evaluate the project, decide how often and how the employer will continue to monitor the effectiveness of the new organization. Was the aim to save costs? How much did you save after one quarter? Was the aim to increase profits? Did profits increase after six months? Did it go as desired? What could have gone better and what went well? Don't forget to draw up reports, employer certificates, pay final salaries and otherwise offboard those who have been dismissed.
Good luck with your reorganization!
Christoffer Lewinowitz
Employer lawyer
With us, the first call is free!
We believe it should be easy as an employer and manager to do the right thing. The distance to ask for help must be short, which is why an initial consultation is always free with us. We will hear from you within 24 hours.
Security agreement for employers...
The subscription includes:
A good complement to the company's legal expenses insurance. Labor disputes are usually an exception in business insurance. For terms and conditions, application and price list, click here.