The festive season and a brand new year are fast approaching, and it’s a time when thoughts turn to joy, peace, goodwill to all, and careful considerations of how quickly we can be rid of certain individuals in our workforce who made the outgoing year so insufferable.
Which brings us neatly to the discussion of Elon Musk and Twitter.
We can imagine that by now you’ve heard plenty about the controversial £38 billion acquisition of Twitter by Elon Musk in late October 2022. Controversial in part that Musk made headlines by almost immediately making 50% of the workforce redundant, and firing several top executives. Not only was this move shocking, the speed with which it was executed was baffling, leaving many questioning as to whether it was even legal.
In the wake of the Twitter mass firings/redundancies, we have been asked by clients; “If Elon Musk can do it, why can’t I?”
So in our final blog of 2022, we’ll be examining a few of Musk’s actions, the lessons to be learned, and where UK Employment Law stands on the matter, whether you are a billionaire CEO with hundreds of Employees, or a small business owner with a desire to relieve yourself of just one.
What Is The Law On Redundancies In The UK?
There is a raft of legislation that protects Employees in the UK from day 1 of their Employment. When it comes to redundancies these are:
- Where an organisation has 1 to 19 employees being made redundant, there should be a ‘reasonable’ consultation period with each individual before any decision is made;
- Collective consultation must begin 30 days before the first dismissal where 2 to 99 Employees are being dismissed as redundant within a period of 90 days; and
- Collective consultation must begin 45 days before the first dismissal where 100+ Employees are being dismissed as redundant within a period of 90 days.
An organisation would also need to present a strong business case to support their reasons for considering redundancy. Any redundancy selection processes would need to be conducted in a fair and non-discriminatory manner.
Were Elon Musk’s Actions Legal?
A large global corporation such as Twitter may be subject to different laws on fair dismissal depending on the country in which its Employees reside and where the Employer is based (this is known as jurisdiction).
In the UK, a dismissal to the tune of the Twitter incident would generally be unlawful, opening Employers up to the risk of multiple Tribunal claims.
While most of Twitter’s Employees are based in California, there are UK Employees based in Birmingham, London and Manchester. As it stands, Twitter has failed to comply with its duty to collectively consult with its Employees in the UK. This move is considered to be procedurally unfair, which could give rise to claims of unfair dismissal from its UK employees.
Was He, And Is it Wrong, To Make Redundancies Quickly?
In Twitter’s case, it’s not necessarily that the redundancies were unnecessary, or that costs didn’t need to be reduced to keep the company afloat – it’s recognised that Twitter has been a money-losing business for some time. It was the manner with which these ‘essential’ cuts were made, the speed with which they were brought into effect through the lack of lawful process, and the insensitive way in which Employees were informed of their fate, that will give rise to legal problems for the organisation.
As Employers and through our understanding of the law, we know that doing something for the right reasons doesn’t necessarily absolve us of responsibility if we carry it out in the wrong way. There are countless cases of Employees, being dismissed due to gross misconduct, still going on to win damages from their former Employers, simply because a fair dismissal process was not accurately followed by the Employer.
As mentioned earlier, it is also necessary for organisations to present a compelling case for pursuing redundancies. Twitter still needs to demonstrate why the sudden dismissals were necessary for the survival of the business. While Musk’s financial reasons may be considered ‘reasonable’, the vagueness of the reasons behind choosing not to consult with Employees in advance may still land Musk in hot water with regards to unfair dismissal claims.
Buying Favour?
Both in the UK and US, if an Employer dismisses someone without notice (or insufficient notice), but continues their pay and benefits for what would amount to their final date of Employment had proper notice been given, then the matter is essentially taken care of, as the Employee is likely to be left with no case to argue. This is reportedly what Twitter has done for some of its Employees, although it is not confirmed if this is the case for all of them.
Often called Severance Pay, this type of package typically comprises payment in lieu of notice, accrued holiday pay, pension payments, and any other additional bonuses due. Some organisations who wish to quickly ‘settle’ a situation, rather than to follow the steps required by redundancy consultation, will take this approach as a way of buying out an Employee’s desire to pursue unfair dismissal or other related Employment claims. However, for a settlement to stand up legally, it needs to be formally offered, via a written agreement such as a Settlement Agreement or a COT3.
However, not everyone can be bought – many may not be willing to accept such packages and would rather pursue their rights on principle. If a severance package is rejected, the Employer should then follow the letter of the law and initiate a consultation process.
Practicalities
Whilst we would never expect Employers to intentionally break the law, we do understand the temptation to want to remove a challenging Employee, or lessen the financial burden as quickly as possible, especially if the preservation of the business hangs on it.
Therefore let’s put aside the legalities for a moment, and look at the practicalities of making a move like Musk.
Operations
An organisation’s Employees are all important cogs that keep the wheels turning and the lights on. One of the key fallouts to Musk’s ‘quick’ redundancies and intensive management style that wiped out swathes of Twitter staff, was the negative effects to some of the key engineering functions behind Twitter. Concerns were raised over the site’s ability to stay up and running, after many of the technical experts and operators were let go. Indeed, there have been many incidents of Twitter ‘breaking’ since the redundancies took place. Musk has now gone so far as to attempt to re-hire some of the technical staff that he let go by mistake.
While we do enjoy the very latest in high tech systems, we have not yet reached a stage where they can perform without the designers, builders and operators behind them. The detrimental effects to an organisation’s ability to function without key people should never be underestimated.
Working Relationships
Following the redundancies and other firings, Musk informed remaining Employees that they would need to commit to a ‘hardcore’ culture, and would be expected to work “long hours at high intensity” (even on its own this is potentially discriminatory). Either that, or resign. They were given less than 24 hours to decide (almost sure to be found to be unreasonable by a Tribunal).
Remaining Twitter Employees reported feeling desperately unhappy with the new work culture and environment. Employees in this position are unlikely to perform at peak productivity, even if trying their best to, while others may even be completely disinclined to work to their normal standard, as a form of silent protest.
While a business may have urgent needs and high demands, its reliance on people dictates that much should be invested into working relationships, and fair treatment for all. Humans cannot and should not be expected to work like machines.
Trust and Reputation
Musk informed his Twitter Employees of the possibility of redundancies via a company-wide email, with a date of when job losses would be confirmed. However, the day before this planned date, several Employees reported already being locked out of their work emails without formal notice as to whether they had lost their jobs or not.
Announcing redundancies through a company-wide email, without plans for formal consultation, the support of face-to-face meetings (in-person or virtually), or commitment to confidentiality, will sever much, if not all trust in an organisation, and can leave Employers open to the risk of Tribunal claims.
Additionally, in the case of Twitter, many large organisations who advertised with the platform pulled back, waiting to see what was going to happen next, having lost trust in Musk, leading to a massive loss in revenue.
Furthermore, many high profile users who were very lucrative to Twitter, have since chosen to leave the platform, citing anger over Musk’s actions, or concerns over where he may now take the platform.
Twitter now has a situation where people are leaving through lack of trust, people who remain are reporting various levels of discomfort, and others are announcing that they will never join the platform on the basis of all they have seen.
In an age of social media and instant messaging, where news of your actions can make it home before you do, it is even more important to carefully consider all of your actions, to ensure that you don’t do irreparable damage to your organisation’s good standing.
Conclusion
So to answer the question; ‘if Elon Musk can do it, why can’t I?’ As you’ve probably seen, the fallout from his actions has been immense. He may have bypassed a few legal pitfalls by offering severance packages to Employees, but not everyone has been placated by these, and several Tribunal claims and class action lawsuits have been filed against him. And attractive severance packages are unlikely to make up for the distress inflicted on Twitter’s former and current Employees, the loss of trust within the organisation and amongst clients, advertisers and Twitter users, and the damage to the reputations of both Musk and Twitter.
So in conclusion, you absolutely can do what Elon Musk did. But we most certainly wouldn’t recommend it!