BT job cuts: the legal issues
BT has announced its intention to cut approximately 9000 UK jobs, representing approximately 10% of its UK workforce, over a period of three years. BT also plans to relocate from its Central London headquarters into smaller premises and to employ 6,000 new engineers, cybersecurity experts and customer service staff to support the rollout of new technology.
The changes are being introduced following a damaging scandal and ongoing financial difficulty. Although the restructuring is expected to cost £800 million, it is hoped that it will save £1.5 billion in costs in three years. The money saved is to be invested in new technologies, helping BT to adapt and compete in a rapidly changing digital world.
If the cuts go ahead BT will face a potentially tricky collective redundancy exercise which will involve negotiation with Unions representing the BT UK work force. BT must ensure it follows the required legal procedure when making the cuts as mistakes could lead to tribunal claims from its workforce and increased costs being incurred.
When an employer proposes to dismiss 20 or more employees at one establishment over a period of 90 days or less, a collective redundancy situation is triggered. The employer has to begin a consultation period before any final decisions have been made. Deciding exactly when to start the process may be difficult. BT will have to balance its desire to have a productive workforce for as long as possible against its employees' rights to know exactly what BT plans for them as soon as possible so that the employees can engage meaningfully in the consultation process before any final decisions are made. Where there are 100 or more employees at one establishment, the consultation period must be initiated at least 45 days before any dismissals.
Following the European Court of Justice's decision in the Woolworths case in 2015, one of the first issues BT will face is deciding whether collective consultation is required at all in respect of some of its establishments. Sites with less than 20 employees may potentially not require BT to consult collectively. BT may, however, take the view, possibly after pressure from Unions, that all affected employees should be collectively consulted, even in the absence of any strict legal obligation.
It then has to decide who the collective consultation should be with. If there is a recognised Union for all or part of the workforce, the consultation should be with trade union representatives. If there is no recognised trade union, BT can consult with either employee representatives elected specifically for the consultation or, if there is one, an existing standing body of appointed or elected representatives.
BT must also factor in a requirement to consult with the individual employees about their potential redundancy, even if an agreement has been reached with the relevant representatives as to parts of the process, for example, the relevant selection criteria to be used.
Failure to undertake an effective collective consultation will expose BT to potential unfair dismissal claims, as well as claims for failure to inform and consult, resulting in the risk of liability to pay a 'protective award', representing up to 90 days' gross pay per affected employee.
With the high risks and procedural burdens, it is no surprise that the BT share price fell by 10 % after the announcement and remains volatile.