What you need to remember when downsizing is that those who are to be made redundant have been selected objectively and that it is based on good case management. To ensure this, it’s important to keep these points in mind.
Analyses and mapping in the initial phase
An important part of a downsizing is the mapping that is done, by analysing the company’s needs and considering other cost-reducing measures. It is important to be clear about why a downsizing is necessary and what effect it will have. Downsizing requires a lot of time and resources, so it’s important to weigh up the cost of carrying out the downsizing against its impact. If it is the case that downsizing is a necessary measure, it is important to anchor this with both the board and the employee representatives. It is also important to involve the employee representatives in the analyses to make the process as orderly as possible.
Such transparency during the process makes it easier for employees to understand the decisions on which the downsizing is based. This is made easier if employees can be involved in designing the selection criteria, but this is not a requirement.
The selection process
In the selection process, there are two things the employer must consider. The selection circle and the selection criteria.
Selection circle
The scope of selection is which employees are to be considered for dismissal.
The main rule is that the entire organisation is part of the selection group. This means that all redundant employees must compete for the continued positions in the organisation.
This can lead to many challenges, so there are exceptions that allow you to limit the selection group. In practice, this can be done by, for example, narrowing the selection circle to a location, a business area or a division in the organisation. In order to do this, there must be a legitimate reason.
Selection criteria
The selection criteria are important to ensure that the choice of those dismissed is objective.
It is important that the criteria are applied objectively. As an extension of this, it is important that the case processing is satisfactory so that the employer builds on quality-assured facts to avoid emphasising the wrong facts.
Common selection criteria include seniority, expertise and social considerations.
It is important that the criteria are well justified and discussed with the employees’ representatives. The more vague the criteria, the greater the requirement to document good judgements.
Good application of the criteria
It is also important to clearly specify the requirements for the positions that are being continued. If the positions to be continued are to be changed, it is important that the requirements for the position are specified. The requirements for the new positions have a major impact on the assessments made in the selection process, for example by focusing on a specific type of professional experience in the new or continued positions.
This ensures that it is relevant expertise that is emphasised when assessing competence.
Sharpening the requirements ensures that employees and any other bodies ensure that the company emphasises relevant expertise throughout the downsizing process.
The requirement for other suitable work
After the employer has made the preliminary selection based on the established selection criteria, they are obliged to offer other suitable work in the organisation if possible.
In the requirement for other suitable work, the Working Environment Act states that if the dismissal is due to downsizing or rationalisation measures, it is not objectively justified if the employer has other suitable work in the company to offer the employee.
It is also the case that the employer must offer the employee work that is closest to what the employer originally had in terms of salary and duties in order for the redeployment obligation to be considered fulfilled. In a group, this obligation applies to the entire group.
If there is no available work to offer, the employer will have to recognise that there is no other suitable work.
Dismissal
Once the above has been carried out, and the employer has objectively selected those who they believe are at risk of being dismissed, the employer must invite them to a discussion meeting pursuant to section 15-1 of the Working Environment Act. It is only after the employer has reviewed the selection, considered the employee’s submissions and carried out the statutory balancing of interests between the employer’s need for the downsizing and the employee’s disadvantages of possibly receiving a dismissal that a decision on dismissal can be made.
We have extensive experience of various downsizing processes and know what employees, their union representatives, lawyers and the courts emphasise when assessing whether a dismissal is justified and can therefore provide you with valuable advice throughout the process.
