Although the global recession predicted in 2023 did not materialise, most economies we report on had slower than average growth last year, leading to dismissals, particularly in tech, finance and manufacturing. Governments aren’t typically changing laws on dismissals significantly or at all in response.
The law is employee friendly in most Asia-Pacific countries, including China, Hong Kong, Indonesia, Japan and Vietnam, with limited grounds for dismissals. Redundancies are normally achieved through agreement and with a severance payment.
In contrast, Singapore is more employer friendly than some of its regional counterparts. Dismissals require the longer of contractual or minimum statutory notice, although payments in lieu of notice are possible. Employers are strongly advised, although not legally required, to provide retrenchment benefits for dismissed employees.
In Europe, several countries are making mass redundancies more difficult and time-consuming. In 2022 the Italian government introduced a new preliminary information and consultation procedure to discourage offshoring to lower cost jurisdictions, although the rules apply to all relevant dismissals. Its impact became evident in 2023. Employers need to manage employment relationships and associated costs over long periods before implementing redundancies.
The procedure applies if a company with 250+ employees plans to make at least 50 employees redundant because it’s closing a plant, branch or local office in Italy and permanently stopping the activity. It involves notifying the Ministry of Labour, the Ministry for Business and Made in Italy, the competent Region, ANPAL (the National Agency for Active Labor Policies) and trade unions or works councils at least 180 days before the start of the ordinary collective dismissal procedure. If the preliminary procedure applies it can take up to 255 days to dismiss employees and an employer can only start ordinary collective dismissal processes once it has followed the procedure.
The employer must present a plan to safeguard employment levels and/or reduce the social impacts of dismissals within 60 days of notification. If it doesn’t submit a plan or the plan doesn’t meet the legal requirements, the employer will incur increased costs for the ordinary redundancy procedure.
The employer must discuss the plan with the works council/ trade unions for up to 120 days. If agreement can’t be reached through consultation, the employer can start ordinary collective dismissal processes but will incur increased costs. Dismissals in breach of the preliminary procedure are invalid. Employers may have to repay any state aid received in the previous 10 years, potentially including COVID-related support, if they dismiss more than 40 percent of their workforce.
Spain introduced similar, although less onerous, requirements in July 2023. These apply if an employer plans to close a workplace and stop its activities, with the loss of 50 or more jobs. The employer must notify the Ministry for Labour and Social Economy and the relevant labour authority at least six months before starting an employee redundancy consultation (or as soon as possible if there are reasons why the full notice period cannot be given). Having to give so much notice before a closure causes practical problems for employers.
Even in the United States, typically a flexible labour market, some states have strengthened their WARN requirements. Under federal WARN requirements, employers with 100 or more full-time employees normally have to give 60 days’ written notice of dismissals if certain thresholds are met. One example is a workplace closure involving 50 or more employees. Shorter notice periods apply in some cases.
Many states add to federal WARN requirements with Mini-WARN Acts. Several states expanded their Mini-WARN requirements in 2023. In New York, notices must now be sent to a wider range of governmental entities. These include the New York Commissioner of Labor, New York City’s Mayor’s Office and the locality that provides police, firefighting and emergency medical services to the affected employment location. Notices to employees must include more detailed information about pending dismissals, such as severance packages or financial incentives for employees who stay at work until the relevant end date. In New York and New Jersey, notice periods under the relevant Mini-WARN Acts have risen from 60 to 90 days.
In New Jersey, the threshold for WARN requirements includes dismissals involving 50 employees across the state. That’s regardless of the proportion of the workforce being dismissed. Significantly, when the New Jersey Mini-WARN Act is triggered, all affected employees must receive severance of a week’s pay for each year of employment unless they’re entitled to more under a collective bargaining agreement or employer severance plan. This is the first Mini-WARN to make severance compulsory.
Effective June 21, 2023, the New York Mini-WARN Act became increasingly complex