Corona and reorganization of the Company
BLOG reorganization of the company
Do I need to reorganize is a question that many organizations are now asking themselves. Taking measures that will result in the loss of jobs, you as an employer must ultimately go to the Subdistrict Court, but in the event of a reorganization for economic reasons, the employer must go to the UWV.
In this blog I will briefly discuss the various “business economic grounds” that exist and briefly explain the consequences of choice made. However, before the employer gets around to dismiss employees for business economic reasons, according to the rules of the UWV, the deployment of ’employees’ in the flexible shell, such as temporary workers, on-call workers and self-employed persons, must first be terminated.
What kind of “reason” do you choose as an employer in a reorganization? The UWV will only grant permission for dismissal if the employer can demonstrate that there are business economic circumstances. The Implementation Rules of UWV distinguish six different business-economic reasons on which the employer can base the necessity for the loss of employment. A combination of reasons is possible. Which reason the employer chooses determines to a large extent what information must be provided to the UWV. This information also reaches the employees for whom permission for dismissal is requested. The choice of the dismissal reason determines the strategy of the reorganization, as it were. It is therefore important to think critically in advance on what “reason” the reorganization request at the UWV is based on.
The most important business reasons and the assessment framework of the UWV are:
Poor financial situation organization
If you opt for ‘poor financial situation’, you must demonstrate, on the basis of the financial key data from the past three financial years, that there have been financial problems for a longer period of time. In addition, you must demonstrate that a reorganization is the appropriate solution on the basis of forecasts for changed and unchanged policy. Before choosing this reason, it is therefore important (a) to determine whether you want to -may- include the requested financial key data in the procedure; (b) whether the key financial data also sufficiently demonstrate that the financial situation is poor or deteriorating; and (c) whether the projections can support the recovery of financial health in proportion to the proportionality of the labor cost restriction. In doing so, not only the core financial data of the company must be submitted, but if the company is part of a group, also the group data. This obligation is sometimes a reason for employers not to start the UWV procedure.
Organizational and / or technological changes
For this reason, the organizational and / or technological changes, efficient operational management is central. The employer must demonstrate that it is necessary in the context of efficient business operations to take measures that result in the loss of employment. This can be based on a bad or worsening financial situation, but it is not necessary. If you outsource activities for example, there will also be organizational changes. This reason also includes the loss of jobs by -for example- automating work.
You can choose this reason if you think that a reorientation of the market is required in order to be able to respond faster and easier to new developments. “The world with Corona” now also lends itself to and is therefore frequently used in practice. It will be clear that if this reason is used, little financial information needs to be submitted to the UWV. This can be decisive for an employer to choose this basis.
Structural work reduction
If the employer wants to reorganize because there is in fact structurally excessive staffing, the basis is “work reduction”. The employer must then demonstrate that there has been a structural change in the supply of work that it is not justified to keep the workforce in the context of efficient business operations. The employer will then have to demonstrate that he has made efforts to increase the supply of work, but that there are no other options than to reduce the number of employees now that the work is structurally less.
If the employer is going to definitively end his activities, he (she) can opt for the basis “business closure”. The reason for this can be business in nature (bad financial situation or work reduction) or more personal in nature (health, age, lack of follow-up, etc.). On the basis of information about the purpose of, for example, the business premises, the assets and the customer base, the employer must demonstrate that the activities of the company are actually and definitively terminated. In addition, the employer must explain whether continuation of the company, for example due to a transfer of undertaking, is not possible. It will be clear that if the activities are nevertheless continued in a “substantially” modified form, there is often no question of a company closure but a special form of organizational change.
If you as an employer are considering a reorganization, careful thought should be given to which reason or combination of reasons you choose for this. It is not only important that the reason is in line with your considerations for reorganizing, but also the obligation to submit the necessary information in the UWV procedure to make this reason plausible can play a role in a final choice.
Works council, trade unions
Finally, it will be clear that in a reorganization the works council or the workers representation will play an important role. Often also trade unions, especially if the Collective Redundancy Reporting Act (WMCO) applies, or if this follows from an applicable Collective Labor Agreement. However, this topic will be covered in a next separate blog.