Labor shortage and skills gap
Given the shortage of skilled workers, the transformation into a smart factory or toward electromobility focuses less on layoffs and far more on training and qualifying employees for new requirement profiles. Many employees are open to the use of innovative technology: According to the “The State of the Connected Frontline Manufacturing Worker 2021” report, even the 55+ age group states that attractive digital equipment for manufacturing, maintenance, and health and safety workplaces would be a reason to change jobs. Nevertheless, there is a lot to do: Only 22 percent of the German employees surveyed were in favor of greater use of robotics, for example. Similarly, only 14 percent would prefer more wearables such as data glasses. Further education is not always an option such as in cases where the business model undergoes a fundamental transformation. Some employees cannot or will not obtain further qualifications for the smart factory or the smartphone on four wheels, or they simply have no interest in “New Work”. Under some circumstances, organizational structures may have to be streamlined because of the transformation, staff reductions can be unavoidable.
Incentive to leave the company despite close relationship
Voluntary severance programs are one means of avoiding layoffs for corporate groups and, in particular, for family businesses, which traditionally value high employee loyalty. This approach has the following advantages: Given that this eliminates the need for social selection pursuant to Section 1 para. 1 of the German Employment Protection Act (KSchG), this can prevent the loss of experts while also improving the age structure. For example, by making the programs particularly appealing to employees from whom the company wishes to part. It also eliminates the risk of lengthy wrongful dismissal lawsuits, which simplifies planning and saves both time and money.
Include turbo or sprinter bonuses
Severance payments are generally scaled according to the length of employment and employers can take into account the special situation of employees such as those with severe disabilities, single mothers or fathers who provide child support, for example. Regardless of the specific case, HR managers need to put a time limit on severance programs. In addition, the model should include a turbo or sprinter bonus to provide an incentive for employees to participate in the first place or within a certain time period.
Caution with the selection
Voluntary severance programs have their own pitfalls. Selecting the participants is one example: In order to target the “right” employees, companies often limit the severance programs to specific job profiles, business units, or employee groups, or specify top performers who are not eligible to participate. In view of this, implementing the principle of double voluntariness is advisable to ensure that neither the employer nor the employee is obliged to conclude a severance agreement. It is important to know that the principle of equal treatment and prohibition of discrimination also applies when selecting the participants. As such, HR managers need to ensure that they can objectively justify their selection.
Thresholds for mass dismissal exceeded?
Depending on the extent of the program, companies may cross the mass dismissal thresholds. This means that companies need to follow the procedure for consulting with the works council and notifying the relevant employment agency. The time of termination in the severance agreement may create another pitfall if it is several times longer than the notice period. In this case, the severance may then be interpreted as a fixed-term continuation of the employment relationship.
In principle, the works council does not have a fundamental right of co-determination with regard to voluntary severance programs as per Section 87 of the Works Constitution Act (BetrVG). However, it pays to be careful: The initial measures that bring about the program are frequently classified as an alteration pursuant to Section 111 of the Works Constitution Act (BetrVG). Examples here include relocating a site and implementing agile working or digital production methods. As a consequence, forward planning with a well-considered timeline and action plan is essential for the entire transformation project to prevent any risks. Before the voluntary severance program is launched, HR managers also need to check whether the change represents an alteration in a legal sense. If this is the case, the voluntary severance program has to be included in the negotiations with the works council on a reconciliation of interests and social plan. It is important to know that severance payments in voluntary programs can be regarded as guidelines for severance payments in social plans.
Communication as a success factor
Communication makes a major contribution to the success of a voluntary severance program. It requires a good understanding of the staff’s needs together with the ability to provide the employees with timely and comprehensive information via various communication channels. Potential addressees must be able to see that the program offers them means of avoiding the layoffs that would otherwise occur. Agreeing on the selection criteria with the works council makes sense in certain circumstances.
Out of a job and into a job?
The voluntary programs are often linked to individual support programs such as coaching or orientation advice and outplacement counselors are involved in the process. In view of the digital and green transformation and the simultaneous shortage of skilled employees, new approaches are currently being discussed to make the transition of personnel between companies as seamless as possible. This is because diverse employment opportunities often arise at other companies. Binding job-to-job agreements are one possibility, for example. Contacting the local employment agency at an early stage in the process can prove helpful in order to identify placement opportunities at companies that require personnel and to obtain subsidization for any necessary qualifications. The Baden-Württemberg Qualification Networks or qualification and employment platforms such as Future Pool represent pioneering projects. For small and medium-sized enterprises in particular, it can be worthwhile to hire and train older employees over the age of 45 or people with a severe disability, because up to 100 percent of the training costs can be covered.
Voluntary severance programs serve as an attractive tool in digital or green transformation projects in situations where further training is not an option or layoffs have become unavoidable. HR managers require a smart strategy for the entire transformation project with a well thought-out timeline and action plan in order to reap the full benefits and avoid any legal pitfalls. Often, a change in operations leads to the voluntary severance program. As such, it is important to allow enough time for communication with the works council. The ability to communicate properly with employees represents a key success factor.