Chair dancing or tug-of-war? Restructuring step 2: selection

In our blog from last month, we discussed the step 1 of the restructuringroadmap (the reasoning). Below you will find our infographic, in which the steps to be taken and the timeline are shown schematically.

This blog focuses on step 2: the selection. If an employer has reasonable grounds for the redundancy and decides to implement the restructuring, the employer must decide which positions will be made redundant as a result of the restructuring. Subsequently, the employer must select which employees are eligible for dismissal. According to Dutch law, the employer cannot select the employees as it sees fit, but must comply with distinct selection criteria. Please be referred to the below, in which we will discuss the selection of employees and which leeway you (do not) have.

Interchangeable positions

In order to determine which employees are eligible for dismissal, you must first determine which positions will be made redundant and whether these positions are unique or interchangeable. If the positions are interchangeable, you must follow a number of selection rules. A unique position is a position that is held by only one employee. A position is interchangeable with another position if the level and the remuneration of the positions is equal. Also, the content, the required knowledge, skills and competencies must be comparable. The personal qualities of the employees involved are not relevant; the interchangeability of the positions is decisive, not the interchangeability of the employees performing these positions. The job description will therefore usually be the most important source of information for determining whether a position is interchangeable or not.

’External’ employees first

Employees with an employment contract for an indefinite period of time are given greater protection during a restructuring than employees who have a more flexible employment relationship with the employer. As a result, you first have to say goodbye to external employees (seconded employees, temporary workers, self-employed workers and employees hired from another business location) working in the relevant category of interchangeable positions. If the necessary staff reduction cannot (sufficiently) be realized with this, you must proceed to the next step: the reflection principle.

Reflection principle

With the reflection principle, the order of dismissal is determined within five age groups on the basis of the seniority principle (last in, first out). The purpose of this principle is to ensure that after the restructuring, the composition of the staff (divided over the five age groups) is as equal as possible to the situation before. Dismissals are spread over the different age groups in proportion to the number of employees within a certain interchangeable position. Employees who have reached the State pension age are also included in the reflection, but must be dismissed first. This also applies to employees working on the basis of an on-call contract or on the basis of a temporary employment contract that ends within 26 weeks after the UWV decides on the application. If an age group has already contributed sufficiently as a result of these rules of precedence, no other employees from that age group are eligible for dismissal.

Business location

All interchangeable positions within the company are included in the reflection, unless the redundancies fall within a single business location. In that case, in principle, only the positions of that particular business location must be taken into account. If there are several business locations, you must therefore assess whether these locations can be regarded as an  independent business location according to the [UWV policy for dismissal due to business economic reasons; link https://www.uwv.nl/werkgevers/Images/uitvoeringsregels-ontslag-om-bedrijfseconomische-redenen-sep-2020 (only available in Dutch). To qualify the different business locations as independent business location may impact the selection of employees and may therefore create desirable leeway.

Exceptions

Leeway in the selection of employees may also be created by making an exception for employees with special knowledge or skills that their dismissal would be detrimental to the continuation of the business operations. To rely on this exception, you should submit a well-founded request to exclude the so-called indispensable employee from the reflection principle. Another exception can be made for an employee with a disability or an employee working under the direction and supervision of a third party whereby replacement cannot be required from the employer. Different rules may also apply if a Redundancy Committee has been established.

The method of musical chairs

If you need to restructure the business, you naturally prefer to say goodbye to employees who do not perform up to standard. Therefore, leeway is desirable. Performance, however, does not play a role in the reflection principle. That having said, it is possible to eliminate certain positions and create new ones. In the so-called method of musical chairs, a group of employees in a certain position is eliminated and all redundant employees can apply for a newly created position. As such, you can decide who suits the new role best. Please appreciate, if part of the work of the eliminated position is continued in the new position, you must apply the reversed reflection principle. This means that if there are several suitable candidates, the new position must be offered to the employees whose work will (partly) be continued in the new position first. The employee who would be eligible for dismissal after applying the reflection principle last, will have priority over the other candidates. Subsequently, the other suitable employees can be placed.

If you would like to use this method, please make sure that the old and new position are clearly different. In that regard, it is recommended to make use of new job profiles that illustrate and confirm the differences. In any case, it is important to clearly define the suitability criteria (competencies, education, work experience, etc.). A difference in salary can be an indication that the position is not interchangeable, but is not decisive. In the advisory process with the Works Council it is sensible to mention the new position and convince the Works Council of (the benefits of) the new position. If necessary, an assessment can be used in the selection for the new position as the selection of employees must take place on the basis of objective criteria.

If you are considering to restructure the business, carefully consider the selection of employees. All in all, this second step is a very important step and determines the further course of the restructuring. Selection based on suitability is partially possible and as such can create leeway, but is subject to strict rules.

Want to know more?

Would you like to know more about the different steps to be taken in case of a restructuring or do you have any questions about this blog? Please contact Yvette Dissel (dissel@boontje.nl) or Stéphanie Spoelder (spoelder@boontje.nl). You can also contact them by telephone on 020 – 572 7190. Our Corona Restructuring Team gladly remains at your disposal.

Authors: Yvette Dissel, Stéphanie Spoelder

Category: Restructuring