Global Reorganization Playbook: Top Tips For Employers (Podcast)

In this podcast, Roger James (partner and co-chair of Ogletree Deakins' Global Reorganizations Practice Group, London) and Kate Martin (of counsel, London) present practical strategies for executing the HR side of complex cross-border restructurings such as RIFs with confidence. The speakers emphasize the importance of planning and coordination with these projects and distill essential legal and operational considerations into clear, actionable tips for upcoming reorganizations.

Transcript

Transcript Pending

Announcer: Welcome to the Ogletree Deakins podcast, where we provide listeners with brief discussions about important workplace legal issues. Our podcasts are for informational purposes only and should not be construed as legal advice. You can subscribe through your favorite podcast service. Please consider rating this podcast so we can get your feedback and improve our programs. Please enjoy the podcast.

Roger James: Hello, and welcome to this podcast, Global Reorganization Playbook: Top Tips For HR and Legal. My name is Roger James; I’m a partner in the London office of Ogletree, and I co-chair the firm’s Global Reorganization practice group, and in that role I spend a lot of my time working on group reorganization projects for multinational companies, and quarterbacking that across numerous countries across the world, and in particular productions in force, but also other types of reorganization such as post-acquisition harmonization. Sat next to me is my colleague, Kate.

Kate Martin: Hello, I am an of counsel based in the London office, and I work alongside Roger on all global reorganization matters for our clients wherever they may need it.

Roger James: Thank you, Kate. So, Kate and I have decided that the approach we’re going to take today is to share with you our top tips for working on global reorganization projects, based from our experience helping many multinationals dealing with those kinds of projects. Our focus is going to be in particular on the international aspects of these projects, meaning outside of the U.S.; we’re not going to be covering, for example, WARN in our talk today, but we are going to be talking about equivalence to that all around the world, and managing these projects. Because a lot of companies’ reputation and success depends on these reorganizations being executed in a successful way. So, that’s it by way of intro, unless there’s anything else Kate?

Kate Martin: No, I think we can kick off.

Roger James: Okay. So, tip one is planning. So, if you are doing a riff across numerous countries, you have got to deal with the laws and customs of all the countries that are impacted by that riff and it’s very important to coordinate that. Nowadays in particular, the world is a small place, and teams typically stretch across many countries. Employees will often be communicating regularly with colleagues all around the world. And so, it’s really important that there is a coordinated approach.
And in relation to planning, you want to be thinking about what communications you’re going to issue not just internally to your workforce but externally to the market and customers too. You’ll probably need to put together a business plan that sets out the changes that you are proposing and why you are proposing them. You need to give thought to the order of events that you are going to need to follow. For example, in some European countries, you might have to confidentially tell the works council what you are planning on doing before you make a general announcement.
And I always think it’s a really good idea to give as much information as possible to employees on day one of these projects. So that means a lot of planning in terms of putting together things like Q&A and information for employees because the more you can set out that kind of detail and answer questions, the employees might have more control. You’ve gone over the message because the alternative, if you haven’t done things like prepare a Q&A, is that employees all around the world will be asking their manager what’s going on and different managers will be giving different explanations, and you can get yourself in a bit of a mess. So planning is my one.

Kate Martin: Yeah, that brings us neatly onto our second tip, which is about central management, the whole process. And I guess they are kind of interlinked because you want to make sure as part of your planning, you have thought about the team that will be managing it because it can become a bit unwieldy if you’ve got people everywhere working on the same project. Whereas if you have a core team who knows what’s going on in each country is aware of the background as you know, it starts before day one, the learning and the preparation. So having all of your ducks in a row and making sure that you’ve got people who are designated to their certain functions or that’s legal HR, having your outside counsel lined up, ready to help you in the process. And I think it’s always good if you can have weekly meetings, check-ins to make sure that you aligned in what you are doing in the process, making sure that you can keep an eye on the timeline and what you are trying to achieve as a business because sometimes full well that the timelines can be aggressive.
So making sure that it all works in terms of the commercial objectives, but also legal, having someone keep an eye on that and ensuring that there are good channels of communication and senior management team and relevant business teams and also those that are on the ground. We know it’s not always possible to have everyone looked in at the very start, but if you can identify who would be really valuable to provide an insight on helping you with that process, because more often than not, it is those HR that are on the ground that will be able to help you map out what it is that you need to achieve. So yeah, organization is definitely a key.

Roger James: I particularly like your point about having regular meetings. It’s weekly for example, and okay, and I, when we’ve worked on some projects, we’ve scheduled weekly meetings with clients, just the core team with the client and then others can be brought in depending on what might be relevant in that particular stage project. But even when there’s not, maybe it’s been a quiet week and there’s not that much to talk about, just all getting together on a team’s call or whatever and just connecting, making sure that everyone knows what’s happening or if there are delays, why etc. But even if it’s only a short call and giving thoughts on of an agenda and what you’re going to talk about is really, really valuable I think in the central management.

Kate Martin: I agree because it’s about visibility isn’t it, making sure that you’re keeping an eye on everything because it’s so easy for things to get missed or fall between the cracks if you haven’t got a proper grip on what’s going on. I say even in the quiet weeks, there might be something that needs action in, so making sure that you know who’s responsible for that.

Roger James: And responsibility scares now. I think where I could envisage these could go wrong; these projects is where different people don’t know what each other are doing and maybe something falls through the cracks because everyone’s assuming someone else is dealing with an issue. And so I think having that core team that’s got a responsibility, both including people from the company and the external advisors and just getting together, having those weekly conversations and making sure with checklists that everything’s being covered is just so, so important.
So, tip three is to give thought to the information you are going to need to go through these kinds of processes and also the documents that you might want to get your hands on. It’s really important to at an early stage, get a schedule of impacted employees with all the information you might want in relation to the employees who we’re talking typically about a risk situation where there’s jobs potentially at risk, you’re going to need to know basic information such as obviously job titles but also things like notice periods start dates, compensation information because as you go down through the process and get to points where you are having to think about things like employee selection in a number of countries that information is going to be crucial.
Many countries take a selection decision that should be taken based on length of service has been okay. And so, if you haven’t got that information of when people’s start date is, then you’re on the back foot. But so, getting it all together at the outset is very, very important. And in terms of documents, getting your hands on the employment contracts, associated documents, things like share equity plans, compensation details, work rules, policies, all the things that might be relevant for the change, whatever that change may be is a really important thing to do as early as possible. I think talk to your advisors about all that information and the documentation and understand what it’s you’re going to be dealing with.

Kate Martin: Yeah, agree. I think also if there are termination documents that their particular countries are very familiar with and can make the process easier if it’s possible gaining access to those as well. Because as you and I both know, sometimes local HR or even the employees prefer to have the documents in the way that they’re used to rather than sometimes how we would do them. Even if you can do a bit of due diligence around that in terms of documentation, I think that can help. It kind of gives you an insight into what the expectation is in terms of language and format and style.

Roger James: That’s a really good point, Kate. Because there can be more than one way of doing things. Well, there can be more than one style for things like settlement agreements and termination notices and working at what the local team in any given country is used to what they’re using. Absolutely. I agree. That makes a lot of sense. And if it’s working for them and they’re used to a particular document, then probably it makes sense to check it over to make sure it works for the project in question, but use the local document. You and I have found that that tends to be the best approach.

Kate Martin: And sometimes quicker.

Roger James: And sometimes quicker. Yeah.

Kate Martin: So that brings us onto tip four, which is about having an understanding and establishing whether there any collective bargaining agreements that are pickable, whether you have works councils in place, relationships with the trade unions, and just giving thought as to whether any of those interplay with the process that you’re carrying out, if there are any documents that you need to establish as part of that, if there are any relationships that you need to work out who the key players are, maybe with the workers council or the trade union to have that direct line of communication for consultation.
Just being clear basically on whether there are those elements that you need to factor into your process and making sure that you, particularly where we are dealing with trade unions or works councils, have that open line of communication and make sure that they feel like they have the ability to have their say because I think that’s a really key consideration and something that you do need to factor into your process so that you don’t have those delays and that you don’t have to deal with any potential fallout. You can just be confident that you’re giving them everything they need and that they also have the vision as say to ask questions to make sure that they’re in the know and that they can do their job as part of their role.

Roger James: For sure. And think it’s such an important point that the works council where they are present and trade unions feel they’re involved in the process because otherwise in some countries they’ve got the power to bring the whole thing into a halt, go off to court and get a court order that you haven’t consulted them when you should have, you’ve got to go back to square one. Countries differ as to whether works councils can actually veto changes that might be proposed in a lot of countries. Most of the time it’s just that they should be asked for their opinion, but it’s a really important thing to do.
And there’s a misconception I think that things like trade unions or works councils and consultation only apply to collective redundancies. In other words, once a threshold, whether it’s depending on the country, 20 or more people or whatever it might be that are at risk of termination. It’s certainly true that in those collective situations you will almost certainly have to deal with works councils and trade unions. But sometimes even for individual terminations, you also have an obligation to deal with the works council or trade union in certain countries. So, for example in the Netherlands, if you’re getting rid of a key individual, then works council involvement is required. And another example would be Sweden, where even if it’s just one termination, if there’s a trade union involved, then it’s really important to make sure you don’t overlook involving the trade union in even an individual termination decision.

Kate Martin: It’s about impact on the remaining workforce in some of those countries, isn’t it? Rather than, as you say, the collective is that person going to create additional work, for example, for the remaining workforce. So yeah, that’s a good addition to it.

Roger James: Yes. And make sure when you’re doing your timetable you include would a timeline be required for involving works council, trade union. And as I was saying before, that involvement may just be informing them. It may be a requirement to consult with them, which means listen to them, but you don’t have to agree with them. Or in some countries, for example, Germany, you sometimes need permission effectively from what to proceed on depending on what the change might be is severance pay and whether it is sensible to try and apply a common approach across different countries. So, if for example there’s 15 countries that are impacted by a riff, do you try and come up with a common approach for calculating severance, be that well meets pay service or whatever it might be across all those countries. And in an ideal world, that would be a good thing to do because you have obviously the consistency and the fairness treating everyone the same.
But unfortunately as we know, Kate, the laws differ quite considerably. And as a general approach, it’s not going to work to try and apply the same approach everywhere. You obviously need to comply with whatever local minimum severance laws there might be. And then there’s the question about whether you want to pay more in any particular situation or country to get a waiver of claims and a severance agreement. I think having a common approach to severance is fine and suffice, it’s a safety net, like a minimum. But then if statutory entitlements and more, you obviously need to go to whatever the statutory is and you get the statutory and then some potentially beyond that if you want a waiver of claim.

Kate Martin: I think something that we both found out is that whilst the law says this, the expectation either in the market or amongst the employees to sign a waiver of claims in exchange for a settlement payment, there’s usually a rule of thumb isn’t there? So, it’s like an unofficial rule that the employees would expect to get X months on top of. It’s whether that then aligns with your uniform approach. But I think one of the things that you and I would probably say to our clients or prospective clients is just expect the unexpected because there are some jurisdictions where negotiations can be a lot more in terms of the money that the employee’s expecting then what we could forecast.

Roger James: For sure, and it can vary so much by country. Honestly, in some country there’s no countries, there’s no entitlement to settlement pay at all. And then in others it can be eye-washing, the high amounts of money as a general rule, if you’re ever paying more than minimum statutory. I think it’s also a good idea to make that subject to a settlement agreement with a waiver.

Kate Martin: Yeah, that’s definitely best practice, isn’t it, it’s a recommendation.

Roger James: Yeah. So, anything else on severance pay, Kate, that you want to mention?

Kate Martin: I think probably it feeds into your earlier point on just being clear on employees notice periods because that be an additional payment that will need to be made on top of severance pay and sometimes in some jurisdictions it can be quite a lot, can’t it? So just when you just sitting and looking at it, the package as a whole, just mindful that there are those elements on top that mean that it can work out expensive. And I guess the same applies to hollers and acres in some countries. It can roll over for quite a long time. So, employ in Italy for example, so that can end up being a big payment as well. So, I guess it’s about being clear on what the total severance package is going to be as well as establishing how you want to have your formula for severance pay.

Roger James: Yeah, and something not to overlook is checking any CBA agreements in my excess because sometimes they will specify that severance pay for a particular classes of employee has to be accurate in a certain way. And when we say CBA, typically we think of an agreement that’s specific to a business that has been reached with a union or some other employee body. But in some countries, there can be CBA agreements that apply across a whole industry regardless of whether a company even knows of CBA, let alone having personally as a company agreed to it.
And there might be an agreement that applies to all software engineers, for example, in a particular country. So, those sort of things always need to be for any entitlements that there might be. And past practice is also relevant. You were talking about employee expectation. Well one of the things that shapes that is if there was a round of terminations and year or two ago and redundancy pay was calculated in a particular way, then employees are likely to know about that and will have an expectation that it’ll be calculated the same way, whether legally it has to be facts, but it’s something when you are running these restructuring projects, you need to have an understanding of what might have gone before and how payments may have been calculated.

Kate Martin: Particularly if employees have knowledge of how they were calculated as well.

Roger James: Yeah.

Kate Martin: So, redundancy in selection, that is our sixth top tip. So, employers always want to select based on performance, but they ignore local, well not always, but sometimes they could ignore local selection rules. So I guess being mindful of each country’s criteria of what is deemed to be a fair, I’m going to call it redundancy, but it’s obviously not redundancy in the strict terms in every country, but being clear that you are selecting based on let’s say the objective criteria that country may require because that will play into the furnace of the process, but also in terms of if you do the process properly, then that reduces your exposure from a settlement perspective as well.
So, getting it right from the outset is actually invaluable and we would always recommend that you make sure you are clear on that jurisdiction’s requirements. And whilst we totally get the performance, I mean you and I have had this conversation many times is a logical way of selecting individuals in some countries that just won’t work, and we’ve seen it fall apart for that reason.

Roger James: Yeah, absolutely, Kate. It’s a key point, isn’t it, that there’s obviously a desire to terminate based on performance. And in a lot of countries, you can everywhere. Or at least if you do want to do a based-on performance in a country where the rule say it should be someone else you select, then pay a lot of money to get to essentially agree.

Kate Martin: So yeah, I think being clear on that, again, it kind of feeds into which is apt as this is about organization, but the organizational element of it and making sure that the best are dealing with in each country so that you can get it right from the outset. I think it’s so much better to be proactive rather than reactive when you’re managing global organization project.

Roger James: Yeah, I think working out redundancy selection approach is in the process and that helps then shape the whole process, doesn’t it?

Kate Martin: Yeah.

Roger James: So, another key important tip is to understand any local quirks. They might be around process. So, for example, some countries will require wet signatures for termination documents. There might be rules on particular individuals from management who’ve got to be the people who sign termination letters or maybe even be the people who have conversations. So, all of that needs to be understood as well. And again, it’s something to understand early on as part of the planning. If it doesn’t come to light until the late stage, then there can be a mad rush to get the right person to sign the letter. It might need to be personally delivered, and the right person might be based in a marker to deliver a letter in Turkey or whatever it might be. And that can then result in a need for power of attorney documentation, which can get very complicated and take time and may require puzzling process.
So although I’m mentioning it now rather than beginning it, planning it, we could equally have mentioned it at the beginning of our talk when we were talking about planning because it’s something that’s very important to understand early on all those kind of requirements around the execution of these things and the local laws on these points. I know Kate, when you and I are advising clients, one of the things we do is put together guidance on all these, they’re almost like small print issues, but they can really become really big issues if they’re not thought about and understood.

Kate Martin: And it’s always these sorts of things that actually, as you say, you don’t really think about it until it comes to the execution of the documents, but it can throw the process out. I mean there are some countries where if it’s not signed by the right person, it’s just not valid. And there are other countries where, and quite a few countries, which surprises me in this day and age, but where hard copy is the default, and you cannot issue it via email or with electronic signatures. So, you definitely don’t want to be in a mad panic because you’ve not identified where does have those more, let’s call it old-fashioned, is that okay?

Roger James: Spain is an example where a termination notice asked to be served by something called Bureau facts. And the word facts in there make me think of those old-fashioned machines from 1998, but it’s not that kind of fax. It’s like an electronic telegram service. But all the same. It has to be loaded in, it gets printed somewhere and then it’s created effectively to someone’s house, but it has to be done that way, or at least it’s highly, highly advisable to do it that way. It can create complications if you don’t.

Kate Martin: And there are some countries where it has to be witnessed, so you have to have someone present to witness the signature say on the termination letter. So yeah, as you say, those are one of the things that can fall between your cracks and making sure that you are clear on there.

Roger James: Kate, I’m looking at our list of tips, and I think we’ve covered most of them. Is there anything else that we should cover?

Kate Martin: No, I don’t think so. I think we’ve covered the kind of core topics. We could give tips for days given our experience, but I think those are the most crucial ones to help, particularly HR and legal kind of map out the priorities when they’re about to undertake a global reorganization project. And as we both said, just being mindful of the things that may not seem important right now but can be later down the road.

Roger James: Yeah. And trying to spot things early. The planning, can’t under emphasize just how important the planning is at the outset so that you can try and foresee issues that might arise. And unfortunately, we all know that these projects can sometimes come along and it’s all urgent. Senior management have taken decision that they need to do some restructuring. It needs to happen ASAP.
You don’t always have the time that you would like to have for the planning, but doing as good a job as you possibly can, devoting as much time as you can up front to the planning and then putting in place a good courting to execute it makes such a difference to how well these run and minimizing the risk of things that can go wrong. And the things that can go wrong as we know are litigation, claims from employees, claims from unions, claims from works councils, which can be both expensive and bad publicity and a lot of management time to deal with.

Kate Martin: Yeah. And not meeting the commercial objectives because if those things happen or there is a bump in the road that delays the process, then sometimes that can throw everything out. And we know that clients for whether it be the financial year or whatever it may be, do have those hard stops when it comes to closing out. So that’s why if they follow our top tips, hopefully they can achieve what they need to achieve.

Roger James: Absolutely. Well, we hope that our top tips are useful and hope you’ve enjoyed our session. So, goodbye from me.

Kate Martin: Thank you for your time.

Announcer: Thank you for joining us on the Ogletree Deakins podcast. You can subscribe to our podcast on Apple Podcasts or through your favorite podcast service. Please consider rating and reviewing so that we may continue to provide the content that covers your needs. And remember, the information in this podcast is for informational purposes only and is not to be construed as legal advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.