European labour laws slow down layoffs by major tech companies

As multinational technology companies announce fresh waves of layoffs, they’re coming face to face with a major hurdle, European labour laws.

While in the US companies can easily fire workers en-masse, letting thousands of people go without giving notice or a reason, they can’t do the same in Europe.

In Europe, companies are generally required to not only give workers prior notice but also justify their decision (unless workers are still on probation). If they’re trying to avail themselves of a number of workers at once then they need to negotiate with unions or works councils, which makes firing thousands of workers a herculean task.

Therefore companies operating in Europe much prefer if their staff voluntarily resign from their position.

Germany and France are two of the countries with some of the strongest labour laws.

In those countries companies such as Amazon and Alphabet are negotiating with their respective works councils (company-level body of representatives, elected by the workers to represent them in negotiations with management) to reach an agreement before they can initiate layoffs. A process which can take months.

According to Bloomberg, Amazon has attempted to incentivise some of their European senior managers to resign by offering a full year’s worth of pay as severance. Similar tactics have reportedly taken place in Alphabet, where generous severance packages were offered to anyone willing to resign.

When Elon Musk bought Twitter in October 2022, one of his first decisions was to announce major layoffs in the company, reducing headcount by at least 50 per cent, according to their ex-head of trust and safety.

Yesterday’s reduction in force affected approximately 15% of our Trust & Safety organization (as opposed to approximately 50% cuts company-wide), with our front-line moderation staff experiencing the least impact.

— Yoel Roth (@yoyoel) November 4, 2022

The manner in which the layoffs were carried out led to accusations by former UK Twitter employees who complained that they were dismissed unlawfully.

This led to some backpedalling by Twitter in Europe, which pushed the company to reinstate some of their employees.

Elon Musk’s attempted fire-by-email of European Twitter VP @smcs has been overruled by Irish Court.

You can’t fire people like that in Europe. https://t.co/OhCaEuf8Je

— Adrian Weckler (@adrianweckler) November 30, 2022

Thus far layoffs among major US tech firms have not reached Malta. When Microsoft announced layoffs earlier this year, it informed this newsroom that its Maltese office would not be affected, and that it would be celebrating 20 years since it was established in the country.

Most recently the Swiss bank UBS decided to cut 36,000 jobs shortly after its recent forced takeover of the ailing Credit Suisse, joining the tide of major layoffs among finance and tech companies which started during the last quarter of 2022.