Redundancies in the Technology Sector

Compared to more traditional companies, many businesses within the technology sector were better able to manage during the COVID-19 pandemic due to the early adoption of remote working and the use of online platforms and video meetings.

Many companies even increased their headcount following growth and investment in light of the surge of people working and socialising within their homes.

For example, Meta, the owner of Facebook and Instagram, nearly doubled its number of employees to 87,000 between 2019 and 2022.

However, the end of the COVID-19 restrictions and 'return to normality' led to reduced growth rates and excessive payrolls for tech businesses, with difficulties compounded by wider economic factors, such as higher interest rates.

In early 2022, aspiring projects were halted, and hiring budgets were put on hold. In January 2023, Amazon declared one of the largest layoffs ever seen by the tech industry, cutting over 18,000 jobs, whilst Peloton announced in May 2024 that it was set to lay off 15% of its staff in order to align its spending with its revenue.

In some cases, such as UK-based online car retailer Cazoo, administrators were called in, resulting in 728 redundancies. It is reported that over 90,000 employees in tech companies have been laid off so far in 2024.

Data shows that larger technology companies are making redundancies, so the collective consultation rules are more likely to apply due to the volume of employees who may be at risk of redundancy.

In addition to ensuring that the redundancy dismissal is fair on an individual basis, an employer must also comply with additional requirements to provide information about its proposals and to consult on a collective basis.

Collective consultation applies when an employer proposes redundancies at a single establishment over a 90-day period.

In cases where between 20 and 99 dismissals are proposed in the 90-day period, collective consultation must be started in good time and last at least 30 days before the first dismissal happens.

For cases of 100 or more dismissals, it must be started in good time and last at least 45 days before the first dismissal.

Where collective consultation is triggered, the obligations of the employer include:

• Informing the Secretary of State.
• Identifying appropriate representatives of affected employees.
• Consulting meaningfully with representatives.

In addition to a potential claim for unfair dismissal, failing to comply with these obligations could result in the Employment Tribunal awarding what is known as a "protective award" up to a maximum of 90 days of gross pay per employee.

A failure to inform the Secretary of State is a criminal offence that could result in a fine for an employer.