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Twitter’s ripping off the plaster

12 January 2023

It is already cemented infamously in history that within hours of acquiring Twitter in November 2022, the “individual eccentric genius” that is Elon Musk cleared the decks at Twitter globally, terminating more than 3,700 employees by email with immediate effect.

The mass exodus was followed swiftly by a rehiring – directed by Elon Musk – of anyone who, according to Twitter’s Global Vice-Present Sinead McSweeney, was “excellent” or who fitted within the category of being “not negative and performed a critical role”.

An interesting strategy to adopt, as one would usually expect the review process preceding any necessary terminations to identify those individuals with excellence, the right attitude and/or who performed critical roles within the business, thereby sparing those individuals from the execution in the first place. However, it seems that prudence did not prevail for Twitter.

The strategy of the mass firings can perhaps be best compared to ripping off a plaster – both ruthless and barbaric but also efficient and effective.

The reality as I understand it is that Twitter was a business that had never turned a profit. On the
corporate balance sheet, workers are not regarded as an asset but as a cost. One of the most common ways of turning a business to profit is to cut costs, and staff are almost always the largest cost on any balance sheet.

The plaster strategy was effective – the cut-throat strategy immediately improved Twitter’s EBITDA.
It failed, however, to recognise that most of an organisation’s real value lies in its people – their
knowledge, skills and ideas – and, by ripping off the plaster as it did, it destroyed the very fabric of the business. While staff cannot be ‘owned’ like other assets of a business on a balance sheet, they
are a critical asset – they hold the knowhow, the know-what, the know-where and the know-why of every business. Ripping off the plaster also likely ripped the heart out of Twitter, and we all know that broken hearts take a long time to heal.

But this article is focused on the legalities from an employment law perspective. Irrespective of who you are, the law applies equally to everyone – there are no exceptions.

In California, where the majority of the terminations were effected, the legal risk was limited to the damages flowing from failing to provide 30 days’ notice to employees, together with any notice period under the contracts.

That risk was sought to be mitigated by offering three-month ‘severance’ packages to affected employees. So let us now explore the legalities of the plaster approach adopted by Musk, had it been applied in the Channel Islands.

In Guernsey and Jersey, when an employer wishes to terminate an employee’s employment, they must have regard to obligations imposed under the contract of employment and by the applicable statutory regime.

All employees are entitled to notice – with minimum requirements being set by the law and contracts of employment often providing for longer notice periods. In Guernsey, the minimum statutory notice period ranges from one week to four weeks and in Jersey, from one week to 12 weeks, in each  case based on an employee’s length of service.

Whether or not the Twitter employees were made redundant is perhaps a topic for an article itself (particularly those employees who performed “critical roles” and who were subsequently rehired). But for now let’s assume that the mass firing was a cost-cutting exercise and satisfied the legal definition of redundancy in both islands. In such circumstances, regard would need to be given to:

  • Employer handbooks, which often contain redundancy policies that may include an entitlement to severance pay. This generally ranges from one week to one month per year of service and may be capped at a certain level of pay referenced by the length of service.
  • In Jersey, for employees with more than two years of continuous service, there is a statutory entitlement to severance payments based on years in service at one week’s pay per year of service, capped at £860 per week. No similar entitlement exists in Guernsey.
  • In both islands, it is necessary to apply a fair and reasonable process to effect a redundancy and avoid an unfair dismissal claim (see below).
  • Senior employees may have entitlements under long-term benefits schemes, the most common being longterm incentive plans that often provide for favourable treatment in the event of a redundancy.

Where an employer proposes to make more than 12 employees redundant in Jersey, the law imposes an obligation to consult with a nominated employee representative at least 30 days before implementing any of the redundancies.

A failure to do so could result in a payment of a protected award of up to nine weeks’ pay for each employee. Guernsey does not have a similar provision.

An unfair dismissal regime operates in both islands. Employers must have both a valid reason for dismissal and to adopt a fair process in effecting that dismissal.

Any dismissal must satisfy both limbs, with a failure of either limb automatically rendering a dismissal unfair. In such circumstances, employees are entitled to compensation. In Guernsey, this is six months’ pay and in Jersey, the compensation award ranges from four weeks to 26 weeks’ pay based on length of service.

The unfair dismissal regimes in both islands only apply to employees with more than 12 months of continuous service (with limited exceptions for dismissals for an automatically unfair reason).

Therefore, had the mass firings involved employees in either of the Channel Islands, the financial cost to Twitter would have far exceeded the three-month severance package offered to employees.

All that said, the far greater issue for Twitter is the mess that now needs to be cleaned up.

It would be fair to say that the scab came off with the plaster and has no doubt opened a whole new wound – a culture wound that will take a particular type of leader to heal the damage that has been done to the very fabric of Twitter; to try to rebuild a business where staff are not walking on eggshells, too scared to check their emails for the next round of firings.

What Twitter needs now is a leader who has a high ‘love quotient’, otherwise known as ‘Love-Q’. This is different to IQ. It is more than EQ – it refers to a leader’s ability to create a safe, connected and sustainable workplace for their staff.

Love-Q is all about consistency, fairness and integrity – all of which appeared to be lacking in the Twitter plaster debacle – and all of which will take months, if not years, to rebuild.

All leaders need to make tough decisions and the best leaders will not shy away from doing so, but great leaders will ensure that those decisions are implemented effectively, having appropriate regard for the human beings that make up the very organisations that they are appointed to lead.

Workers are not just a cost to be cut, they are not just assets to be disposed of at will – they are the very fabric of a business and once a hole is made in that fabric, it won’t take long to unravel.

How Twitter responds now to repair that hole will make or break it as a business.

First published in BL Global Businesslife Magazine, issue 81 (December 2022 / January 2023). 

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Locations: Guernsey | Jersey

Related Service: Employment Law