The statutory obligation to mitigate the consequences in the event of mass redundancies for the affected employees by means of a social plan also benefits employers. And a cleverly negotiated social plan with targeted coaching measures even offers those who have been made redundant opportunities for the next career step.

Compulsory social plan since 2014

The social plan obligation and the prescribed procedure are regulated in Art. 335d to 335g OR. Violations of the regulations can lead to considerable costs. The reasons for mass redundancies in a globally oriented economic order are manifold, but often comprehensible to outsiders as well. For employers, the obligation arises in the case of

  • more than 20 and less than 100 employees and at least 10 redundancies,
  • 100 to 300 employees and at least 10% of the workforce affected,
  • more than 300 employees and at least 30 layoffs.

But even in the past, at that time still on a voluntary basis, the social plan was a proven means of maintaining peace at work, cushioning the financial and social consequences for the affected employees and supporting them in their professional reintegration.

Benefits for employers too

While the benefits are obvious to those concerned, our experience shows that employers also benefit from a fairly negotiated social plan. This is particularly the case when, thanks to professional advice, all the challenges of this complex process can be met in a positive way. The most obvious aspects are the impact on the outside, in particular bolstering the image of the organization and reinforcing the employer branding. However, well-balanced benefits also have a calming effect on the entire workforce, enable a faster implementation of dismissals and are a proven means of preventing staff migration and ensuring the retention of top performers. Productivity is maintained until the last working day, without the employer having to pay huge sums for retention bonuses. In addition, measures that reduce the number of redundancies, such as early retirement, reduced level of employment or unpaid leave, are explicitly included in the social plan and can therefore be shown as additional benefits.

Subject of a social plan

Early retirements should be made with caution, as the cost side should not be overlooked and older employees do not yet want to be part of the old iron (they would prefer to continue working). Staff reductions should be executed in a transparent manner and take account of production planning and the needs of those affected by longer periods of notice or early release. Financial measures such as severance payments and compensation or a hardship fund can be attractive. More sustainable, however, are measures that professionally support the job search or improve opportunities on the job market. These include job centers, outplacement (also for groups), paid retraining and further education as well as a job reference which is issued in a benevolent manner and mentions dismissal for operational reasons.

The exact content of a social plan is not prescribed. Its purpose is to define measures to avoid dismissals, limit their number and mitigate their consequences. However, this is not only about financial benefits. Normally, the following contents can be found:

  • Recruitment freezes
  • Financing of outplacements
  • Severance payments
  • Early retirements
  • Changes in notice periods

A cleverly negotiated social plan offers opportunities to those affected!

A dismissal can completely turn upside down the lives of those affected. Powerlessness, fears of loss and insecurity can be felt dramatically and can lead to existential fears or loss of identity and ultimately also burden private relationships. This makes it all the more important to quickly give a new perspective and give back some security through suitable measures as soon as the redundancies are announced. The dismissal is thus not understood as a professional last stop, but as a new beginning, which thanks to professional coaching can even open up new professional opportunities!

Outplacement or severance pay?

Even if some of those affected would probably spontaneously opt for financial compensation, professional outplacement is much more sustainable. Together with the coach, the energy is put on an active and positive future and by the means of a career balance life goals and career planning are redefined. In the next steps the job seekers improve their self-marketing, discover alternative jobs and industries and profit from the network of the coach. And it is not uncommon for outplacement support to result in a happy end for dismissals, i.e. when the employee can start a better job than he or she ever dreamed of.

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