On the last day of April 2023, Cloudflare's CEO announced, in a statement during the company's quarterly earnings call, that the company plans to terminate over a hundred salespeople due to underperformance and failure to meet KPIs.
The company's board intends to hire new salespeople with a "proven track record of success, grit, and a strong cultural fit" to upgrade the team. While some reactions online criticised the move for its potential harm to the ex-employees future prospects, others speculated on how this move would be prosecuted in Europe. I'll address why this may be true in a bit.
Cloudflare is a global cloud-based web-performance and security company headquartered in San Francisco, California, with operations in several cities in North America and Europe, including London, Munich, Paris, and New York City.
Over the last six months, big tech companies like Apple, Meta, Amazon, Google, Twitter, and Microsoft have collectively laid off over 70,000 employees globally. While some companies confirmed that they were freezing hiring, others still have open roles on their websites.
These layoffs often come in hundreds and thousands, taking effect immediately without prior notification, leaving affected employees high and dry. Some distraught employees even express their frustration on social media probably to get a sense of comfort.
While it's easier to effect sudden layoffs in regions like the US and Africa, employees in European countries often resist such moves due to their stringent labour laws.
When Bloomberg reported that big tech companies like Google and Amazon face difficulties laying off staff in Europe, it sparked a conversation in the Techpoint Africa editorial room on whether Africans could at any point enjoy such a level of protection. Although laying off is a global issue affecting workers, let's focus on how Africans can navigate labour regulations in their favour.
What regulatory protections do Europe's labour laws provide?
In the global context, the International Labour Organization (ILO) has a mandate for the legislation of employment protection since employment security is a major concern in the right to work. This body has, at different times, taken the liberty to create recommendations for addressing these issues and several countries have adopted them. Many of these countries are in Europe.
Europe has 45 countries, and European labour laws and policies vary depending on the country. However, some features are common in many of these countries, especially regarding layoffs.
Based on the ILO's recommendations as included in the EPLex database, these policies are based on elements such as valid and prohibited grounds for dismissals, probationary periods, procedural notification requirements for dismissals, notice periods, severance pay, redundancy pay, and an avenue for redress.
In Germany, for instance, labour laws related to layoffs are governed by the Protection against Dismissal Act (PADA) 1969 (Amended). Although it doesn't protect employees under six months of service (probationary period) from unfair dismissal, employers must have justifiable reasons for layoffs and are obligated to provide advance notice and severance pay. Employees also have the right to challenge the legality of their dismissal in court.
For collective dismissal -- where the employment of several workers is terminated on the grounds of economic, technological, structural, or similar reasons -- of at least 10% of a 60 to 499 workforce or more than 30 out of 500 employees, the employer must have prior consultation with trade unions and workers' representatives and can be obligated to consider alternatives to dismissals.
Meanwhile, when the termination is done on economic grounds -- like redundancy and restructuring -- the employer is admitting that they no longer want the job an employee was doing to be done by anyone. This means hiring freezes are mandated after such dismissals. This explains the earlier speculation concerning the CloudFlare case.
If dismissal is not challenged, collectively dismissed employees are entitled to redundancy pay, which is severance pay of up to 10 months depending on the length of service. If ruled as an unlawful dismissal, the employees can choose either reinstatement or compensation of not more than 12 months' pay, but this can increase with an additional three to six months if the years of service exceed 15.
Taking Germany as the benchmark, similar laws apply in other European countries, including Spain, Ireland, the Netherlands, the United Kingdom, Italy, and France, with only a few differences in the probationary period, the number of employees in the case of collective dismissal, and redundancy pay.
How are these different from Africa's employment laws?
According to an ILO policy brief (PDF) on employment protection from 2009 to 2019, Africa witnessed the most increase in employment protection reforms. For instance, in 2018, Zambia generalised the obligation to have valid reasons for dismissals and to provide them to employees.
Conversely, Europe, particularly Western Europe, experienced reforms that decreased employment protection levels. Nonetheless, cumulatively, African labour laws related to layoffs tend to be less protective of workers' rights, unlike in many European countries, although countries like South Africa, Kenya, and Tanzania have relatively stronger protection for workers.
In South Africa, for example, employers that intend to lay off a significant number of their employees (at least 10% of a workforce with more than 50 employees) must not only consult with the workers' union but also with the Commission for Conciliation, Mediation and Arbitration under the Labour Relations Act of 1995 (amended in 2018).
Employees affected by collective dismissal are only eligible for redundancy pay of a maximum of 5 months (20 years of service and above). Although the laws do not protect workers with less than a year of service, employees can challenge the legality of the dismissal in the Labour Court, and the worker is entitled to reinstatement or compensation in the case of unfair dismissal.
The problem with African labour laws, however, is how specific guidelines on giving advance notice, valid reasons for dismissal, severance, or legal redress are either not clearly defined or entirely missing, providing loopholes that employers can exploit.
Employment protection in Europe Vs Africa: The Twitter case
According to layoffs.fyi, over 300,000 job cuts have been announced by tech companies since 2022. Layoffs happening at companies like Meta, Amazon, Google, and Twitter extend beyond the US.
In November 2022, when Elon Musk took over as Twitter CEO, he decided to lay off half of its workforce, while losing others to attrition. Reports have it that Twitter had a workforce of 7,500 before Musk took over, but the number was at approximately 2,300 as of January 2023. Musk, who has often been criticised for his unorthodox way of managing people, again poorly managed the layoffs.
Thousands of Twitter employees woke up on Thursday morning of November 3, 2022, to find themselves shut out of their emails and official communication channels without any official word of their employment status until the evening of the same day when a company-wide email went out that the layoffs would begin on Friday.
A slightly differently worded email was sent to workers in Europe: "...it is with regret that we write to inform you that your role at Twitter has been identified as potentially impacted or at risk of redundancy."
Going by European laws, as discussed earlier, you cannot lay off employees just by sending an email and without prior consultation.
Probably owing to this, termination letters were sent after two weeks, putting them on 'garden leave,' which means they are technically employees but are not allowed to work. After that, a mass email requiring employees to either accept some extreme terms of employment or resign was sent. Some ignored this.
European labour laws typically increase dismissal costs for the employer by making the process difficult and complex. The employer might be expected to concede to a waiting period for consultation and negotiation in order to present a justification for the layoffs.
In a case where the company cannot provide a valid reason for dismissal, it might have to expend resources on lawsuits. This was the case when Sinead McSweeney, a VP at Twitter Ireland office, won an injunction to be reinstated from the High Court one month after the dismissal.
Although Musk flouted the laws in these European countries, not all have decided to take the case to court. Others are seeking the help of unions to at least revisit the flat three-month severance pay which Musk announced via a tweet.
Meanwhile, affected employees in the US have also filed a lawsuit against Twitter at a California federal court. Although they might be at a disadvantage because of the "at will" employment system in the US -- which allows an employer to terminate an employee at any time and for any reason, or for no reason at all -- they tried to argue on the basis that the layoff was on prohibited grounds, which can make it unlawful. Two of these have been dismissed -- disability and sex.
A petition signed by some Twitter employees affected by the Ghana office closure showed that the company had flouted laws regarding informing employees prior to the dismissal and negotiating a severance package.
While the country's law has no clear specifications regarding severance pay, the company was supposed to inform the public administration, that is, the Chief Labor Office before going ahead with the layoffs.
Article 65 (1) a) and (2) Subsection 4 of the Labor Act of 2003 state that "the employer shall provide in writing to the Chief Labor Officer and the trade union concerned not later than three months before the contemplated changes..." and "the amount of redundancy pay and the terms and conditions of payment are matters which are subject to negotiation between the employer or a representative of the employer on the one hand and the worker or the trade union concerned on the other," respectively.
True to the claims in the petition, Elon Musk was accused of outright refusing over a dozen employees of three months' severance pay promised to staff in other regions, expecting that they settle with the salary they would collect for the garden leave. The last that's heard of the petition was Musk agreeing to negotiate with the laid-off employees.
Can similar protections be put in place in Africa?
While African countries do have active labour laws, amending these laws would be a step in the right direction. This would require addressing ambiguities in procedures and clearly defining restrictions where necessary, such as prohibited grounds for dismissal and severance pay.
Another important step to achieving Europe's level of employment protection is through enforcement. Even if Africa's labour laws are weak, effective enforcement could strengthen them. Implementing enforcement mechanisms would hold employers accountable for violations and empower national labour courts to expedite cases brought to them.
Moreover, promoting regular dialogue with stakeholders such as employers, trade unions, and workers' organisations will open avenues for bargaining and reforming existing policies and practices. Interestingly, Africa is well represented within the ILO, with the continent accounting for approximately one-third of the Organization's 187 member states.
However, the influence of this representation on the strength of labour laws in African countries is not quite felt. African nations should take advantage of the technical expertise and resources provided by the Organization while aligning political will with best practices in other countries.