US tech firms 'a little surprised' by the lengthier Irish redundancy process

Tech layoffs have highlighted challenges with Ireland’s redundancy process, which has boosted business for consultancy and HR professionals

The current downturn in tech is predicted by many analysts to be temporary, but once the economy bounces back, there are some concerns that many firms have left themselves too exposed with a low a headcount. File Picture: Brian Lawless/PA 

On March 3, human resource software firm Workhuman released a survey which found 38% of employees in Ireland feel invisible or underappreciated at work.

Less than three weeks later, staff at the firm — with a valuation $1bn (€925m) — received a company wide email in which they were called “humans” and notified that the company would be cutting 10% of its workforce.

“Some people joked that the reasons invoked might as well have been written by ChatGPT. Vague reasons, nothing specific. Infuriating,” said a source who was among the recipients of the email.

In the email, the reasons for the layoffs included to "realign our investments with new strategic initiatives and opportunities", "balance for growth and profitability", "exercise prudence given the volatile macro environment".

About half of the company’s approximately 1,300 employees work out of its European headquarters in Dublin, and many have been left confused and without guidance about the future of their jobs, a source said.

This lack of clarity for staff in the tech space right now is not unique to Workhuman.

Earlier this week, Facebook-owner Meta announced it would layoff 490 additional employees as part of its plan to reduce their headcount by around 10,000 people this year. Since last November, the social media giant has made around 370 staff redundant at its Irish operations, and a worker with the multinational said some fear there will be more rounds to come.

Workhuman, like all tech companies that have made some its Irish staff redundant, gave its at risk employees a 30 day notice period before they were officially let go, in compliance with the law. 

However, some people said that this notice period added to the pain felt after the initial email. One source said:

I’ve given 8 years’ service with this company and I have trained 90% of those that joined after me and yet I’m the one at risk. The whole 30 day process is like dangling a mouse in front of a cat.

Fergus Condon, partner and head of the technology sector with professional services firm Grant Thornton, which has advised tech firms through the current downturn, said that many multinationals are “a little surprised” by the lengthier process needed to layoff employees in the EU.

“When you’re strategically making decisions about how many of your global headcount you need reduce, you’re working with numbers, not the regulations,” he said.

“In the US, they have this thing in their employment contracts which is called an 'At Will Clause' which allows, in the US labour market, for an employee to be dismissed or made redundant almost instantaneously.” 

Mr Condon suggested that this lengthier process can be a double edged sword when firms decide to slash their headcount in European markets.

“Because it takes longer to go through the process that means it probably takes longer to name the people or the sections where you’re going to make redundant and as a result, in sections who are not impacted, fear and uncertainty bleeds into those teams and that has its own knock on effects for productivity and morale,” he said.

From a morale perspective, for those that have been left behind, it’s not easy. 

Firms seek assistance 

The difference in regulations and some separate changes to employment law have also led to increased business for one sector, amid a challenging economic environment.

Leading Cork-based HR firm Peninsula has witnessed a 5% increase in queries relating to redundancy compared to the same time last year.

“[This is] definitely because of changes in employment law and employers have been finding it really hard to keep up with those,” said COO of Peninsula Moira Grassick. “So we’re getting much more queries and clients in relation to that.” 

Ms Grassick said Peninsula mainly works with smaller tech firms, but is “definitely in more conversations with the tech industry than we would have been before”.

Through her lens as a HR expert, Ms Grassick said that when a firm is announcing redundancies, it cannot be a one size fits all across markets, and that employee engagement is key for future growth.

When you have a reputation or when you have been perceived as not treating employees maybe in the best way that you could have, that will form an employer branding perspective and that can cause quite a lot of damage.

Ms Grassick also said she is witnessing knock-on effects of the tech slowdown in Ireland for other industries.

“When you look at big firms like Google, that would have been in the (Dublin) city centre, the footfall for other industries around them is definitely having an impact on other industries like newsagents, coffee shops, all that sort of thing,” she said.

The fallout of the Workhuman redundancies gives a unique Irish insight into a growing problem around staff management within the global Big Tech industry, which has been highlighted amid the ongoing slowdown in that sector.

Big Tech slims down

During the pandemic, tech firms became bloated, but as e-commerce slumped and inflationary pressures took their toll, these firms decided to become leaner.

Central Bank figures from earlier this year showed the tech slowdown has led to more than 2,300 job cuts in Ireland in recent months, with Meta’s recent layoffs pushing this figure closer to 3000.

The global tech sector has announced more than 170,000 layoffs in 2023 so far, according to a tracker by TechCrunch, a leading US website reporting on the technology industry.

The tech slowdown is familiar territory for Chris Horn, who was the co-founder and CEO of Ireland's first NASDAQ-listed company, IONA Technologies.

During the dotcom crash in 2001, Mr Horn carried out a single round of cuts worldwide. The company had 22 offices and about 1,200 staff at the time.

“I thought it would be far worse to do a series of cuts, with people never knowing would there be yet even more cuts to come. We didn’t want death by a thousand cuts,” Mr Horn previously told the Irish Examiner.

Meanwhile, a source told the Irish Examiner Workhuman’s Eric Mosley has been visiting different departments recently to boost morale after the cuts announcement, and was asked if there will be any more cuts. At this time, Workhuman does not plan to make further reductions to its workforce.

The current downturn in tech is predicted by many analysts to be temporary, but once the economy bounces back, there are some concerns that many firms have left themselves too exposed with a low a headcount.

“I think some of them have gone very slim. Even when they bounce back, if the labour is available, their own hiring processes will take time,” said Mr Condon.

There are different cultures in different tech firms and certainly one I’ve been speaking to, their general culture is to cut back as far as you can almost to the bone.

Mr Condon added that what his firm witnessed pre-Christmas before some of the layoffs were announced was that a number of large multinationals put out tenders for outsourcing type activities, to use firms like Grant Thornton in terms of supplementing the workforce.

Time will tell if this strategy will stay in place once the tech downturn is over.

However, new jobs figures showed employment jumped 4.1% in the 12 months to Q1 to reach 2.6m, indicating that Ireland has overall weathered the tech storm.