companies strategy for saving compensation

The last few years have been turbulent for the workforce. They’ve gone from mass hiring during the pandemic to mass layoffs and a return to the office. Many employees, unhappy with the changes, began a mass exodus in what’s known as the Great Resignation, changing jobs, or the silent resignation, staying in their jobs but working the bare minimum to keep them. Now, companies are going passive-aggressive, moving specific employees to other positions and forcing them to resign.

Fewer official layoffsThe pace of layoffs slowed in the second half of 2023, and data suggests the trend will continue through the end of the year.

According to data compiled by Trueup, there were 312,679 layoffs at major global tech companies from January to June 2023. Most of these were recorded in January 2023: 108,616 layoffs. May will be the turning point for the new trend, and with 55,947 layoffs, it will be the last in the series. Already at 14,694 layoffs as of June, they have been decreasing until they reached 6,900 layoffs recorded in the tech sector in the summer of 2023.

There is no dismissal, but the position disappears. Internal role redistribution is common in all companies. Faced with different times and strategies, companies adopt different structures. In the current scenario, after the massive layoffs that occurred in the second half of 2022-2023, companies are reorganizing their teams and even eliminating entire departments.

However, this change can also be used as a tool to covertly get rid of the most inconvenient employees without having to compensate them with severance pay.

Intermediate positions in the spotlight. The group most affected are the people in intermediate positions. They are the main victims of mass layoffs and now, with a salary higher than the average of their colleagues and with fewer people to manage, they find themselves in the pillory with demotions or mandatory transfers to other departments in which they probably won. feel less comfortable.

Forced ostracism: either you comply or you leave. The case of Matt Conrad, publisher of The Wall Street Journal, is a good example of this practice. Conrad was a mid-level salesman at IBM, which underwent two job changes in two years. In the first case, his manager told him that his position had been eliminated and that he would now be moving to sell software that he knew nothing about and that, due to the stress, had affected his mental health.

A year later, he was reassigned to a position more in line with his original role, but six months later the company abolished that team and he was reassigned back to his current position. Not quitting when he was first reassigned was a matter of principle, Conrad says: “I wouldn’t have quit because I was a great performer and it just wasn’t fair.”

Professional Dead Ends. This new strategy is driving some employees into a professional dead end, where employees are trapped and have no choice. As Roberta Matuson, an executive coach and consultant, comments in a WSJ article: “They’re basically telling you, ‘Look, this is the only way I’m going to get a job here, I need to reassign you, so (wink) yeah.’ If I were you, I’d take the assignment.” The only way to avoid ostracism is to take it or leave.

Significant change in working conditions. Spanish labour legislation provides for the case of “significant change in working conditions” in Article 41 of the Workers’ Statute, in Section 4 of Law 36/2011 “Regulation of Social Jurisdiction” and in the Collective Convention for each type of activity.

Thus, if it is proven that the transfer entails a material change to the original terms signed by both parties in the employment contract, the employee may challenge it or even demand termination of the employment relationship with the right to compensation.

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Image | Pexels (Cottonbro Studio)

*The previous version of this article was published in August 2023.