Is there a right and a wrong way to sack employees?
Vishal Garg, the CEO of Better.com recently hit the headlines when he sacked 900 members of staff via a Zoom call. As a result of the unconventional move, Business Leader decided to investigate whether there is a right and a wrong way to sack an employee.
Better.com is an online mortgage lender and their CEO, Vishal Garg became infamous when he sacked 900 employees over Zoom, which included the company’s diversity, equity and inclusion recruiting team.
During the video call, Garg, who founded Better.com in 2016, told those on the call that they “are part of the unlucky group that is being laid off”. He also said: “This is the second time in my career I’m doing this, and I do not want to do this. The last time I did it, I cried”.
It was later reported by Fortune that Garg accused the sacked employees of “stealing” from their colleagues and customers by being unproductive and only working two hours per day. Garg also cited market efficiency, performance and productivity as the reasons behind the firings.
However, after receiving heavy criticism, the Better.com CEO went on to issue an apology to the company’s remaining staff via email. An internal memo has now since revealed that Garg is ‘taking time off effective immediately’.
Is sacking 900 employees over Zoom a reflection of the hybrid/home working era that we live in?
Since the pandemic hit, hybrid and home working has grown considerably. A report published by the Office for National Statistics in June 2021 revealed that the proportion of adults who worked from home at some point in 2020 increased to 37% on average from 27% in 2019.
As a result, videoconferencing apps like Zoom have surged in popularity. In a blog post from last year, Zoom founder Eric Yuan stated that in June 2020, Zoom was seeing 300 million daily meeting participants. This compares to 10 million in December 2019.
With this in mind, we were interested to learn whether Varg’s mass sacking was simply a reflection of modern working environments.
Emma Robinson, Managing Director of Red Diamond Executive Head Hunters, wonders whether there was an alternative to sacking so many employees at once.
She says: “It’s incredibly sad to have to lay people off. He made it clear he didn’t want to do this, and it gave him no pleasure. If he’d have brought 900 people into a room, he’d be accused of being inconsiderate. Instead, he’s being berated for hiding behind a Zoom call. What was the alternative?”
Is it a case of unfair dismissal?
With many being forced to work from home, sacking employees via videocall is likely to have increased. However, it’s important to consider whether Garg’s specific actions would constitute unfair dismissal, and if an alternative method for letting his employees go should have been pursued.
If the CEO of a UK business would have done the same thing, what would it mean for them too?
According to GOVUK, a dismissal could be deemed as unfair if:
- the employer does not have a good reason for dismissing someone
- if the employer does not follow the company’s formal disciplinary or dismissal process
So, if we look at the reasons cited by Garg for sacking the employees, which were market efficiency, performance and productivity, there is an argument that he had a good reason for dismissing his employees.
But without knowing what Better.com’s formal disciplinary or dismissal process is, and whether Garg’s move was an infringement on this process, it’s impossible to determine whether the laid-off staff will have a case for unfair dismissal. As this happened in the US, it’s also important to point out that labour laws are likely to differ there.
Emma Robinson is confident there will be a loophole, which would remove the basis for unfair dismissal.
She says: “I’m no employment lawyer, but I’m sure there will be a loophole – there always is! I don’t know a lot about the person in question, but I’d like to think the CEO of such a large organisation would have had an advisor behind him. If he has done things correctly and his business difficulties are a result of genuine market conditions, there should be no grounds for unfair dismissal.”
However, Rebecca Thornley-Gibson, partner at law firm DMH Stallard, believes firing 900 employees over Zoom would almost certainly be regarded as unfair dismissal in the UK.
“Almost certainly yes, in the UK,” says Rebecca. “If an employee has been continuously employed for two years, they would be able to make a claim for unfair dismissal where their employer did not follow a fair process in dismissing them for redundancy.
“Although there is no set redundancy process mandated by law as part of a fair redundancy process, an employer must individually consult with the affected individuals and allow them an opportunity to put forward representations about the redundancy proposal affecting them.
“There are also additional statutory requirements, where large numbers of employees are being made redundant at the same time. If the Better.com scenario had taken place in the UK, as over 100 employees were being made redundant and if they worked at the same establishment, the employer would have a duty to collectively consult for at least 45 days before the proposed redundancy termination date.”
What grounds do employers need to sack staff in the UK?
“An employer is only entitled to legally dismiss an employee for one of the five fair reasons prescribed by law,” continues Rebecca.
“The five fair reasons for dismissal are conduct, capability, redundancy, legality (this is where an individual is no longer able to do their job legally, for example, a bus driver who has been banned from driving) and ‘some other substantial reason’.
“Not only should there be a legally fair reason for dismissal, but a fair and reasonable process needs to be carried out for the dismissal to be lawful. Failure to do so will result in successful employment tribunal claims for unfair dismissal, even if there was a substantively fair reason e.g. redundancy, for the dismissal.”
Many will feel that sacking 900 employees over Zoom would not constitute a fair and reasonable process, which would mean a strong case for unfair dismissal in the UK.
But, what about Garg’s reasons for their dismissal and is there a right and a wrong to sack a member of staff? Emma Robinson points out that part of the reason for their sacking was because Better.com needed to save money, and that letting people go is always a difficult job.
“This is such a sensitive issue. These people have been let go because the company cannot afford to pay them, not because he woke up one morning just before Christmas and thought ‘I know I’ll go and ruin the lives of 900 people today’.
“I don’t think there is ever a good way to let people go, and what a hideous job. I would say that it’s important to work closely with HR, legal, and probably PR professionals when embarking on such matters. There are no winners in these situations.”
Having to sack one member of staff, let alone 900, cannot be an easy decision to make, especially so near to Christmas. And whilst the jury is still out on whether letting 900 people go via Zoom would constitute an ethical means of sacking, it might not be long before Better.com has a few cases for unfair dismissal at their door and perhaps it’s fortunate that they are based in the US?