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A mosaic of different legal systems
Unlike the United States, Europe has no single employment law framework. Each country has its own labor code, employee consultation rules, and public oversight mechanisms. As a result, restructuring a business or workforce across Europe can feel like managing a patchwork of different legal systems.
For example, in Germany, France, Belgium, the Netherlands, Spain, and Italy, employers must work with works councils—employee representative bodies that must be informed, and often formally consulted, before implementing a restructuring plan. "Consultation" generally means the council must issue an opinion on the company's proposed plan before management can act.
In contrast, the United Kingdom, Ireland, Switzerland, and many Central and Eastern European countries have lighter procedures and fewer mandatory consultations.
Even where approval is not required, the consultation process itself can be lengthy. In many countries, management must suspend action until the process concludes—typically three to five months, and up to nine to twelve months in complex cases, such as the closure of a major local employer or heavily unionized site.
Preparation is key
Because collective dismissals ("reductions in force") in Europe can be highly regulated and expensive, advance planning is critical. The total cost includes not only severance but also "social measures"—programs to support dismissed employees such as retraining, job search assistance, or relocation grants.
Where possible, companies often explore alternatives such as:
- Voluntary separation programs (e.g., offering enhanced packages for employees who agree to leave).
- Natural attrition or workforce planning (not replacing departing employees).
- Individual settlements for specific roles.
However, these measures rarely suffice if the company intends to close an entire site or eliminate a full business line. In such cases, a formal collective dismissal procedure is usually unavoidable. Occasionally, divesting a business unit—selling it to another company rather than closing it—can be a financially superior and politically smoother option.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
