NetEnt, 2020: how a redundancy package was improved and jobs kept

In December 2020, employees of the gaming company NetEnt in Malta were told that their jobs were redundant. This followed NetEnt’s acquisition by Evolution. The General Workers’ Union (GWU) represented most of the affected staff, and Dr Aron Mifsud Bonnici advised the union and supported its negotiations with the company.

The outcome was a better package than the one first agreed, and a route back into work for a large share of the people affected. The case is a few years old now, but the question it raises comes up in every restructuring: once redundancies have been announced, is there still room to change the terms?

What happened

A severance offer had already been negotiated with an employee representative. The GWU took the view that the process should go further, and filed an application before the First Hall of the Civil Court asking for an injunction to stop the company from implementing redundancies or terminating employment. The court provisionally upheld the request.

Talks between the union and Evolution followed. They produced four results:

• Evolution agreed to offer alternative employment to at least 40 of the affected employees within weeks.
• Around 60 more employees were expected to be taken on by gaming and financial services operators in Malta.
• Each affected employee received an additional EUR 750 on top of the severance already negotiated.
• Employees on maternity leave received better safeguards, and affected staff kept access to the company’s health benefit package.

The affected GWU members approved the revised offer by a large majority, and the union withdrew the injunction. The dispute ended there. Josef Bugeja, then Secretary General of the GWU, said at the time: “We saved jobs to the extent that this was possible.”

The legal position

Redundancy is a lawful reason for dismissal in Malta, but it is not a free hand. The Employment and Industrial Relations Act (Cap. 452) and the rules made under it set conditions on how it is done.

Where a business plans to dismiss a certain number of employees within a set period, the Collective Redundancies (Protection of Employment) Regulations (S.L. 452.80) apply (see collective redundancy). These implement Directive 98/59/EC. The employer must consult the employees’ representatives in good time, with a view to reaching agreement, and must cover ways of avoiding the dismissals or reducing their number and of softening their effects. The employer must also give the representatives written information on the reasons, the numbers, the selection criteria and the method of calculating any payments, and must notify the Director General for Industrial and Employment Relations.

Where a recognised union represents the staff, it is the natural party to that consultation. A process that sidelines it, or that treats consultation as a formality after the decisions have been made, is open to challenge. The NetEnt injunction shows that such a challenge can stop a timetable while the parties return to the table.

Consultation is also where the wider tools come in. These include redeployment within the group, placement with other employers in the sector, enhanced severance, and protection for people in a vulnerable position, such as employees on maternity leave. None of these is guaranteed by law in a fixed amount. All of them can be negotiated.

What employees and their representatives should do

• Ask for the information early. The reasons, the numbers, the selection criteria and how payments are calculated should be in writing. Without them, there is nothing to test.
• Look past the cash figure. Alternative roles, benefits continued for a period, and terms for people on leave can be worth more than a modest increase in the payment.
• Know where the leverage is. A defective consultation gives a union or an employee group a real basis to ask a court or the Industrial Tribunal for relief. That is rarely the goal, but it changes how the other side negotiates.
• Get advice before signing. A settlement usually closes off later claims. Read it before you accept it.

What employers should do

• Plan the consultation before the announcement. Building a timetable that allows real consultation costs less than defending one that does not.
• Engage the union where there is one. An agreement reached with the recognised union is more durable than one reached around it.
• Prepare alternatives. Redeployment and placement options reduce headcount losses and lower the risk of a challenge.

A restructuring will always be difficult for the people affected. A clear process, run in good faith, keeps it from becoming a dispute.