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Understand legal regulations on workforce transformation
Organizations are bracing for an uncertain future by implementing hiring freezes and, in some cases, reducing the size of their workforce.
In the past year, we have seen announcements of major headcount reductions from multinational corporations, often influenced by advances in technology. This trend is expected to continue well beyond 2027, with certain sectors facing a rapidly changing future where AI and automation streamline work processes and make some roles obsolete. At the same time, organizations are experiencing growing demand for new skills to manage and complement these technological developments. Flexibility and adaptability will be key factors for success.
Employers need to proceed carefully when planning a workforce transformation project. Labor and employment law issues can pose significant challenges during business transformations. Managing workforce retention and reduction programs effectively remains crucial for success. Key considerations include establishing legal justification and fulfilling information and consultation obligations toward employee representatives. Even broadly worded announcements about headcount reductions or cost-saving initiatives may trigger consultation requirements in certain jurisdictions.
When planning a workforce transformation, it is important that employers have a thorough understanding of the regulatory landscape to ensure compliance with local laws and regulations. Multinational organizations face differing legal frameworks across jurisdictions, each with separate procedural requirements that can make global restructuring challenging and complex. Generally, a “one-size-fits-all” approach is not feasible. Failure to properly address workforce issues can expose organizations to various risks, including damage to employee relations, the organization’s brand and its business relationships.
In this edition of the EY Global Labor and Employment Law Strategic Guide, we examine the legal landscape regarding workforce transformation across 47 jurisdictions worldwide.