In a move aimed at slashing costs and adapting to challenging market conditions, Nokia, the Finnish telecommunications giant, has announced significant job cuts.
The decision comes on the back of disappointing financial results, which have been impacted by a slowdown in mobile network sales and a turbulent economic environment.
Nokia’s plan involves cutting up to 14,000 jobs worldwide, with an estimated cost reduction of up to €1.2 billion (almost $1.3 billion) expected to be realised cumulatively by the end of 2026.
The company’s CEO, Pekka Lundmark, expressed that these decisions, particularly those affecting its workforce, are among the most challenging ones a business can make. Nevertheless, he emphasised Nokia’s commitment to supporting all employees affected by this process.
The announcement of these layoffs coincided with Nokia’s report of worse-than-expected results for the third quarter of 2023. The company noted a 15 percent drop in sales compared to the same period in the previous year.
Nokia attributed this decline to macroeconomic uncertainty and higher interest rates, which continue to pressure operator spending. Furthermore, mobile network sales fell by a substantial 19 percent in the third quarter, largely due to a slower-than-expected rollout of 5G technology in markets like India.
Nokia is not alone…
It is not just Nokia feeling the strain, as its Swedish rival, Ericsson, also warned of lower sales in the latter half of 2023, citing similar challenges in the business environment.
Despite these challenges, Nokia has maintained its sales outlook for 2023, forecasting between €23.2 billion and €24.6 billion (equivalent to $24.4 billion and $25.9 billion) for the full year. CEO Pekka Lundmark expressed the company’s unwavering belief in the long-term attractiveness of its markets.
However, the move has sparked concerns and discussions within the legal and employment sectors in the UK, where Nokia has a significant presence. Several employment lawyers have weighed in on the situation and have emphasised the need for Nokia to adhere to legal procedures when implementing these job cuts.
Kate Palka, an Employment Lawyer and Client Legal Director at The Legal Director, noted that Nokia must justify the rationale behind these redundancies and follow a prescribed process that includes consulting with workplace representatives to ensure the process is legally “fair.” Failure to meet these requirements could result in unfair dismissal claims.
Redundancies are essential
Chris Cook, an Employment Partner at SA Law, echoed this sentiment, emphasising that meaningful consultation and the consideration of alternatives to redundancies are essential. Failure to meet these obligations could lead to separate claims for protective awards for not following proper consultation processes.
Melanie Stancliffe, an Employment Partner at the law firm Cripps, underlined the importance of informing the UK government and affected employees about the redundancies. She emphasised the need for Nokia to engage in a consultation process, including discussing how employees will be selected, what alternative roles are available, and what the financial packages will comprise.
Lorna Hughes, an Associate in the Employment Team at Ashfords LLP, added that specific legal requirements come into play when a company proposes to make 20 or more redundancies within a 90-day period. Nokia must adhere to these requirements, listen to employee and representative suggestions, and consider alternatives to dismissal to prevent potential unfair dismissal claims.
Nokia’s decision to cut thousands of jobs is a response to challenging market conditions and a disappointing financial quarter. While the company remains optimistic about the future, it must navigate a complex legal landscape to ensure the fairness and legality of its job reduction plan.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.