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Bankruptcy and redundancy: how to communicate with staff

Communicating with staff requires careful thought, as those at Made.com learned after being sued by employees that were made redundant via zoom last year.

After Dutch e-bike maker VanMoof was declared bankrupt last week (18 July), an internal email was sent to staff announcing the news.

The email, first published by The Verge, said founders Ties and Taco Carlier were “extremely sorry” about the failure of the company and thanked staff. However, it did not confirm definite plans for the employees. 

So, how can employers use internal communications well if they have an uncertain financial future, or plan mass redundancies?

More on redundancies:

A quarter of UK organisations to make redundancies in 2023

Redundancy rounds top reason other employees want to quit

Layoff alternatives called for as tech sector redundancies hit 200,000

What, why and when

Mimi Brown, director of corporate communications at The PHA Group, said clarity is essential when communicating with staff through uncertainty.

Speaking to HR magazine, she said: “In times of pressure, which many businesses are facing to some degree right now, communicating well with employees and colleagues can be the difference between a secure, stable future and a highly uncertain one.

“The VanMoof founders’ email announcing the bankruptcy to their employees unfortunately highlights the disconnect between leadership from the panic likely being faced by the people in the organisation.

“No re-assurance is given to staff, no next steps were shared on the process or job security, and it also doesn’t explain why the situation has occurred. When it comes to difficult news it’s really important to help people, whether that’s customers or colleagues understand what is happening and, crucially, why.

“High-performing organisations are driven by employees that feel valued: staff receiving this deserved more context on something affecting their futures. In founder-led organisations this is particularly pertinent as they’re often united behind shared values and to hear directly from leadership is powerful and personal.”

 Key takeaways:

  • Explain why the situation has occurred
  • Be clear about employees’ futures
  • Avoid a disconnect between staff and leadership



Worry about your staff, not your legacy

Martin Tiplady, founder of HR consultancy Chameleon People Solutions, said communications around redundancy must anticipate staff’s questions rather than focus on the company’s legacy.

Speaking to HR magazine, he said: “The trouble with this announcement is that it may be written in a friendly and affable style but did not anticipate the questions that concern staff: pay, jobs and futures.

“In these circumstances, the concern should solely be about staff, not a so-called lasting legacy, when the company has just perished. 

“Whatever difficulties exist about the logistics, there is nothing better than face-to-face communication or if that's not possible, virtual. 

“It may be hard to answer questions but a willingness to stand in front of staff, face the abuse and hard questions, and say ‘I don’t know’ when they cannot be answered, says a lot about that organisation and the people that run it.”

Key takeaways:

  • Focus on your people’s future, not the company’s legacy
  • Anticipate people’s questions
  • Communicate face to face where possible


Outplacement protects staff and reputation

Liz Sebag-Montefiore, founder of HR consultancy, 10Eighty said the VanMoof company owners are in a similar state of uncertainty to the staff.

However, she emphasised the need to take care of employees and protect a brand’s legacy through outplacement services.

Speaking to HR magazine, she said: “I think to criticise the VanMoof letter too much is unfair. The bankrupt owners really don’t know what will happen next, what steps the trustees will take. The trustees will follow the required process and tell staff how their jobs are affected and what to do next.

“The best way to announce redundancies is face-to-face, with HR on hand to answer questions. If nothing else, this gives the workforce a forum and even if their questions can’t be answered at this point, at least they have a voice in the process. 

“Where possible, an ethical business takes care of employees. The provision of an outplacement service also sends a strong message that the organisation treats former employees with dignity and respect and reassures remaining employees who may have worries about the future of the organisation.

“From a PR perspective, outplacement is also crucial to managing the employer brand. A reputable name and respected brand can be damaged astonishingly quickly especially since social-media has magnified the scope, speed and reach of commentary that could potentially damage an employer’s reputation.”

Key takeaways:

  • Give staff an opportunity to ask questions
  • Outplacement is a responsible way to take care of staff
  • Be aware of the impact handling redundancies will have on the employer brand