Redundancy Package Structuring

Structuring redundancy packages is a critically important process that requires a meticulous blend of financial, legal, and HR strategies. When a company undergoes reorganization due to economic difficulties or technological changes, workforce optimization becomes necessary. However, dismissing employees involves more than just issuing a notice. It is a complex legal procedure where the employer must comply with collective redundancy laws, and the employee must receive fair compensation. A properly structured redundancy package not only protects the company from litigation but also ensures a dignified exit and social protection for the employee.

What Does the Redundancy Package Structuring Service Cover?

Labor law specialists registered on Legal.ge assist both employers (in creating packages) and employees (in evaluating offered terms). The service includes:

• Compliance Audit: Determining the minimum compensation the employee is entitled to under Georgian legislation and their individual contract.
• Developing Compensation Formula: Creating a financial model that considers tenure, position, unused leave, and additional bonuses (e.g., "Golden Handshake").
• Managing Collective Redundancy Procedures: Preparing mandatory notifications for the Ministry of Health and employees as required by law.
• Defining Non-Monetary Benefits: Extending health insurance, providing reference letters, career counseling (Outplacement), and training for finding a new job.
• Drafting Settlement Agreements: Creating a legally sound document where parties agree on compensation terms and waive future claims.

Common Real-World Scenarios

This service is particularly relevant in the following cases:

• Mergers and Acquisitions (M&A): When merging two companies creates duplicate positions (e.g., two CFOs), and one needs to be let go with dignity.
• Liquidation of a Branch or Department: When a specific business line is closed due to a change in strategy.
• Economic Crisis: When a company is forced to cut costs and lays off more than 10% of its staff (mass redundancy).
• Top Management Change: Dismissal of high-ranking executives, where the compensation package includes stocks, options, and strict confidentiality guarantees.

Georgian Legislation and Legal Framework

The redundancy process is strictly regulated by the Organic Law of Georgia "Labor Code of Georgia". Article 47 defines the grounds for termination of an employment contract, including "economic circumstances, technological or organizational changes."

Special attention is paid to Collective Redundancy (Article 48^1). If an employer plans to dismiss a significant portion of the workforce, they are obliged to notify the Ministry of Labor and the employees in writing at least 45 days in advance. The law also mandates a minimum compensation of at least one month's salary (Article 48), although parties can agree on more. Incorrect calculation of the redundancy package or violation of procedures can lead to the dismissal being declared void and the employee being reinstated with full back pay.

Step-by-Step Process with a Specialist

The involvement of a professional lawyer ensures transparency in the process:

1. Analysis and Strategy: The lawyer evaluates the legal grounds and risks of the redundancy.
2. Package Modeling: A draft offer is created, including financial and non-financial benefits.
3. Negotiation: A meeting between the employer and the employee (or trade union) to agree on terms.
4. Documentation: Signing the final agreement, which protects both parties from future disputes.

Why Choose a Specialist on Legal.ge?

The redundancy process is emotionally and legally complex. An improperly drafted document can cost a company thousands in court damages while leaving an employee without due compensation. Specialists on Legal.ge possess deep knowledge of corporate and labor law, guaranteeing that the redundancy package will be fair, legal, and acceptable to both parties.