The Clients

Logica and CMG – The UK’s and Netherlands’ leading IT Companies

The Situation

In 2001/2002, following the boom years of the end of the millennium (Y2K) a deep recession gripped the IT Services sector. Logica and CMG each employing thousands of staff globally were forced into implementing large scale redundancy programmes. Then in 2002/3, in order to reduce costs further and improve efficiency, Logica and CMG merged. LogicaCMG was born but has since been re-branded as Logica.

Our Managing Director, Tom Fisher was working for Logica at the time. He was appointed to manage Logica’s UK redundancy programme and then to manage the integration of the two groups of employees into a single IT Services workforce.

Initially it was judged that Logica would need to shed nearly 1/5^th of its UK workforce of around 5000 staff. The UK’s CEO decided that the whole exercise should be completed within the statutory minimum consultation period of 90 days.

The Redundancy Task

Tom now had to ensure that a series of critical tasks were completed within a very demanding time-scale and had to liaise with, coach and manage both HR and line management colleagues in order to ensure the redundancies were completed with the 90 days.

The first priorities were to establish an appropriate redundancy policy and procedure and to commence consultations. With no trade union representation within Logica this necessitated the election of staff representatives from each of the companies operating divisions and the formulation of completely new consultative machinery. A staff communication was prepared and nominations were invited and within 10 days of the initial announcement the new consultative council was up and running.

Next, fair and reasonable selection criteria had to be established. This necessitated a major consultative exercise, initially with HR colleagues and Divisional Operations managers and then with elected representatives. Once the criteria had been established hundreds of managers had to be trained in their application and the results of the consequential selection exercises had to be recorded collated and moderated before being reviewed with elected representatives.

HR colleges were then trained to train their managers in the most difficult part of the whole processes – notifying staff that they were at risk of redundancy; consulting with them on a one to one basis and all too frequently, confirming that they were to be made redundant.

Behind the scenes Tom worked with other colleagues to ensure the calculation of redundancy and severance payments were undertaken and prepared and that quotations were ready to be issued.

After the receipt of formal redundancy notices a number of appeals were made and Tom’s priority at this stage was to ensure these were all heard my appropriately senior mangers in business units other than those in which the employees worked.

The Redundancy Outcome

All redundancies were affected by the 90 day deadline. A number of appeals against redundancy were up-held and a small number of unsuccessful appeals went to Employment Tribunal. However, none of these were up-held by the Tribunals.

The Merger and More Redundancy Tasks

However, within months of the redundancy programme and then still more redundancies it became apparent that a still more drastic remedy was required and the merger of Logica and CMG was announced. This time, Tom was appointed to manage the integration of the two UK workforces.

It was immediately apparent that further large scale redundancies would be required and Tom’s initial priorities were to work with the senior managers of both companies to establish what affect the integration of operating businesses and corporate services was likely to have on jobs. Once the broad scale was established – around a thousand redundancies out of a combined workforce of some 7000 employees – a joint Logica and CMG company council had to be constituted for the purpose of collective consultations. Once again a 90 day target for the completion of all redundancies was announced. Previously elected representatives from both organisations were consulted and agreed to take on the same role for the duration of the merger process.

If the forthcoming redundancy process was to be fair and just as importantly, if it was to be seen to be fair, it was of critical importance that those managers who would ultimately be responsible for making staff redundant, were themselves, seen to be appointed to the new organisation as the result of a fair and reasonable procedure. A key objective for Tom was therefore to develop such a procedure. Tom therefore worked with the Learning and Development Directors from Logica and CMG to establish a new set of management competencies that would be used as the basis for selecting the new management team. Tom prepared and issued the necessary guidance to Divisional Directors across the company after the competencies and been discussed and approved by the new company council.

Because the two companies would be merging into one new legal entity rather than one of them acquiring the share capital of the other, it was accepted that TUPE would apply. Because TUPE protects employees terms and conditions of employment, it effectively prevented Tom from seeking to harmonise terms and conditions of employment after the merger.  This presented a major challenge to Tom and the senior management team because the integration of two workforces into one, employed and operating under harmonised terms and conditions of employment, was an essential pre-requisite of the merger plan.

Tom therefore recommended that the harmonisation of terms and conditions should be tackled before the merger and the legal constitution of the new employer. This recommendation was accepted and new terms and conditions were proposed and consulted on at the company council and were subsequently accepted by the vast majority of employees in both companies before the merger took place. 

Once this obstacle had been overcome and the management team had been appointed on the basis of the new management competencies, the integration programme was largely a repeat of the redundancy process described above.

The Merger Outcome

Once again it was completed within the 90 days and there were no decisions made against the company at the few Employment Tribunals that were instigated. The new company, LogicaCMG commenced trading in 2003.