Implications of cutting workforces

07 October 2016

Mining companies globally that have sought to reduce costs have in some instances been forced to cut workforce size.

The decision to reassess staffing levels, on account of high labour costs, is rarely made lightly; cutting workforces is extremely contentious both from a legal and reputational perspective, and it can impact long-term productivity as staff morale is adversely affected. Yet there are other, more positive ways, to manage costs around employees. A company’s Employee Benefits program can be essential in strategically managing costs around employees and, crucially, can also be used to retain talent.

Workforce reductions inevitably carry a range of commercial and contractual risks. These risks are more acute in the mining sector on account of the unionisation of the workforce, but also because of complex, and ever-evolving, employment legislation and, the fact that employment law and regulations vary immensely between countries. For mining companies with global portfolios, non-adherence to local employment law can carry financial penalties and heighten reputational risk. In addition, many emerging markets are becoming increasingly litigious. As such, mining companies have a range of short and long term risks to manage when making cuts to workforces.

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For further information, please contact Harry Floyd, Partner, Mining on +44 (0)20 7466 1305 or email harry_floyd@jltgroup.com

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contact Harry Floyd
Partner, JLT Mining harry_floyd@jltgroup.com