Navigating automotive workforce restructures amid falling UK car production

2025 is shaping up to be a year of change for the mobility sector, with economic pressures likely to lead to many employers considering restructuring exercises. We outline the steps employers should take to manage any such exercises appropriately.

Downturn in vehicle production

Domestic and export automotive markets have been affected by a global shortage of semi-conductors, logistical delays and rising energy costs. The result has been a sustained period of decline in new vehicle production in the UK. The Society of Motor Manufacturers and Traders (SMMT) reported that car manufacturing numbers had fallen below one million in 2024, seeing ten consecutive months of decline culminate in December’s new car output falling 27.1% below December 2023’s numbers. 

In such a challenging time for the market, there is likely to be an impact on the profitability and resource levels of OEMs and the suppliers who sell components to them. In addition to this, car manufacturing (like many other industries) is becoming increasingly automated, which may reduce the number of employees required for vehicle assembly.
If an OEM or supplier needs to cease production at a particular plant (or altogether) or has a reduced need for employees to perform certain kinds of work, then a redundancy situation could arise. For more information on identifying a redundancy situation, please see: What is and what isn't a redundancy situation.

Redundancies are already happening at scale. Research by CLEPA (the European Association of Automotive Suppliers) estimates that roughly 86,000 jobs have been lost in the European automotive industry since 2020. CLEPA also reports that an additional 32,000 redundancies were announced in the first six months of 2024, exceeding the job losses experienced in the worst period of the pandemic. 

Managing redundancies in the mobility sector

Should the downturn continue into 2025, OEMs and supply chain intermediaries will need to lean on support from their HR professionals to run any redundancy processes which might become necessary.

At the outset, HR should ensure that the business is clear on the reasons why redundancies are being considered and the types of changes being proposed. One will generally inform the other – for example, if a particular plant’s low output has made it untenable to continue production there, then there may be a place of work redundancy meaning that all employees working there need to be put at risk. If an isolated product line needs to be discontinued, then perhaps only the employees assigned to that line will be affected.
Employees in the ‘at risk’ pool should be scored fairly using appropriate selection criteria; personal opinions should not factor into the decision-making and an employer should be able to explain the scores given against each criterion. The best selection criteria are objective, measurable, and avoid vagueness which could be applied in a discriminatory way (for example, “flexibility” is hard to define, and a manager might assign a lower score for this where an employee has childcare commitments or difficulties arising from disability).

Even where objective criteria are used, potentially discriminatory impacts should be considered. For example, an OEM making redundancies on a production line might have a criterion measuring production outputs per employee, but adjustments should be considered if an employee’s disability causes them to work more slowly.

Consulting with the worker (and their Trade Union)

If fewer than 20 employees at a single establishment are being put at risk in a 90-day period, then the employer will need to consult with those employees individually. Affected employees should be invited to a series of individual consultation meetings. The first consultation meeting should concern why the business considers a redundancy situation has arisen, why that redundancy situation has led to the employee being put at risk, and any ideas about ways which could avoid the employer having to make compulsory redundancies. The employer should inform the employee of the timescales they are proposing to work to and give the employee an indication of the redundancy package they are likely to receive if their employment were to be terminated.

A short consultation period is unlikely to be enough to constitute a fair process, so rushing a consultation will come at high risk to an employer. Generally, an employer should aim to hold at least two further consultation meetings with affected employees. Those meetings should cover the possibility of alternative employment within the employer’s Group (for example, at another plant or on another model’s production line). If suitable alternative vacancies exist within the employer’s Group, they should be brought to the employee’s attention. The meetings should also give the employees opportunities to ask questions and make any counter-proposals. An employer may wish to offer voluntary redundancy during the consultation process, in which case written terms should be offered, and accepted, and often a settlement agreement (which will require the employee to take independent legal advice on the waiver of their employment rights in exchange for enhanced settlement terms) is used.

A potential alternative to compulsory redundancies could involve upskilling and redeployment. If demand for electric vehicles grows in line with the government's EV initiatives, perhaps OEMs could work with ‘at risk’ production staff to give them the necessary skills to work on them. Staff whose roles are no longer necessary due to automation may be suitable to perform more technically advanced roles with proper training.

If 20 or more employees are being put at risk within a 90-day window at the same establishment, then (in addition to individual consultation, which will also need to be done), the employer must consult with affected employees’ representatives. These could be elected representatives or, as is more often the case in the mobility sector, existing trade union representatives. Note that the Employment Rights Bill will, if implemented, remove the limitation on a single establishment, so that 20 or more redundancies across the workforce within 90 days will trigger collective consultation obligations.
Collective consultation must begin in good time. If 100 or more redundancies are proposed, consultation must begin at least 45 days before the first redundancies are intended to take effect (albeit the Bill will, if implemented, double this to 90 days). If fewer than 100 redundancies are proposed, then the minimum period of consultation is at least 30 days. At the outset, representatives should be provided with a prescribed list of information about the proposals (including, for example, the numbers and descriptions of ‘at risk’ employees and information on the use of agency staff). Collective consultation should be meaningful and done with the intention of reaching agreement on ways to avoid redundancy, reduce the number of dismissals or mitigate their consequences.

Lay-off and short-time working

If an OEM decides that the downturn in its production levels is temporary (for example, if production at a plant is interrupted), then it may wish to consider lay-offs or short-time working as an alternative to compulsory redundancies.

Laying off employees means giving them no work and no pay while maintaining their employment. Short-time working means providing employees with less pay and less work. Either option should be for a temporary period, as after four consecutive weeks (or six weeks in any 13-week period) the relevant employees will be entitled to statutory redundancy pay. 

Lay-off and short-time working are available where an employee’s contract makes their level of pay contingent on the amount of work they are given. OEMs should check their contracts to see whether they contain express terms to this effect and, if not, they may wish to introduce such terms through contract amendments.