Franco Manca, 225 jobs and the cost of assuming redundancy is straightforward

When a well-known brand announces closures, the public conversation is usually predictable. Attention turns to the sites shutting, the jobs lost and the broader health of the sector. All understandable.

Employment lawyers focus tends to turn to process!

This week, Franco Manca confirmed the closure of 16 restaurants across the UK, including Glasgow, with around 225 jobs affected as part of a restructuring. For those impacted, the story is immediate and personal.

For other employers, particularly SME leaders dealing with rising costs and sharper margins, it should prompt a different question:

If we had to do this, would we do it well?

That is not quite the same as asking whether a business could make redundancies. Many can. The more useful question is whether they would survive the process with finances, reputation and management time intact. Redundancy is defensible and it is often necessary. Getting it wrong though, can be costly – in both reputation and financial repercussions.

The trap hidden inside partial closures

Where an entire business closes, the legal narrative can be relatively clear. Where only some sites close and others remain open, things become more interesting, and not in the enjoyable sense. If one location shuts while another continues trading, similar roles may still exist elsewhere. Staff may wonder why they were selected and others were not.

Tribunals tend to wonder the same thing. That is where employers can find themselves defending questions such as:

• Was there a selection pool and if there was, was it too narrow?
• Were employees at other sites doing materially similar work?
• Do staff work across multiple sites on occasion?
• Were alternative vacancies genuinely considered?
• Was consultation real, or theatre with minutes?

None of these issues are fatal on their own. Together, they can become costly. Many SME leaders make the understandable mistake of believing that because a closure decision is commercially obvious, the legal process is equally obvious. It rarely is. Commercial necessity and procedural fairness are related concepts, but they are not twins.

Why SMEs are particularly exposed

Larger organisations often have HR infrastructure, templated documentation and managers who have been through restructures before. SMEs frequently have something else: agility, entrepreneurial instinct and a heroic tolerance for solving problems at speed. Those qualities are valuable. They are not always ideal in a redundancy exercise. Fast-growing businesses often carry historical inconsistencies. Contracts differ between sites. Reporting lines have evolved informally. Some employees are flexible in practice but not on paper. Managers know who is strongest, weakest, easiest and loudest. None of that reads especially well when later examined in a tribunal bundle. That is why a redundancy can be sensible in substance yet vulnerable in execution.

Consultation is not a ceremonial exercise

One of the more persistent myths in business is that consultation is simply what one does after the real decision has already been made. It is not, and it would be foolish to believe it. Consultation does not require an employer to abandon commercial reality, but it does require thoughtfulness. It is the point at which assumptions are tested, alternatives explored and employees given a genuine opportunity to respond. Sometimes nothing changes. Sometimes something important does. Even where the commercial destination remains the same, the route taken matters.

The golden opportunity many employers overlook

Often overlooked, employers would do well to consider whether the settlement agreement route mitigates litigation risk in part-business closures and more broadly. This way their litigation risk is mitigated to as close to zero as they might get and often for not much more than a redundancy process might otherwise cost.

Handled properly, they can be the golden opportunity in an otherwise difficult process. It is not about concealing bad behaviour or nefarious decisions. It is about carrying staff teams with you whilst maintaining the business direction of travel and achieving business objectives in a fair and balanced way. The option/timing/narrative around offering a settlement agreement where neither party has done wrong, can often soften the impact/raw feeling where there is a business need to cut overhead cost.

A well-timed settlement agreement can:

• draw a clean line under potential unfair dismissal or discrimination claims
• avoid months of management distraction
• preserve relationships and dignity on exit
• allow commercial budgeting rather than speculative defence costs
• prevent a manageable issue becoming a public one

For many SMEs, this is where strategy matters most. Defending a claim may be emotionally satisfying and commercially absurd. There is no medal for winning after twelve months at three times the value of early resolution. Equally, a poorly pitched agreement can inflame matters, so judgment and tone remain essential.

The wider lesson

Franco Manca’s announcement is not remarkable, because closures happen. The landscape of the hospitality sector has seen a marked increase in closures. Markets shift, costs rise and leadership teams make hard calls. What remains remarkable is how often businesses still treat redundancy as a simple operational task rather than a moment requiring discipline, empathy and foresight.

The employers who navigate these periods best are rarely the loudest or toughest. They are usually the most thoughtful. They ask the right questions early. They challenge their own assumptions. They document decisions properly. They understand that process is not bureaucracy but insurance. When resolution is available, they recognise it.

In employment law, as in business generally, the cheapest dispute is usually the one that never starts. If you need to take advice or need a steer on restructuring and/or redundancies/ exits, then don’t hesitate in reaching out to the magnificent employment team at BTO.