Alternatives to Redundancy: EU Factory Playbook

Not enough time to read the full article? Listen to the summary in 2 minutes.

When layoffs feel inevitable, here’s what smart manufacturers do instead.

When market conditions tighten, the first instinct for many factory leaders is to reach for headcount cuts. But in Europe – especially Germany, France, and Central Europe – redundancies come with high costs, long timelines, and lasting reputational damage.

What if you could reduce payroll pressure without immediate job cuts?

This playbook explores practical alternatives to redundancy that manufacturers across the EU are using to stay flexible, preserve skills, and maintain production readiness during downturns.

We’ll keep it clear, actionable, and grounded in real execution – not theory.

Why Redundancy Is a High-Stakes Move in Europe

Laying off workers in EU member states is legally complex and expensive. Employers face strict consultation requirements, potential delays from works councils, severance costs, and possible court action for unfair dismissal.

In Germany, for example, employers must:

Consult with the Betriebsrat (works council) before any collective redundancy
Follow social selection criteria (age, tenure, family status) for layoff decisions
Offer a Sozialplan agreement — often with costly severance and retraining funds

Add the reputational risk of union backlash, media exposure, and the difficulty of rehiring later – and redundancy stops looking like a quick fix.

That’s why many manufacturers now treat layoffs as a last resort, not a default.

Start with the Right Question: What Are You Trying to Solve?

Before choosing any strategy, isolate the real constraint.

Are you facing:

A short-term drop in orders?
Margin pressure due to energy or input costs?
Structural overcapacity in a specific plant?
Slow decision-making from HQ while losses mount?

Each scenario needs a different fix. If you’re only trying to shave payroll for the next 3 months, shedding skilled operators permanently might backfire.

If one plant is outdated but others are at capacity, relocation or rotation might solve more than a cut would.

Proven Alternatives to Redundancy in EU Manufacturing

Here’s what manufacturers across Europe are doing instead of letting people go.

1. Kurzarbeit (Germany) and Similar Subsidy Schemes

Germany’s short-time work scheme allows companies to temporarily reduce working hours while the state compensates employees for lost pay. Other countries have similar models:

Austria: Kurzarbeit
France: Activité partielle
Italy: Cassa integrazione

These tools keep workers on contract while reducing labor costs during demand dips. They’re designed to protect jobs – and they work.

Firms that use short-time work effectively avoid rehiring and retraining costs once demand returns.

2. Voluntary Exit & Early Retirement

Some companies offer exit packages to older workers or those close to retirement. This preserves morale and avoids forced terminations. The key is structuring the offer attractively – not just financially, but with dignity.

You’ll need careful legal design and negotiation with the works council. Interim HR or restructuring experts are often brought in to run these programs quickly and discreetly.

3. Internal Redeployment

Instead of layoffs, companies shift workers between plants or roles. For example:

Move excess headcount from a high-cost site to one with capacity
Rotate teams into maintenance, training, or digital projects
Cross-train for roles with rising demand (e.g. logistics or inspection)

This works especially well in industrial groups with multiple facilities across Europe – but only if mobility clauses are clear and local labor laws allow it.

A temporary move can solve a structural problem – if handled with empathy and clear communication.

In industries with seasonal demand or erratic order flow, some firms reduce shift length or alternate working weeks. Two employees may share one role for a period, with compensation adjusted accordingly.

While not viable long-term, it buys time. More importantly, it keeps your trained workforce intact for a rebound.

Why Execution Matters More Than the Idea

These alternatives only work if they’re executed right.

That means:

Mapping all legal and labor obligations by country
Engaging works councils early and respectfully
Communicating with clarity to teams
Backing up strategy with a reliable financial case

Execution takes capacity – and that’s exactly what many firms lack when the crisis hits.

This is where interim leadership can help. Companies often bring in a seasoned interim HR director, restructuring lead, or program manager to handle a short-term workforce reset.

At CE Interim, we’ve seen this play out inside factories across Europe. When internal teams are stretched or politically exposed, outside execution leaders get the job done quietly and cleanly – without triggering internal conflict.

Real-Life Use Case: From Layoffs to Rotation

A Central European automotive supplier planned to cut 80 jobs after a sudden drop in export orders.

Before moving ahead, they brought in an interim operations lead to assess alternatives.

Within 3 weeks:

A cross-border rotation plan moved 40 workers to a sister plant in Romania
The local team restructured 3 production lines to reduce shifts but preserve continuity
Talks with the works council produced a voluntary retirement package for 15 more

In the end, they avoided involuntary layoffs entirely – and positioned the company to scale back up six months later with no hiring delays.

Common Pitfalls to Avoid

Not every company gets this right. Here’s where most fail:

Waiting Too Long

By the time layoffs are on the table, tempers are high and your credibility is low. Move early. Engage teams before cuts are announced.

Misjudging Legal Complexity

One HR policy won’t cover your whole European footprint. Germany isn’t Poland. France isn’t Slovakia. Local compliance is non-negotiable.

Using Redundancy as a Default

Layoffs are irreversible. They should never be your first option. Treat them as the end of the process, not the start.

Internal Politics Blocking Action

You can’t lead a reset with the same leaders who created the problem. This is why many firms temporarily install an outside transition lead – someone who can manage change without fear or bias.

What Interim Leaders Do Differently

Sometimes you don’t need new ideas. You need someone who can push the execution through.

That’s the job of interim leaders. When you bring in a specialist with EU restructuring and plant transformation experience, you:

Buy time to find a permanent fix
Move fast without internal friction
De-risk legal and employee relations issues
Keep control of the message with works councils and external stakeholders

The best ones don’t just manage the exit. They rebuild the next phase – helping you turn a crisis into a clean, structured relaunch.

Conclusion: Rethink Redundancy Before It’s Too Late

Letting people go may feel like the fastest way to reduce costs. But in Europe, that move is slow, expensive, and often final.

Your workforce holds more value than just headcount. And when the market returns – as it always does – you’ll need their skills again.

So before you send the letter, ask a different question.

Is there another way?

With the right mix of legal insight, financial strategy, and operational execution, there almost always is. Sometimes you just need help seeing it – and acting fast enough to make it work.

If your leadership team lacks capacity or neutrality to lead that shift, bring in someone who can. Interim execution is not about theory. It’s about getting things done – before your options run out.