After missing out on £27.5m in funding from the Government's Regional Growth Fund, Lotus has announced that 99 jobs are to be cut at its plant in Hethel, Norfolk.
In a letter to staff, chief executive Dany Bahar said there is a “need to reduce headcount in a number of areas.” Management has since taken further steps and invitations have been sent out for voluntary redundancy applications from employees. Mr Bahar said that job cuts were necessary if the future success of the company was to be secured. However, a spokesman for the company said the restructuring could lead to fresh recruitment in the near future.
The government’s Regional Growth Fund was claimed by the car maker to have had the potential to create over 1,000 jobs. The £1.4bn fund was launched earlier this year to help private sector businesses create sustainable jobs. Other companies including Nissan and Jaguar Land Rover have already secured some of the available funding to help them grow and create jobs. Lotus is said to be reapplying for funding from the fund.
Some have raised the issue of employment law. When facing redundancies, firms often resort to cutting 99 jobs – the ‘magic number’.
Geoffrey Mead, employment partner at Eversheds, explains the current law: “You come across employers who will keep the number of redundancies below 100 to have a period of 30 rather than 90 days. You might say that is a bit sneaky but it is structuring your decisions to comply with legal requirements.” He said Lotus could save significant wage costs – “60 days’ pay for up to 99 people” – by doing this.
A Lotus spokesman said: “As a natural part of Group Lotus evolution, we are undertaking an efficiency review. Part of this review is a planned restructuring of back-office functions which regrettably will lead to the loss of some positions ahead of a recruitment programme in the near future.”
Group Lotus is a subsidiary of Malaysia’s Proton Holdings and is itself a parent company which owns car manufacturer Lotus Cars and Lotus Engineering.