Return to office (RTO) – productivity programs or stealth layoffs?

Amazon made headlines with a full return-to-the-office policy recently: Five days a week, for all employees, from January. The company is following examples from other players like Apple, AT&T, Disney, Twitter/X, and more, citing the increased “energy, collaboration and connections within the company”. For many employees hired during or past COVID, the motto of the return to office policy is “relocate or resign”. Obviously, this is raising some eyebrows over the real intent behind these measures.

Latest return to office (RTO) policies

Amazon shocked its ranks when CEO Andrew Jassy told workers they would be expected to report to the office five days a week from January. The decision represents one of the hardest “return to office” (RTO) policies from a major corporation since the pandemic when offices were suddenly closed and many employees shifted to remote work. For many companies, it was more or less 100% work from home during the pandemic, with some – like Amazon – ordering employees back to the office for 3 days a week. A move back to full physical presence 5 days a week is still unusual, especially for a business in the tech industry, which has largely embraced remote and hybrid work arrangements. Amazon, however, has defended the RTO mandate, claiming it has stimulated more energy, collaboration, and connections within the company.

The challenge for employees working from home

Many employees, previously working from home, now face a pressing dilemma from return to office (RTO): relocate to an Amazon hub, find a nearby office or tender their resignation. This abrupt policy shift has left employees feeling disconcerted and undervalued, with some already contemplating job changes and others anxious about the prospect of increased workloads due to potential colleague resignations.

This “relocate or resign” policy resemblances other, similar moves in the US (e.g., Apple, AT&T, Disney, Twitter/X), which did raise suspicions of a covert layoff strategy. The seemingly straightforward phrase “relocate or resign” could be a smoke screen concealing an attempt to shrink workforce numbers without the accompanying packages for people getting fired. This might be a very effective move. Many employees will be caught off guard by the sudden change, and then face the illusion of choice: The either disrupt their lives and relocate – or hand in their resignation.

Many suspect other motives at play

This has led to suspicions that the policy might be a hidden layoff strategy, encouraging employees—particularly those who prefer remote work or moved away during the pandemic—to resign on their own. The “relocate or resign” approach could be a cover for reducing the workforce without the costs or negative publicity of formal layoffs, offering several advantages for employers:

• Voluntary Attrition: Employees who prefer remote work may leave on their own due to RTO requirements, avoiding severance payments or legal challenges.
• Cost Savings: Reducing headcount without formal layoffs saves on severance pay
• “Engagement indicator”: Return to office policies might signal which employees are less engaged or productive, justifying further headcount reductions based on performance.
• Control Over Workforce Restructuring: Employers can indirectly manage their talent pool, retaining those (with exemptions to RTO), while encouraging all others to exit.

Overall, RTO programs might seem to be a subtle and cost-effective means for employers to reduce staff – without the drawbacks of traditional layoffs. However:

Don’t panic – and don’t hand in your resignation just yet!

Disregarding the negative impact on team morale and corporate culture, downsizing at least be a convenient side effect of such programs. However, in our view, many of these RTO plans seem a bit… unrealistic. Do the math — can your office fit 100% of your colleagues, five days a week? Even before the pandemic, many companies operate with only 60-70% office capacity (seats per full-time employee). Also, the RTO might be a breach of contract, collective agreements and might need works council involvement. This makes the 5-day RTO demand to look like… a bluff and really a steath layoff program for all those who are most vulnerable or fall for the “relocate or resign” story.

Even if RTO might ruin your life, don’t rush to resign

We therefore believe that employees should never rush to resign due to the negative effects from RTO policies yet – for several key reasons:

• Potential breach of contract: For people hired as a remote employee during or after the pandemic, a full RTO may be a change of contract that cannot legally be “ordered” by the employee in many jurisdictions. However, an RTO can be perfectly within your employer’s discretion without an explicit work-from-home provision in your contract. At least in Germany, an employer can determine the place of performance of work and issue instructions. An RTO is legally permissible – again, unless the employment contract state otherwise
• Breach of collective agreements: Employees may be protected by collective agreements – and challenging the RTO requirements could be successful.
• Failure to involve the works councils: In Germany, the works council could be entitled to a right of co-determination for cases of RTO (depends)
• Loss of severance pay: By resigning, employees forfeit potential severance pay, which they might receive if the company eventually initiates layoffs or offers voluntary exit packages.
• Loss of Unemployment Benefits: Quitting voluntarily often disqualifies employees from receiving unemployment benefits, leaving them without financial support during the job search.
• Leverage for Negotiation: Staying in the role allows employees to negotiate flexible arrangements, such as hybrid work or special accommodations, that might improve their situation..
• Job Search Buffer: Remaining employed provides stability while looking for a new job, enabling employees to transition on their own terms rather than out of urgency.

In a nutshell

Many employees affected by a new RTO plan face the dilemma of relocating to an office hub or resigning. However, RTO, as seen recently in companies like Amazon, is suspected of being a covert layoff strategy to reduce headcount without the costs and fallout of another big layoff program. While the policy pressures employees who prefer remote work to quit, it may also be a bluff. As many offices lack the capacity for a full return and the RTO can be legally challenged in many cases. Employees are best advised not to resign hastily, as staying may offer legal protections and negotiation leverage for a fair severance package. When in doubt, it might be advisable to check your options with a lawyer: