With uncertainty our new normal, we are regularly seeing employers forced to undertake restructuring and redundancy processes, amidst confusion over the legal obligations around this.

It is often a balancing act to meet urgent business needs, while meeting duties to employees.

Recent media reports of large businesses downsizing without mention of consultation have added to the confusion, but despite the impact of COVID-19, employee rights remain and personal grievance claims where things go wrong are often expensive to address and resolve.

Kate Ashcroft from Copeland Ashcroft gives us some top tips to help steer business owners in the right direction.

You need to restructure: Where do you start?

Employers need to look at the individual employment agreements, collective agreements and organisational policies as these documents set out the basis of the employment relationship and the foundation for the restructuring process. Specific clauses to consider are notice period, compensation and any other provisions relating to the restructuring process.

Genuine business reason

Employers have the right to make changes to their business, however, employers must have genuine business reasons when proposing changes to employees’ roles, and must explain these to employees in consulting regarding changes.

Additionally, employers should be able to produce appropriate evidence of the need for change, for example if financial reasons are outlined, source documents must accurately reflect those.

Fair process

Employers must follow a fair process, including consulting affected employees regarding the proposed change before reaching and communicating a final decision.

In a nutshell, fair process generally involves:

• Developing a written proposal, which outlines what is proposed, and why, with supporting documentation
• Meeting with affected employees to provide the proposal and explain the process, which includes:
  • Receiving employee feedback
  • Genuinely considering and responding to the feedback
  • Reaching a decision regarding the proposal and communicating this to affected employees.

Employers must also consider redeployment options for affected employees and use selection criteria when reducing multiple roles.

If you are intending to undertake a restructure it is a good idea to get initial advice around what is specifically required for your employees and business. As there are a lot of moving parts its best to embark on the process with legal guidance around the justification and procedural requirements.

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