What to know if you’re restructuring your business and employee roles

Think you need to make some changes to the current roles within your team? 

Maybe the business isn’t doing so well or just lost a major contract? 

Or do recent changes to your systems or technology mean that you just don’t need people doing the same mahi anymore?

Sounds like you might need to look at a restructure process.

Restructure

Restructuring is a process where the structure of a business is changed by changing, replacing or removing positions in the business.  Sometimes, a restructure can lead to certain positions becoming redundant because they aren’t needed anymore.  Whilst connected, the processes are separate.  But through both processes, an employer needs to act in good faith.  To do this, there are two fundamental things that are needed:

• A genuine reason to make changes and restructure (and ultimately to make any redundancies); and
• A robust process which involves genuine and proper consultation with all affected employees.

Genuine Reasons

An employer must have genuine commercial reasons for undertaking a restructuring process.

This means that redundancy is always about the positions that need to be changed, and never about getting rid of a particular employee.  So a restructure cannot be used to get rid of an employee because of their poor performance or illness – those are quite separate issues specific to an individual.  With a restructure, we start with the existing structure and positions/roles, and then we develop a new structure that will best fit the commercial needs of the business. 

We note that commercial reasons don’t necessarily mean that the employer has to be experiencing financial difficulties.  While business operations may be successful, an employer may elect to make itself more efficient by abandoning or contracting out less profitable areas.  Part of assessing whether there is sufficient justification for a restructure is to also think through any other alternative solutions that may also achieve the desired outcome.

Consultation

Employers must consult with employees that may be affected by the proposed restructure.  This is critical and should, like any staff communications, be genuine – despite the often-difficult circumstances.

To start this process, an employer should clearly communicate the details of the restructuring proposal to any potential affected employees.  This would include providing potentially affected employees with access to information relevant to the proposed restructure and advise each employee how they might be affected if the proposal is implemented.  Each employee should have a reasonable opportunity to meet with the employer and to ask any questions or provide feedback.  Where there is considerable change proposed or redundancy is an option, it is reasonable for an employee to have a couple of weeks to provide feedback and/or seek advice.

Of course, once any feedback is received, a key part of the process is for the employer to then consider the feedback from all affected employees in a genuine way.  Employees should be invited to provide any alternatives to the proposed restructure and, where those are provided, they should certainly be considered closely and with an open mind.

Once the consultation process is complete, the employer will be in a position to make decisions about commercially viable options available going forward.  For example, a new position may be created that was not originally foreseen.  If this is the case, the criteria used to select the successful candidate must be clearly communicated to affected employees where more than one may wish to apply for the position and/or would be considered.

Where any employee is ultimately made redundant through a restructure process, the employer must act in accordance with the relevant employment agreement.  There is also an obligation to consider any redeployment opportunities available to an employee who is made redundant. 

Tread Carefully

In the midst of circumstances that require such significant change as a restructure, it is easy for small parts of the process to fall through the cracks.  As in any employment process, it can unfortunately be those small parts that create risk to the business in terms of personal grievances by the employee.

If an employee raises a personal grievance in respect of the restructure or any redundancy, the employer’s consultation process, decision making process and reasons for undertaking the restructure will all come under scrutiny.   It is often here that any ulterior motives which may exist become easily visible and clearly set out rationales for any decision making are incredibly valuable.

If you need assistance with setting up and managing a restructure process, please contact us. 

Renika is a Director and leads our Workplace Law Team. She can be contacted on 07 958 7429.