Restructures and redundancies
In the current economic climate and in particular the last quarter, we have been helping clients with restructure and redundancy processes to assist in reducing costs and navigating these uncertain financial times. In most instances, clients have fully exhausted other cost saving measures in their businesses and are still struggling to reduce costs.
Restructures and redundancies are when a business needs to change or remove roles. These processes are about changing roles and not focused on the people in the roles (although naturally they will be impacted). The desired impact on businesses is that their labour force is realigned to what the business needs or their overall labour costs are reduced. The impact on employees is that their day-to-day duties and terms of employment may change or unfortunately their position may be surplus to requirements, and they are made redundant.
To consider making these changes in a workplace, businesses need to first establish a genuine business reason for requiring the change and present this to employees for their feedback. So far in 2023 in processes we have assisted on the business reasons have included:
· a decline in sales/services (most common)
· outsourcing of services to another business
· consolidation of services from multi-sites to a single site
· changes to services provided to meet current market demands
As is often the case in employment matters, if businesses don’t follow the proper processes, they may be at risk of a personal grievance, as well as low staff morale and the associated problems that flow on from that. Restructures and redundancies are not an opportunity to remove employees with performance issues. These concerns should be addressed under a performance management process.
The correct process to follow for restructures and redundancies is:
1. Present your proposed business case to employees including:
a) The reason you believe it is required and evidence that supports this.
b) The proposed changes and the impact of these proposed changes to the business and employees. This may include proposed new position descriptions and organisational charts.
c) In the event that you may be reducing the number of total positions but not removing them entirely (e.g., going from 8 salespeople to 4 salespeople) the proposed selection criteria for selecting who will retain a position.
d) Where support and assistance can be found for employees during the process.
2. Give affected employees reasonable time to provide feedback on anything in your proposal.
3. Genuinely consider their feedback. This may include going back to step 1 if something meaningful is suggested that you may not have considered.
4. Make the decision on how you are going to proceed (having considered the feedback provided) and advise all affected employees of your decision and when it will be effective from.
5. In the event of redundancies, exhaust all possible redeployment into other positions that may be suitable to employees holding the current positions being made redundant.
a) You would apply the selection criteria (if there is one) at this stage and give affected employees an opportunity to comment on the application of the criteria as it has been applied to them before finalising your decision.
6. Exit any employees whose positions have been made redundant as per their employment agreement.
7. Implement the new structure in your business.
If you’re an employer needing to embark on a restructure process, please get in touch. It is a technical legal area and if not done correctly, can be costly should an employee challenge your process and/or decision. We have cost-effective options to suit all budgets.
