Legal considerations when designing a restructure

As well as considering what a restructured organisation will ‘look like’ and how and when you are going to communicate plans with staff, there may be elements of your planned restructure that involve a formal legal procedure or have potential legal vulnerabilities.

Possible redundancies

It is obviously common for a restructuring to result in people being made redundant, and to ensure this is lawful, you need to be certain that it is necessary, that the requirement for the employee/s concerned to carry out work of a particular kind has diminished (or been removed entirely), and that their dismissal because of this. That would constitute a fair reason for a redundancy, however even in the event of a fair reason for redundancy you must also follow a fair process.

Consult – even when only a very small number of staff are affected, you still need to consult with them, although the longer timescales expected of bigger organisations or larger-scale redundancy programmes won’t be necessary. Consultation means giving them information about the proposed change, and giving them meaningful opportunity to comment, raise concerns, make suggestions, and for these to be considered and responded to.

Select fairly- even in very small-scale redundancy situations it may be that you have more than one member of staff who could be made redundant and will therefore need to select who will be redundant and who will stay. How you do this may depend on the situation. Sometimes applying for new jobs is suitable, but often it will involve scoring employees against criteria, usually involving things like performance, skills, disciplinary record and attendance record. It’s important to avoid any criteria which could be discriminatory (or to make adjustments to those criteria where this is a risk), and use objectively substantiated evidence where possible – for example solid evidence from performance reviews rather than the subjective opinion of a line manager.

Allow representation – like with any dismissal, if an employee attends a meeting which could result in their dismissal, they are entitled to bring a colleague or union representative with them.

Allow an appeal – similarly with any other dismissal, you should allow an employee to appeal the decision, even if they have been consulted fully.

Changing contracts

Even if you can avoid redundancies as part of your restructure, it is very possible you will need to make changes to employees’ terms and conditions, either small changes such as job title, or more significant ones like hours of work or location.

As a starting point, the legal position is that consent is required to change terms and conditions, however obviously you need to be prepared for this not being given. Remember the following when you need to make contractual changes:

  • Seek agreement first, using a compelling business case and explaining the changes, as well as reassuring employees about any concerns they may have.
  • If you can make any adjustments to the changes that might encourage your employees to agree to them, this is probably preferable to trying to force through a change.
  • Incentives can be used to encourage agreement. These can be financial incentives or perhaps incentives in terms of working arrangements, such as increased flexibility of hours, or homeworking.

 

If you cannot get your employees’ agreement to the necessary changes, you could abandon the idea, or, if it is genuinely necessary, either impose the change on the staff or dismiss them and reengage on the proposed new terms and conditions. Both of the latter options come with legal risks, so it is important to take advice before going ahead, but ultimately if you have followed a good procedure, consulted fully and have good business justification for the changes being necessary, the risks are low.

 

 

If you would like advice on legal procedures when restructuring your small business, do get in touch.