Tips for Restructuring

Restucturing / 24 July 2019
Tips for Restructuring

At our recent seminar series, we discussed the changing rules around restructuring.  This article outlines things to consider before implementing a restructuring process.

In order to justify restructuring (including termination for redundancy), employers must have both genuine reasons for change, and follow a fair process.

As a starting point, 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; and
    • 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.

Message for employers

While the restructuring process can be tricky to manage, ensuring you work within the current legal framework will assist you in achieving the best possible outcome for your business and employees.  There are myriad possible scenarios, and we recommend seeking advice before embarking on this kind of change, given the complexity involved in the law, and the need to ensure you’re taking the right steps in the circumstances.

For help with restructuring contact our team.

Disclaimer: We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.

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