Restructuring? Top tips to ensure you stay on the right side of the law.

Employment

Restructures and resulting redundancies are not straightforward. This is a complex area of law, and employers who get it wrong can face significant penalties and awards against them. These are our top tips for ensuring you protect yourself and your business.

Collect all relevant information regarding the reasons for the proposed restructure.

Often restructures are due to a business needing to save money, fast. However, there can be other entirely legitimate reasons, such as efficiency, or an owner wanting to take a more active role.

Whatever the case may be, all relevant information will need to be provided to potentially affected employees. Often your accountant and/or bank manager can assist in collecting this information.

Consider the provisions of the potentially affected employee’s employment agreements.

Including notice periods, and any process provided for restructuring and redundancies.

Present the proposed restructure and relevant information in a way the employees can understand.

Be mindful of any literacy and/or language barriers, and ensure financial information is presented in a clear and easy to understand manner. Organisational charts are often helpful to present the proposed new structure compared to the current structure.

Genuine consultation is key.

Provide adequate time for employees to consider the proposal and provide feedback. This includes a realistic timeframe for the employees to take advice.

Answer any questions an employee may have about the proposed restructure, and try to be flexible about how the employee can meaningfully engage in consultation – i.e. having the opportunity to provide feedback in writing, verbally, or in person.

Genuinely consider all feedback, comments, and discussions had during the consultation phase.

Document this well, for example in Board or meeting minutes.

If there is a decision to proceed with the restructure proposal, consider what that means for each individual employee.

Where an employee’s position is made redundant, and there is a similar position in the new structure that the employee can perform, or could be trained to perform, it is likely they will have to be offered the position rather than having to apply for it.

Ensure notice periods and any redundancy compensation in each employee’s individual employment agreement are strictly complied with.

Selection criteria.

Where two or more employees whose positions have been made redundant could do one role in the new structure, formulate and consult on the selection criteria that will be used to decide which employee is offered the role.

Take advice!

Restructures and resulting redundancies are not straightforward. This is a complex area of law, and employers who get it wrong can face significant penalties and awards against them.

If you would like any advice on restructing please contact one of employment law experts.

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Copyright © Cavell Leitch. All rights reserved. Redistribution is only permitted with express written permission. For enquiries please contact us. This article by its nature cannot be comprehensive and cannot be relied on by clients as advice. It is provided to assist clients to identify legal issues on which they should seek legal advice. Please consult the professional staff of Cavell Leitch for advice specific to your situation.