Business Restructures - Get it Right

Employers often look to restructures when economic uncertainty is looming. With that in mind it is vital employers fully understand their legal requirements if looking to restructure and make staff changes.

1. It must be legitimate

As a starting point here must be a valid, well documented and legitimate business reason/s for the employer wanting to disestablish a position in its organisation. Robust evidence must support these reasons and be the primary rationale for the redundancy.

2. It’s not a way to get rid of a poor performer

The position when looking at the organisation structure as a whole must be surplus to requirements. The restructure cannot be about getting rid of a particular person. It is easy to spot when a low performing employee is targeted for a restructure.

3. It must be a significant change

A significant change to the actual role is required and a minor change to a role will not be sufficient. Roles that are sufficiently similar to a current role will not warrant a restructure.

An important note is that job descriptions are not always accurate/up to date so employers should really ascertain what the person actually does and not what the job description says they do before starting a restructure.

Good Faith and Fair Process

Not only must the employer have substantive grounds to disestablish the role but the employer, just as importantly, has to follow a fair process. The good faith requirements requires consultation which means setting out in full the reasons for the restructure, providing all the relevant information relied upon to come to that decision to terminate for redundancy and give the employee opportunity to provide feedback. If an employer fails to provide all the relevant information or just not provide the relevant information upon request or turn its mind to any questions posed by an employee this could give rise to a personal grievance for unjustified dismissal or an unjustified disadvantage.

Redeployment Options

We see employers often fail to look at the redeployment option once they get past the disestablishment of the role however if the restructure involves making a position redundant and creating a new role employers must also carefully consider appointing the employee/s to these positions. Where it is clear that a new position is similar in duty to remuneration and skill level to the redundant position, redeployment should be offered. The obligations will not be discharged by merely inviting a departing employee to apply for a new role. If redeployment is possible the position should be offered without an advertisement or application process.

Employers need to take care when proposing to make an employee redundant. Case law has confirmed a number of cases where the courts put a restructuring and redundancy decision under increased scrutiny.

It is therefore more important than ever to seek solid employment advice to assist you in making these important decisions. If you are looking for help we are here to assist - call Katherine McDonald on 03 211 0924