Redundancies & Restructures; what businesses need to know.

As the coronavirus pandemic continues to devastate lives and economies the world over, UK businesses face unprecedented levels of economic uncertainty and instability. It is therefore essential that businesses consider whether their workforce is the right shape and size to weather the storm.

However unpleasant, many UK businesses are likely to decide that a workplace reorganisation or reduction in headcount is necessary for their survival over the coming months, particularly as employees return from furlough leave and the lockdown restrictions are relaxed.  

Here’s some quick guidance from our team to help you differentiate and decide on which route you should consider to help your business navigate its way through these unprecedented times.

Redundancy and/or restructure?

The terms “redundancy” and “restructure” are frequently used interchangeably but they have entirely different legal meanings. Many employers find it difficult to differentiate between the two, but failing to identify a redundancy situation can result in a claim for unfair dismissal, or even a protective award.

What is a redundancy?

Redundancies are the result of an employer’s decision to reduce the number of its employees in a specific job role or the closure of a workplace. There is no denying that making the decision to enact redundancies is a difficult reality to face. However, when used in a structured and strategic manner, redundancies can offer a lifeline to struggling businesses whilst reducing the need for other workforce actions. 

What is a restructure?

There is no exact definition but usually a restructure refers to changes to a business’s organisational structure or roles within an organisation. This may or may not involve a loss of headcount.

 A restructure may involve the redistribution of work among the same number of employees, which may amount to a proposal to vary employees’ contracts rather than a redundancy situation at law.

Restructuring is predominately about keeping the right people in the right place and upskilling your workforce to support business growth. It’s a complex and delicate process that requires the utmost skill and experience in order to protect a company’s brand, performance and profitability.

What to do if you need to make changes?

For both redundancies and restructures it is vital that an employer follows a fair process to avoid claims for unfair dismissal. The foundation of a fair process is consultation with employees before any final decisions are made and employers must consult with employees on an individual basis (as well as collectively depending on the number of employees affected).  The process used to select employees for redundancy should be impartial and fairly applied and the employer should consider if there are any other appropriate roles that could be offered to the employee instead.

When contemplating making changes to your workforce, it is important to understand the potential legal consequences, impact on workforce morale and financial implications of not seeking expert legal advice.

Whatever the reasons for restructuring a business or making redundancies, it is imperative that those affected are treated fairly and procedures are followed.

If you think your business needs to consider redundancies or needs restructuring, our expert HR team & employment lawyers can support you with pragmatic and straightforward guidance. Contact us to find out more.