24 September 2018

How to restructure your business

Often it is a necessary process for companies to make redundancies to ensure they can restructure their businesses to help make important cost savings.

The notion of redundancy is often used as a catch-all term for a dismissal, but actually the legal definition only encompasses business closure, workplace closure and reduction of workforce. An employee is redundant, if the work associated with their position has ceased or diminished at the employee's place of work.

It is more important than ever in redundancy situations to ensure full consultation and consideration of all issues. There is a statutory requirement to consult with Employee Representatives/Trade Union at least 30 days before any action is taken, if there are over a certain number of positions that are being considered for redundancy.

Redundancy dismissals require consideration of a wider and more varied range of issues than other types of dismissal. Employers must keep an open mind until the entire consultation procedure has been completed, and most likely more than one meeting with each individual concerned is likely to be necessary. If Trade Unions are recognised it is advisable always to include them in consultation in order to demonstrate reasonableness, regardless of the number of employees involved.

The majority of issues that the HR advisers come across are companies think that the process is too long winded and therefore jump ahead stages and not engage properly in the consultation process. A lot of companies also struggle with how to manage employees that are on long-term sick/maternity leave. Sometimes companies will also use it as a mechanism of getting rid of someone, they see it as an opportunity to get rid of individuals e.g. those that are not performing. This course of action is always unadvisable due to the fact that the redundancy process is a role and not the person. If you have any issues with performance then this should be managed with a performance management process and not redundancy.

Many businesses forget that the redundancy route will cost them, so before any action is taken it is important to figure out the potential redundancy costs and whether your business can afford to pay the amounts.

Ensure an appropriate Redundancy Policy is in place within the company. Make sure to record fully at Board level any proposals regarding redundancy and the reasons for it. Keep an open mind as to who will be made redundant - the selection criteria should be objective as far as possible, with managers undertaking the scoring process basing it on solid facts such as past appraisals, productivity etc. and not a subjective personal opinion.

After taking everything into consideration, and redundancy is still the best option, ensure the correct procedures are followed. This can lead to a smooth outcome and help a company restructure or help with cost savings.

As long as all the steps of the company Redundancy Policy procedure are followed correctly then the company will be in the best possible position to defend any potential claims received.

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