In employment law restructuring falls under the umbrella of redundancy as the reorganisation of roles within an organisation has the potential for some positions to no longer be needed.
It is important to remember that a redundancy situation should be legally fair. Redundancy (and by extension, restructuring) primarily focus on the job role itself and whether the continued need for it has ceased or diminished – the focus is not on the employee. It is the job that is redundant, not the person.
For this reason, when the need for restructuring has been identified, it is important to understand what functions are needed going forwards and to plan clearly how the work will be organised.
You will most likely find that not all jobs will be at risk of redundancy. Employers are only obliged to have meetings with those whose roles are at risk as a result of restructuring. This is known as “consultation”. Consultation does need to happen properly in order for any potential dismissals to be legally fair. The key is to ensure the consultation meetings are “meaningful”.
If your organisation is considering a restructure it must work through the following steps before consulting with staff. It will ensure that you meet with the right people and are equipped with the right information to discuss as appropriate. Without it, you cannot prove that your restructure (or consultation process) was legitimate.
#1 – Begin your business case
Every company restructuring should have a detailed business case as the foundation, whether it may result in changes to duties, terms or dismissals. Where dismissals are possible, it must establish a genuine redundancy situation exists and that ways of avoiding or minimising dismissals have been considered.
#2 – Selection pool and selection criteria
You must identify any selection pools. This is essentially the group of people whose jobs are at risk. The selection criteria are the information you may come to use to score people to try and objectively distinguish who the business will retain if there are more people at risk than the remaining number of suitable jobs available for the pool.
#3 – Plan consultation meetings
A project plan and draft timetable for consultation meetings should be prepared. It should factor in individual notice periods, consultation periods and time taken to elect representatives (if appropriate). You may find the process will take longer than you originally anticipated. Consider your procedure by factoring in any policy, contractual arrangements, or precedents there may be. Check whether you will need to notify the BEIS (the Department for Business, Energy and Industrial Strategy).
Restructuring timescales
The plan should include timescales and there are legal minimum periods of consultation to be aware of. The minimum period depends on the number of employees whose jobs are at risk of redundancy within 90 days in one establishment, as follows:
- Fewer than 20: no minimum period however, it should be in good time
- 20-99: at least 30 days before notice of the first dismissal is served
- 100+: at least 45 days before notice of the first dismissal is served
There is no set time for how long should be left between consultation meetings – nor how many consultation meetings there must be. This is because every situation is unique, and circumstances can change at any time. Once again, what is important is what would be “meaningful” at the time.
Restructuring consultation
Once preparation is complete, organisations can then begin consultation. The structure of communicating with employees during this time would broadly be:
- An initial announcement (this could be company wide are just to those affected and can be with a group of people at once)
- Invite individuals to apply for voluntary redundancy (Optional)
- Individual or collective consultation meetings
- Giving notice
As above, there is no legal minimum number of individual/collective consultation meetings. However, consultation by definition require more than one meeting and regardless, the appropriate number of meetings will depend on what would be considered “meaningful” in the circumstances.
Whether or not individual or collective consultation should be implemented depends on the number of people at risk.
Fewer than 20 – individual consultation
Where fewer than 20 are at risk, employers may carry out what is known as “individual consultation”. As discussed, there is no minimum period of consultation here, however as legally fair consultation must be meaningful, the time it takes to consult is hinged around this. For example, if the continued availability of work hinged on winning a contract, it may be meaningful to wait the couple of weeks it may take to find out if the contract is won, rather than prematurely letting go of staff.
20 or more – collective consultation
Where 20 or more are at risk, employers must arrange for the election of employee representatives, if there is not an elected forum already in place. Certain information must be provided to the reps before consultation begins, such as the reason for the proposals and proposed methods etc. Employers must then conduct consultation meetings with the elected representatives who should then raise questions on behalf of, and feedback to, all other affected employees.
Where collective consultation is taking place, there is no legal requirement to also undertake individual consultation but, it may be good practice to include some, as there are often issues which individuals may consider too personal to discuss at group level.
Content of the consultation meetings
The content of every consultation meeting will vary, depending on the business, the circumstances and the individual.
However, it is crucial that a job is always described as being “at risk” up until giving notice. In fact, it should be stressed in the consultation meetings that no final decision has been made as yet as to whether the employee’s employment will be terminated.
Generally, during a meeting you should obtain the employee’s view on:
- the redundancy situation
- their provisional selection
- any suitable alternative employment
There is no legal minimum period for individual consultation, but this should be a reasonable amount of time, sufficient to consider the employee’s representations and to search for alternative positions or ways of avoiding the redundancy.
Tribunals will require the consultation to be meaningful and expect employers to go to considerable lengths to offer alternative employment in redundancy situations. This can include entitlement to a reasonable alternative role, statutory trial periods of dissimilar work which the employee may be interested in and even something called “bumping”.
Where selection criteria have been used, an employee selected for redundancy should be given an explanation for his scoring and a proper chance to comment on his scores and challenge them.
Assumptions should never be made about what alternatives the “at risk” employee may be prepared to consider, even if there is a considerable gap between the status and pay of the post currently held and any alternatives available. Tribunals will expect the employee to be advised of any alternative positions which they are capable of undertaking and to be given full details of the job requirements and financial rewards so that the employee can make an informed decision.
Failure to consult
Failure to consult may lead to a protective award of up to 90 days’ pay for each affected employee. This is the case even where the 30-day period of consultation applies (or less). Also note that the statutory cap on a week’s pay does not apply to protective awards: the award is calculated on actual gross weekly pay per employee. There are also several other awards that can be brought to tribunal for failings in a redundancy process.
Karen Falconer is HR knowledge manager at HR Solutions
Further reading
The benefits and drawbacks of demergers – GrowthBusiness guide
