Ongoing economic restrictions continue to put pressure on Northland’s businesses, and many business owners may be considering a restructuring of some kind at this time. A restructure is any kind of significant change to the structure of your business, and may not always involve redundancies, but could also include changing and reducing hours for some staff.
The starting position is that the business is entitled to structure itself as it sees fit. Hand in hand with that though, is that the business must have a genuine reason for proposing a restructure.
The golden rule to remember is the restructure concerns the role, not the person. If your apprentice Sam is always late and is lazy, the question is not ‘can we restructure out Sam’ but ‘do we need an apprentice’? If the answer is, ‘we just need a good apprentice’ then a restructure probably isn’t the right course of action in this situation.
With any business change that impacts an employee, the age-old requirement for consultation applies, even if you have a genuine reason to restructure your business. An employer must consult with employees who will (or could potentially) be affected by any changes including:
- presenting the “proposed” structure to the employees in writing, together with the reasons for the proposed changes i.e. significant financial downturn and how that might affect their role
- providing those employees with an opportunity to provide feedback on the proposed changes, including giving them an opportunity to seek independent legal advice, and having a representative or support person with them when they attend the meeting, and
- considering alternatives and then genuinely taking the employee’s feedback into account prior to coming to a decision on the “confirmed” structure.
You should keep records of all information supplied to employees, and any feedback received, including notes from each meeting you hold.
If you are considering a restructure, you should spend a reasonable amount of time preparing your business case and ensuring you understand the reasoning for the changes you’re proposing. You’ll need to be prepared to share that information with employees as part of the process, or at least have that information available should an employee request it. A genuine reason for a redundancy is typically based on what a “fair and reasonable employer would have done in all the circumstances”, which looks different for every business.
Employers may also think that a restructuring process could be an easier way to let go of difficult staff. However, there are lower risk ways of resolving such employment issues. If you are considering a restructure, we strongly recommend seeking legal advice before going down this path.
How can we help?
WRMK Lawyers has Northland’s largest team of employment law specialists. We help our clients with all their employment processes. Please give one of us a call or contact your usual WRMK lawyer for advice.
Our thanks to David Grindle and Georgia Blockley for writing this article.
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