Restructuring to survive the impacts of COVID-19

As a direct result of the Covid-19 lockdown and the subsequent economic impacts, a business saw a big drop in forward sales and realised pretty quickly that changes had to be made to the structure of the company in order for it to survive.

After doing some number crunching and examining the sales projections, the employer believed they needed to make at least 6 people redundant.

As people were likely to lose their jobs and other people’s duties would change as a result, this meant that the business was being restructured. Therefore, a proposal had to be presented to those potentially affected by the changes.

The employer was required to consult in good faith and follow a robust and just process.

So, who are those potentially affected in a restructure and what is a robust and just process?

If you imagine that you have 10 staff all doing the same job and you need to lose 6, then 10 people are classed as affected.

If, in addition, 3 other people had to change roles or working conditions because of the 6 people leaving, then 13 people are considered affected.

Employers are required to ensure that the process for deciding who is affected by any change and the potential loss of employment is fair. And that people are not singled out based on unfair criteria.

In this case, the employer set firm criteria by which decisions would be made and were not set according to personality or company fit.

Legitimate things to consider when setting the criteria may be:

  • skill set,
  • qualifications,
  • experience,
  • familiarity with special equipment,
  • institutional knowledge,
  • or time served with the company.

People cannot be selected for redundancy based on work performance, relationships with co-workers, previous disciplinary issues, personality or fit. This is the bit that constitutes a just process.

A robust process is one that stands up to scrutiny should one of the employees selected for redundancy take a personal grievance against the employer. If the process is not seen to be fair, then the employee may well have good grounds for claiming unjustified disadvantage or unjustifiable dismissal.

There is a proscribed way to consult with staff over restructuring, including the structural change itself and any selection criteria that may be applied. Regular employment law still applies, even with the constraints of a Covid-19 environment.

Getting it wrong can be very costly - always take professional advice before embarking on a restructure process.

Need some help?

If you need to make changes to your team due to Covid-19, we welcome the opportunity to discuss your restructuring plans in confidence, ensuring your process is both just and robust.
07 839 6666
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What constitutes a restructure?

When you make any significant changes to the roles, positions, or terms of employment of your staff then you are in fact changing the structure of your business, hence the name restructuring.

You may decide to restructure your business for any number of reasons. In the case below, we discuss a company who had to relocate and, therefore, undergo a full restructure.

The company was coming up to the end of the lease on one of their buildings and, to their horror, the landlord told them they were not going to renew the lease.

With no other building available, the employer was obliged to consider moving production to their only other site and consolidating their operations to fit.  There were several ways to achieve this and we provided advice on their best options including whether and how to reduce staff in duplicate positions, or other options such as introducing a night shift to make maximum use of the available facilities.

Such a significant change in employment conditions requires an employer to present a proposal to their workers and potentially to the union (for union members), outlining their plans.

They are required to consult in good faith and give full consideration to all responses to come up with a fair solution that works for staff while maintaining the interests of the business.

As you can imagine this could throw up a whole host of potential problems, including:

  • Staff refusing to change shifts and work at night,
  • Staff wanting financial or leave compensation for doing so,
  • Implementing revolving rosters,
  • Health and safety implications,
  • Adding supervisors and therefore increasing the wage bill,
  • And possible union objection to the proposal.

The company later leased a new building in a different city. People’s working conditions and, in some cases, job duties were changing, while some jobs no longer existed. This, therefore, constituted restructuring.

There is a prescribed way to consult with staff over restructuring. Getting it wrong can be very costly - always take professional advice before embarking on the process.

Need some help?

We welcome the opportunity to discuss your plans in confidence, ensuring your restructuring process is both just and robust.
07 839 6666
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