HR Improve: Organisational Design

What matters

What matters next

In the latest edition of our HR Improve series, we set out the key matters that employers should consider when external circumstances mean that changes need to be made within the organisation.

Restructure, re-organisation or redundancy

Six of one, half a dozen of the other, some might say. In any event, none of these are words that are gladly welcomed when they’re included in any corporate announcement, and referring to any of them will cause concern amongst the workforce.

However, a restructure does not necessarily mean a redundancy situation. The latter has a very specific legal definition – essentially where a business closes, a place of work closes or there is a reduced need for a particular kind of work. Changes to an organisation’s structure do not, of themselves, mean that there is a redundancy situation. Further, a redundancy situation does not, in itself, mean job losses.

Employees will be well aware that organisations are prone, on occasions, to use Orwellian language that is difficult to decipher. If your business is in the fortuitous situation whereby the organisation is being restructured but no job losses are envisaged, then make sure this is made clear in communications with staff. There is absolutely no need to cause uncertainty and nervousness amongst the workforce if it is, genuinely, a re-organisation rather than a redundancy consultation.

Conversely, if job losses are anticipated then this should be made clear in verbal and written communications with the workforce as early as possible, setting out the business rationale for the proposals. It is fundamental to a fair redundancy dismissal that employees are aware that their role is potentially at risk of redundancy and that a thorough, meaningful consultation is carried out with them prior to any final decisions being made.

Like death and taxes

Redundancy is an area of employee relations that never really goes away. Redundancies can be an unfortunate result of difficult macroeconomic circumstances, and this may be something that looms on the horizon for many, given the recent fall in private sector activity. 

They can also occur as a consequence of new technologies (the most relevant example being the increasing prevalence of AI) or a desire to focus on different areas of a business (perhaps those that are more profitable) at the expense of others. They are a natural part of any organisation’s lifecycle, and so one which HR practitioners need to be equipped to tackle. 

A key thing for practitioners to be aware of is that redundancy is not focused on the person, but rather on the work that they do and the role they perform. Depending on the situation there may need to be an analysis of employees’ strengths and weakness for the purposes of selection but, at least initially, it is not personal. For that reason, it can be an easier conversation to have than, say, a disciplinary hearing or a performance improvement process. However, redundancy should not be used as a ‘get-out’ to avoid more difficult conversations. Such an approach would likely be unfair.

Consultation – a two-way process

Despite the fact that redundancies are (at least in theory) based around roles and not personalities, there is inevitably emotion involved. People spend a significant proportion of their waking hours at work, and even the very announcement of ‘the R word’ can set hares running. No-one wants to be told that their job is at risk, even if it isn’t their fault. The sensitivity can be heightened when it comes to selection criteria, when there is inevitably a comparison between staff. 

As well as avoiding discriminatory selection criteria (such as ‘Last In, First Out’) and ensuring that absences related to maternity leave or disability-related absence are discounted, care should be taken to make sure that selection criteria are all fair and that they are weighted appropriately. They should be based on tangible, quantifiable data and not subjective opinions.

Employers are perfectly within their rights to ‘weight’ criteria to fit the requirements of the role that is subject to reduction, but this should not be done too heavily to avoid allegations of a fait accompli. 

If, for example, having a certain qualification gives employees a significantly higher score but only one member of staff does not have said qualification, that person could challenge the dismissal as being unfair and/or that they have been personally targeted. It is prudent to have draft selection criteria sense checked, either by an HR colleague or an employment lawyer, and to consult with employees (and their representatives in collective consultation situations) regarding proposed criteria before the selection process is carried out. 

Consultation should also take place following selection, to give the employee the opportunity to comment on the scores they have received, as well as to discuss potential alternatives to redundancy. It is important that consultation is genuine and that any concerns or queries raised by the employee are properly considered and responded too, for the process to be fair.

Redundancy Top Tips

  • Ensure there is a clear business case for the changes and explain them clearly to staff. If no redundancies are anticipated, say so!
  • Fail to prepare, prepare to fail – get your ducks in a row early and only commence the process when you have a timetable and plan in place. Try and pre-empt questions you may receive from staff and issues that may arise.
  • Don’t rush it – there is no minimum time period required for a redundancy consultation (except where 20 or more redundancies are envisaged in the same place, triggering collective consultation obligations), but it needs to be a reasonable length of time. What is “reasonable” will depend on the circumstances.
  • Consider suitable alternatives – dismissal by reason of redundancy should always be a last resort. If there is a provisional selection for redundancy, alternative roles within the company and, if there is one, the wider group, must be considered.
  • Employees who are on maternity leave are entitled to be offered suitable alternative employment rather than just considered for them. While this currently only applies while the employee is on maternity leave, legislation is being introduced that will extend this well beyond the end of the maternity leave period. HR practitioners need to be aware of when this change comes into force.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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