Business Reorganisations


At first blush business reorganisations appear relatively easy to deal with – after all it is pretty self-evident when there is a need to start a redundancy process with a view to reducing staff numbers. Typically, the triggers are a downturn in trade, a new technical innovation, or a site closure.

Occasionally, however,  it is not so straightforward. As a precursor to making redundancies, there is a duty for the business to consider alternatives such as introducing short time working or temporary pay cuts. Choices must be made whether to instigate a redundancy process or attempt to change employees’ terms and conditions. Even if most employees were agreeable to a temporary pay cut as an alternative to being made redundant, there are usually a minority who will not agree to anything.

Pools and Selection

If a business reorganisation will lead to redundancies, what issues need to be considered? Does it make sense to seek voluntary redundancies by offering enhanced terms which might avoid the need to undertake a selection process but is likely to cost more to implement? How many locations are affected; what are the employees’ places of work (particularly if they are field based) for identifying the pool; what areas of the business are involved, and which members of staff need to be included in the pool for selection?

Defining the pool for selection can be difficult. Do any of the employees at risk have interchangeable roles with their colleagues not at risk  and, therefore,  how far should one widen the pool? How can keep key employees out of a pool when their duties look broadly similar with those who are at risk?

Thereafter, how do employers devise objective selection criteria to avoid unfairness, not forgetting those individuals who may be absent on maternity or sick leave? Who and how many managers undertake the assessment, is there a moderator and do the criteria need weighting in some cases?

When individuals are provisionally selected can hey see their cores and those of their colleagues and is there now a duty for the employer to potentially bump more junior employees thereby creating a further process and, possibly, causing a department or team of employees to feel extremely unsettled.

Collective redundancy consultation obligations (20 or more potentially redundant employees are one location) add a further dimension. In the absence of any Works Council or recognised trade union to consult with, how do organisations elect employee representatives (subject to the micro-business exemption); how should any ballot be conducted, and how long does collective consultation have to continue before employees can be given notices of termination? Then there is the timing of the all important HR1.

Cost Savings Reorganisations

Sometimes there is not a redundancy situation by reference to the statutory definition of redundancy, however there is still a need for a business reorganisation. Typically cost cutting exercises result in a need to reduce headcount  even though the volume of work has not diminished. Roles are removed with duties being redistributed among other staff.

Alternatively, new posts are created requiring individuals to apply for those posts by means of a competitive interview. If a competitive interview is to be used, then what is the best way of creating a fair process.

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