This is an issue of relevance to our corporate clients wanting to ensure their businesses are sufficiently agile to adapt to market changes pre and post BREXIT. Businesses introduce organisational changes for several reasons and even successful, healthy businesses undergo restructuring or make redundancies as they evolve and adapt. The trick is to ensure that doing so minimises staff disruption and claims against your business, particularly where the affected employees have two years’ service or more.
Once you have proposals to put to your workforce you need to identify the process for their implementation. Broadly speaking, ‘redundancy’ is used to describe a reduced staffing requirement due to:
- A business closure;
- A workplace closure; or
- Diminished requirements of the business for employees to do work of a particular kind.
A redistribution of work amongst the same number of employees is more likely to be a restructuring rather than a redundancy situation.
For example in Shawkat v Nottingham City Hospital NHS Trust (No.2), the Court of Appeal held that where a Trust decided to merge its cardiac and thoracic departments and ask a thoracic surgeon to cut down his thoracic work and undertake some cardiac surgery (so that more people were doing cardiac work), he was not redundant. Even though pure thoracic work was different from combined thoracic and cardiac work, there was no reduction in the requirements of the Trust for employees to carry out thoracic surgery (even though there was a reduction in the required hours for Mr Shawkat specifically) and therefore no redundancy situation.
Having identified the legal process how do you go about putting the changes you want to make to your staff? In a redundancy situation you need to individually consult your affected employees and will additionally have a duty to undertake collective redundancy consultation where 20 or more redundancies are envisaged at one establishment in a 90-day period. Employees with two years’ service or more dismissed on grounds of redundancy are entitled to statutory redundancy pay. Employers should also be mindful that a business or partial business closure should be differentiated from a situation where an employer transfers its business or part of it to a new owner. In these situations, an employee would not normally be considered redundant but would automatically transfer to the new employer.
In a restructuring exercise, a company may be changing the nature or function of employees’ jobs e.g. moving from full to part time. If agreement cannot be reached the employer may be forced to impose the change or to dismiss those who do not agree. Both strategies come with risks, and legal advice should be sought in these situations.
Now is the time to future proof your working practices and documentation. Do you have effective contract clauses giving you the power to relocate your employees or to introduce short time working or temporary layoff? Is the business protected by robust post-termination obligations prohibiting your departing employees from competing or taking your confidential information, clients or key staff? Do you have legally compliant policies such as disciplinary, grievance and equal opportunities for those that you retain?
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.