Get clear on staff restructuring and the law

posted by Angela Carter
21 October 2020

What steps should you take in terms of staff restructuring to ensure your businesses survive the Covid-19 pandemic while still operating within the law? 

Despite a return to overall growth in manufacturing, the breadth of the procurement and supply chain function across vertical industries means there have been winners and losers from Covid-19.

While the likes of e-commerce, fast-moving consumer goods (FMCG) and DIY have seen a boom, businesses in many other sectors have faced a drop in demand. At the extreme end, some, for example in the travel and events industries, have seen their order book dry up almost entirely.

With the UK’s flexible furlough scheme finishing on 31 October, impacted employers need to make the right moves, planning their staffing requirements and structure accordingly. Chancellor of the Exchequer Rishi Sunak’s new Job Support Scheme, announced earlier this month, will provide a continued lifeline for some employers to keep staff on in a reduced capacity into next year. But for several, decisive action is imperative to ensure the long-term sustainability of their business.

Changing employment contract terms and conditions

With the tough implications of the pandemic evident, now is the right time to revisit key questions.

Do you need to make changes to start and finish times to comply with your risk assessment, perhaps redeploy some employees to other roles or departments, or cut hours or pay due to the financial challenge? Will these changes be temporary or permanent? These are all issues that must be worked out, and it is important to document your decision-making so it can be used to support any processes that result from your planning.

Changes to working arrangements may need to be reflected in your employees’ terms and conditions. For example, asking people to work different shifts, perhaps with a later start and finish time, could necessitate a contractual change.

A contract can only be changed in line with its existing terms or by agreement, so first look at what it currently says. Do the terms of the contract already permit what you’re trying to achieve? If so, the change can be enacted that way, providing this is done in a reasonable manner. If not, the quickest and simplest way to make a change is by negotiation and agreement. 

This is also the best option for maintaining good employee relations. There are, however, plenty of factors and scenarios to consider. Lots of guidance is available on this, including on the free Coronavirus Advice Hub.

Preparing for redundancies 

Redundancies have become a reality for many companies this year, and for several business leaders and managers, this is their first experience of what can feel like a daunting process. Employers must consider alternatives before going down this path, though unfortunately, the consequences of Covid-19 have left some with no choice. 

Redundancies must be handled carefully as the potential for legal missteps is high. Processes and timeframes vary depending on how many employees are at risk and the length of service of employees involved; however, some broad principles apply universally. 

When initiating a redundancy process: 

  • Provide employees with adequate advance warning

  • Consult with staff in an attempt to find alternative solutions (usually 10-14 days is required, although this could be shorter for more straightforward situations, or longer depending on the number of dismissals proposed)

  • Be fair and reasonable, and follow a proper process

  • Explore alternatives (such as the Job Support Scheme)

  • Consider, discuss and offer suitable alternative employment if available, and

  • Make appropriate redundancy and notice payments subject to statutory requirements if no alternative or higher contractual arrangement exists.

Such organisational changes are hard. It may be a necessary business decision, but it is important to remember that it is one with real human consequences. The experience can be incredibly difficult for all involved, and employers have a responsibility to support staff in the best way they can.

It is likely that most employees will not have experienced redundancy before either, so explaining how the process works and providing them with information, such as where to go for advice and what support you can offer for their next move, will relieve the added unease of not knowing where they stand and what to do.

Similarly, be open about employees’ rights in redundancy situations, such as their right to appeal, so that they have all the facts. Not only will this help employees to feel more informed and at ease about their options, but it will demonstrate genuine care and concern for those affected. It will help to ensure a more positive, lasting impression of their employment, despite the difficult circumstances, as well as reassure colleagues not directly affected about how the situation was handled.

☛ Angela Carter is head of manufacturing and chartered legal executive at employment law and HR support firm Ellis Whittam.

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