Be careful if you are restructuring your company, especially front-line staff!

The Risks of Organizational Restructuring

The following contribution is from the Red Clover portal, which defines itself as follows: All companies, regardless of size, deserve excellent HR support. For many small businesses, finding good strategic and operational HR resources is difficult, if not impossible. Internal hires lack experience, and PEOs are ill-equipped to collaborate with clients to drive business forward. With decades of leadership experience, our HR consultants understand that if you are seeking significant change in your business, the degree to which your people embrace and implement that change makes the difference between success and failure.

Red Clover offers large-scale, affordable strategic and operational HR support for small businesses. You will benefit from an integrated and cohesive team that delivers customized HR solutions and strategies for your business. Our SHRM-certified consultants come from line management positions across different functions and industries and bring a diverse perspective, helping you approach your problems and goals differently. At Red Clover, we’ve got your back. Contact us to learn how we can help you boost your business.

The author is Jennifer L’Estrange, the founder and CEO.

 

 

 

I led my first restructuring project 20 years ago. Since then, there have been many other larger and more important projects, but this was my first as an HR leader and the one I remember most fondly.

After creating a new shared services center, I spent approximately 18 months traveling weekly between the two locations and my home office, working with line managers and employees to move jobs, change roles and organizational structures, and ultimately integrate two relatively different groups of employees into a coherent and cohesive organization. We also decided to close one of the locations.

 

 

When we had the final headquarters closing meeting and I returned home after the last trip, I sat on the couch and cried.

I cried so much. I cried from mental, physical, and emotional exhaustion.

Complete and Utter Burnout

This is the aspect of organizational restructuring that no one talks about.

Don’t get me wrong, this isn’t about how managing a restructuring impacted me or any leader, because it’s not about us. It’s about the emotional cost to the organization and its employees, and how this affects our ability to assess risk and achieve project objectives.

In restructuring engagements, we often say, «The best work you can do is always good enough.» I still believe that, but I also know that we need to approach it with open eyes and open hearts.

So, if you think organizational restructuring is on the horizon in 2023, here’s what you really need to know.

Key Takeaways:

Define the restructuring clearly before it begins, so employees and stakeholders understand the «why.»

Anticipate the emotional impact. Productivity and morale will decline: acknowledge this and prepare resources to support employees.

Prioritize structured communication. Using multiple formats, repeated frequently, is essential to managing ambiguity.

Support leadership. Rely on outsourced HR experts like Red Clover for structure, coaching, and continuity after implementation.

Measure ROI holistically. Financial returns are important, but long-term success is built through sustainable HR strategies.

 

What is organizational restructuring?

Organizational restructuring is a strategic process in which a company significantly modifies its internal structure to adapt to new business objectives, improve efficiency, or respond to external pressures.

This can include departmental reorganizations, layoffs, leadership changes, mergers, or branch closures.

For many companies, restructuring is part of a broader organizational change strategy.

While it can drive long-term success, it also carries inherent risks, especially when HR strategies are not prioritized.

Now that we understand what organizational restructuring is, what risks should we be aware of?

1. Low Employee Morale

As soon as we announced the creation of a new, integrated organization, many questions arose, many of which we couldn’t yet answer.

Morale and productivity dropped almost immediately, as people spent hours speculating about the upcoming change.

Would there be staff cuts?

Would jobs change?

Leaders were frustrated because they didn’t have many answers, and the few they did have, they couldn’t share.

In addition, there was important work to be done to support business operations, and we couldn’t afford to have half the team spend the day sitting in a conference room talking about what might happen.

 

And yet, this happens with every change project.

There is always a drop in productivity and morale almost as soon as the project is announced.

This is due to employees’ sense of loss of control, who are no longer sure whether their role today will be the same tomorrow, if they even have a place in the company.

In a sense, it marks the beginning of the grieving process.

We are losing the work environment as we knew it and are largely unaware of what we are getting in return.

The «curve» we refer to in change management is based on Elisabeth Kübler-Ross’s work on death and dying.

Like losing a loved one, the loss of a job or a major organizational change in a place where we spend more than a third of our waking hours feels like grief.

Shock is quickly followed by denial and frustration, and we stop focusing on work and begin thinking about how to combat it or avoid it altogether.

When working on organizational restructuring projects involving major job redesigns or layoffs, we estimate a 40% drop in overall employee productivity during the project.

If business continuity is critical during the transition process, we recommend remediation resources for additional support and potential knowledge transfer.

Even if you don’t have the financial resources for a remediation organization, it’s important to include the loss of productivity and its impact on your timelines in your financial analysis.

 

 

Change Management

Pro Tip: To mitigate declining morale, consider conducting proactive change management sessions or engaging an external HR service, such as Red Clover Organizational Restructuring Services.

This can provide clarity and external support that internal teams might be too emotionally burdened to offer.

2. Employee Confusion About the New Vision

Our overall vision for this project was to focus operations on two physical locations instead of three.

This was partly a cost-saving measure, but primarily focused on efficiency gains by keeping teams together in one of the two locations.

This was difficult to communicate to the affected organization, as the end result was that while we were laying off employees in one location, we continued hiring in the other two.

It was a tough pill to swallow for some, including leaders. We offered relocation opportunities to those willing to move to one of the other two locations, but those who couldn’t make it left the organization, and we lost good employees.

Confusion, or outright disagreement, with the new vision and business justification for the restructuring is relatively common.

Our first goal is to achieve alignment on purpose and message among members of the management team and involve them in the employee communication process.

We don’t sugarcoat bad news, but are honest about what we’re doing for the company and why.

Telling people the truth is especially important during a restructuring and is our way of showing respect.

Once people understand what’s happening and why, it’s easier for them to work in alignment with the new vision or, if they fundamentally disagree with the decision, expedite their exit from the organization.

 

3. Loss of Focus

Throughout the project, our leadership team was somewhat chaotic, and team members didn’t always know where to turn for clear guidance. We had lost focus.

One part of the organization was still trying to continue business as usual, while others were trying to define what the new organization should look like.

The meetings were somewhat inconsistent, and although everyone operated with (mostly) good intentions, this began to affect service levels and project timelines.

Loss of focus occurs in most restructuring projects at some point.

In fact, it occurs in any project that has a subsequent impact on job roles. Change projects are extremely confusing for everyone involved, including customers.

It impacts productivity and service quality. The only way to fix it is to work on it.

Communication plans help, but we also recommend increasing the frequency of performance development conversations during this period.

Use them as an opportunity to connect with team members, see how they’re feeling, and make sure they know what they should be doing during this period of disruption.

In turn, employees can communicate more effectively with customers if the change also impacts service levels.

Actionable Tip: Hold short, regular follow-up meetings that reinforce immediate goals and allow employees to express any concerns. Don’t expect focus to return without leadership taking active responsibility.

 

4. Lack of Communication

Throughout the project, we had constant communication issues.

It wasn’t because we didn’t communicate, but because we never seemed to communicate enough.

Since we had clear business continuity goals during project implementation, employee engagement and continued productivity were important.

We communicated regularly, across different channels, in parallel, with communications targeted to each audience.

There was an intranet, email, phone, in-person meetings, group meetings, town hall meetings, and one-on-one meetings. And it still wasn’t enough.

Restructuring projects are disruptive by definition.

As leaders, we must embrace disruption and the temporary loss of efficiency it creates in order to create something better.

It’s something that allows the business to grow and scale. As a leading leadership coach of our generation, Marshall Goldsmith wrote «What Got You Here Won’t Get You There» to help successful people understand what they need to stop doing to become even more successful.

This also applies to businesses. There’s a reason we reorganize operations and the organizations that do the work: we grow through change.

Therefore, understanding what we need to change and why is critical to the success of the project and the business. Once we’re clear on this as leaders, we must communicate it in a way that the rest of the organization, including those directly affected, understands.

There are two deliverables that specifically help with this:

1) A good, traditional project plan with task dependencies and milestones

2) A structured communication plan that includes internal and external stakeholders, takes into account business continuity requirements, and articulates project objectives

Did you know? According to McKinsey, companies that communicate effectively during transformation processes are 3.5 times more likely to outperform their competitors.

Internal Resource: Learn more about effective HR communications by reading «What is a DISC Report?» to learn how assessments can help leaders communicate more effectively during change.

5. Return on Investment Could Be Impacted

When we began this restructuring project, we had a business case.

It focused primarily on operational efficiency and centered on assigning the right people to the right roles, as well as greater clarity about each team’s work.

For people, it meant updated roles, better processes, and cutting-edge technology.

 

 

It also involved closing one physical location and dividing labor between the remaining two.

We communicated frequently from the outset and did some really creative work on training and development for the affected population.

All of this helped protect the return on investment (ROI) we had set as our goal. Ultimately, the project was a success, but perhaps some of the emotional toll could have been reduced.

It was a long project, and the time invested impacted the management team and the organization as a whole.

Case study tip: If you anticipate a long restructuring timeframe, consider phased implementations. This allows for resource planning, gradual role evolution, and regular stakeholder consultation to prevent burnout, especially among managers.

Conclusion

Now, a couple of decades later, I’ve learned that the cost doesn’t have to be so high.

As a consulting partner to leadership teams, we can alleviate some of this burden with structured processes for project execution and communication plans for leaders and employees.

Our team of highly experienced people leaders is embedded in the client’s organization as a permanent resource supporting the change.

In addition to leading change management activities, we act as advisors and coaches to the leadership team during the project and as an ongoing resource for post-implementation support.

 

 

 

What to Do and Say After a Difficult Reorganization

The following contribution is from the Harvard Business Review and is written by Rebecca Knight.

Rebecca Knight is a journalist who writes about the changing nature of careers and the workplace. Her essays and reports have appeared in The Boston Globe, Business Insider, The New York Times, the BBC, and The Christian Science Monitor. She was shortlisted as a Reuters Institute Fellow at Oxford University in 2023. Previously, she worked for a decade as an editor and reporter at the Financial Times in New York, London, and Boston.

 

 

 

 

Surviving a corporate reorganization can be difficult.

There’s often a lot of confusion and uncertainty, and if colleagues are laid off, people might also be sad or angry.

– How can you make the situation easier for yourself and your colleagues?

– What steps should you take to protect your job?

– How can you stay positive?

– And how do you know when it’s time to move on?

What the experts say

Restructurings can be an inevitable part of organizational life, but living through them, even if you’re one of the lucky ones still standing, is challenging and stressful.

 

On a personal level, «you’ve really lost some friends» in the organization, says Kevin Coyne, co-founder and managing director of the strategy consulting firm Coyne Partners and a professor at Emory’s Goizueta School of Business.

And on a professional level, you’re likely feeling uneasy because it’s unclear what life will be like under the new regime.

Reactions are often mixed, says Gretchen Spreitzer, a professor at Michigan’s Ross School of Business and co-author of How to Be a Positive Leader. «Some people are cynical; there’s a sense of, ‘You fired my friends,’ and ‘This reorganization is never going to work.'»

Then there are «the wounded walkers who fear for the future and worry about those who were laid off.»

 

 

Even stars can struggle with maintaining a positive attitude.

«If you’re a high performer, you may feel yourself losing control and start to question your choices.»

But Spreitzer says it’s important to approach change with an optimistic mindset.

«You want to be one of the active advocates who takes the initiative to make the reorganization work,» she says. Here are some tips on how to achieve that.

 

Listen… Before reacting to the news, Spreitzer suggests «listening carefully to what senior management is saying about what’s happening, why it’s happening, and what the expected outcome is.»

Management probably had good intentions with the restructuring: They believe the changes will reduce costs, increase revenue, or improve efficiency.

That said, «don’t just follow the official line and run away. Ask a lot of questions.»

Do your best to ignore office rumors.

Don’t listen to gossip, and certainly don’t contribute to it. «Information on the gossip network is likely to be inaccurate; it will be highly emotional; and there will be a lot of venting,» he says. And evaluate.

Once you’ve digested the planned changes, you should think about what they mean for your daily responsibilities and potential job satisfaction, according to Coyne.

«After you understand what the new strategy looks like, you should try to visualize what your new job will be like six to twelve months from now,» he says.

Then ask yourself some tough questions, like: ‘Once I get over the temporary pain of this, will I still be proud of what this company stands for? Am I equally happy and satisfied with my new position?'»

 

Even if you conclude that things have changed radically, Coyne advises resisting the temptation to quit immediately. «Don’t pull the trigger yet,» he says.

«You need more information,» and you can use the next few months to assess the situation. Reach out.

In circumstances like these, it’s important to show concern and empathy for the people directly affected by the reorganization. «Reach out,» says Spreitzer.

«Express your regret that you’re no longer working together.» Whether you call, email, or stop by their house with a bottle of wine depends on your relatability, he adds.

«Put yourself in their shoes and think about how you would want someone to react if it happened to you.»

As for the right sentiment, less is more. Say, «I’m sorry. This caught me off guard, too. How can I help?»

Showing compassion is not only kindness but also a smart career move, according to Coyne.

You should stay in touch with your deceased colleagues, «because they’re your early warning» about the job market and how you’ll fare if you decide to leave the company.

It helps. If you support the new direction your company is taking, it’s worth letting your boss know, Coyne says.

«If it’s true, tell your manager that you’re on board and that you want this reorganization to succeed,» he says.

That way, they «know they can count on you and that you’re not just being a good soldier.»

Then, follow up with actions that demonstrate your support.

Spreitzer recommends looking for ways to «help the organization be more resilient» during the transition. Think about your skills and experience, in addition to your professional passions.

Is there a new position you could move up to?

Are there new responsibilities you’d like to add to your current role?

Align priorities. Reorganizations are an opportunity

for you to “take control of your career,” says Spreitzer, but you should also make sure you and your manager agree on where you should focus.

Undoubtedly, priorities have changed, and if the restructuring means you must take on tasks previously performed by others, Coyne recommends “quickly agreeing” with your boss on “what parts of your combined workload can be reduced” or eliminated altogether.

“You need to identify the most and least important parts of your new job.”

Remember that your boss is likely overloaded as well, so you should “present a proposal” on how to allocate your attention and time.

“Be constructive,” she says. Manage your stress. In the midst of change and uncertainty, “you need to find things that help you manage stress,” says Spreitzer.

“Make sure you set aside time for the things you love.” Spend time with family and friends; maintain your hobbies and volunteer activities; And, of course, make sure you’re eating well, exercising, and getting enough sleep.

 

 

Injecting Mood into Your Staff

You could also try “injecting some levity” into the office to “cheer people up and get them out of whatever bad mood they may be feeling,” she adds.

Introduce a daily music break, bring in fresh flowers, or start a cookie contest every other Friday.

“The goal is to create fun and reduce the severity of the situation.” Find a purpose.

In addition to offering a little momentary encouragement, you can also work to boost your coworkers’ long-term morale by focusing on the shared mission.

“Remind people why they’re there in the first place,” Coyne says.

If you’re a manager, this is even more crucial. Have one-on-one conversations with your employees to communicate that “what they do matters,” she says.

 

«Help them see the nobility and purpose of their jobs» and convey that «they are part of something they can be proud of.»

Whenever you feel like you’re going through a difficult time, Spreitzer suggests «looking for the small glimmers of light in your workday that give you meaning,» whether it’s helping a colleague or interacting with a client.

Give it time, but don’t wait too long. It’s fair to «give management the benefit of the doubt» in the weeks and months after the reorganization is announced, but if you’re still skeptical of the changes after a while, take it as a sign.

«Keep your Periscope up,» says Spreitzer. «If you’ve been trying to see the light at the end of the tunnel and it’s been 60 to 90 days, it’s time to ask yourself, ‘Is this an organization I want to stay with?’ If it’s not, maybe you need to start considering your options,» he says. “You don’t want to wait around if you feel the company is going in the wrong direction.”

Coyne agrees: Once you’ve overcome “the short-term misery” of the restructuring and “gained perspective” on the company’s direction, you’ll be in a better position to make a decision.

“If the company isn’t doing something you’re proud of, you need to turn to your contingency plan,” he says. Principles to Remember

Do:

Listen to and absorb what senior management is saying about the reason for the reorganization.

Show compassion for the colleagues directly affected.

Look for opportunities to use your skills and experience to help your organization through the transition.

Don’t:

Give in to pessimism: Remind yourself (and others) of the nobility and purpose of your work.

Neglect your well-being: Make sure you’re eating well, exercising, and getting enough rest.

Expect too much: If you don’t believe your organization is on the right track, look elsewhere.

Practical Tips

Case Study #1: Reframe Your New Responsibilities as a Growth Opportunity

Karin Hurt had been working as an HR director at Verizon in Baltimore for more than a decade when a confluence of circumstances—including the company’s impending merger with Bell Atlantic, the firing of her colleague, and the retirement of her boss—caused a huge leap in the scope and scale of her job. The solution, according to management, was to reorganize the $6 billion business unit and give her HR responsibility.

The problem: She wouldn’t get a formal promotion because she couldn’t commute to corporate headquarters in New York. «At first, I was angry,» she says. «I thought, ‘Wait, I’m not going to get the job, but am I going to do it?'»

But it didn’t take long for her to reconsider that initial assessment. «This was an excellent opportunity to sit at the strategic table and meet senior management, and I decided to take it,» she says. «I needed to trust the process.» In her new position, Karin reported directly to the business unit president, so one of her first decisions was to ask her what she wanted to focus on. «A lot of priorities were changing, so we talked regularly about which ones were most important,» she says. «We often spoke on the phone at 7 a.m., when there was silence for both of us.»

The office environment was stressful for both Karin and her team. She shielded her direct reports from the political uproar and commotion related to the merger, reminding them that their work had great meaning.

«I told them we were part of something big, something historic,» she says. «With this merger, we had the opportunity to implement the right policies» to ensure the company had a solid foundation.

 

Her good work caught the attention of the senior vice president of customer service. «He pulled me aside and said, ‘You’re too young in your career to be just doing HR. Are you interested in doing other things?’ As a result, I accepted a series of field assignments that led to promotions. It boosted my career.»

It also gave her the confidence and connections to start her own company. She left Verizon in 2014 and is now the CEO of Let’s Grow Leaders, a consulting firm. «When I look back on my time there, I’m grateful,» she says.

Case Study #2: Understand your organization’s new goals and align your priorities. Sid Savara was six months into his tenure as a senior engineer at a Department of Defense contractor in Hawaii when he began hearing rumors that his project funding would soon be cut. «I tried not to participate in the gossip and just do the best job I could,» he says.

The uncertainty continued for six more months, until a vice president from the company’s Virginia headquarters showed up unexpectedly at his office one day to announce strategic changes. «He said, ‘Finish what you’re doing. This project is ending. We’re going to restructure and change teams,'» Sid recalls.

Sid’s future was uncertain at the time, so he asked the vice president many questions:

What was the timeline for the restructuring?

What was the new direction of the company?

What was the business model for other projects?

The answers he received made him nervous. «I wasn’t sure I’d enjoy new projects.

Some clients are more pleasant to deal with than others, some projects are more interesting than others,» he says. «I started looking for a new job and even had a few phone interviews.

 

A week later, Sid learned he would be reassigned as a team leader for a new project. Half of his previous team was laid off. «I decided to give it a chance. I didn’t want to rush into leaving,» he says.

On his first day at his new job, Sid had a formal conversation with his new boss to learn about his role in the company. «He explained what was going on, how the division works, how we generate revenue, and that helped me align our team’s efforts with those goals.»

This helped him understand his boss’s most important objectives and think about new business opportunities and potential collaborations. «I shifted our priorities as I learned more about the company.

I better understood the roadmap and developed a clearer idea of ​​where the developers should be spending their time.»

Sid ended up staying with the company for four more years. Today, he is a technical manager at the University of Hawaii.

 

 

9 Common Restructuring Mistakes You Should Avoid

The following contribution is from the MyHR portal, which defines itself as follows: We created MyHR because we knew there was a better way. A new way. A way to simplify and optimize HR. A way to make HR work for every business, so you know your people are well taken care of and everyone can focus their energy on building success.

The author is Nick Stanley.

 

 

 

When undertaking a restructuring in your company, there is a best practice process you should follow. While the process isn’t defined in stone by labor law, it has been established by case law (court rulings).

This is positive, as companies vary, and every restructuring is slightly different.

However, it means that without a clearly defined process, employers can, and often do, make mistakes.

 

At MyHR, we have helped hundreds of companies with restructurings and are often asked to correct procedural errors.

So, to help you understand how to get a restructuring right, we thought we’d share some of the most common mistakes we see.

Keep in mind that getting a restructuring wrong is a sure way to expose yourself to disputes or personal claims from disgruntled employees, and it could cost you dearly.

 

 

1. Lack of a Genuine Business Reason

First, if you’re proposing to restructure all or part of your company and the changes could impact jobs, make sure you have a genuine and justifiable business reason for your proposal.

We’ve seen many employers get into trouble because they base the restructuring on personal or non-business reasons (more on this shortly) or because they can’t justify the financial imperative of the change or its benefits.

It could be that the company is losing money and needs to cut costs to keep it afloat, or that it wants to refocus its efforts on a market, product, or activity with greater potential.

Or it could be that you’ve made a strategic decision to refocus the company and need to make changes in line with the new strategy.

Whatever the business justification, if challenged, the Employment Relations Authority (ERA) and the Employment Tribunal will scrutinize it thoroughly and discipline you if it is not legitimate or if you lack sufficient evidence to support your arguments.

Conduct due diligence before embarking on a restructuring and ensure you have compelling evidence to support your proposal.

2. Basing a restructuring on performance issues

Don’t initiate a restructuring because you have a team member who isn’t performing well or isn’t a good fit for the company and you want them to leave. You must manage poor performance or behavior through appropriate processes.

Even if the reason for the restructuring is legitimate, if there is a suspicion that someone could be dismissed due to poor job performance or personal conflicts, the process can be thwarted.

A client initiated a legitimate restructuring of its finance department. One of the affected employees had recently had some issues with a manager and filed a personal complaint, arguing that the restructuring was merely a pretext for his dismissal.

Fortunately, the company was able to successfully defend its position thanks to its extensive efforts to demonstrate the true cause of the dismissal. Had it not done so, it would have had to reach an agreement and pay the corresponding severance pay.

 

 

3. Not Providing All Relevant Information

The key to the restructuring process is consulting with all affected employees about the proposed changes, soliciting their input, and considering it in the final decision.

Employees can’t offer meaningful input if they don’t have access to the same information the company used to inform and shape its proposal.

We’ve seen companies provide affected employees with only a vague justification for a workforce reduction because they’re concerned about sharing their financial data.

This leads employees to (rightfully) request more information to craft a fair response, turning a relatively straightforward restructuring into a long and laborious process.

While private or sensitive information, such as other employees’ salaries, can be withheld if it’s relevant to the decision-making process, it must be shared by law. The criteria or tools that will be used to evaluate team members for new positions or layoffs should also be included, and everyone should be given a chance to have their say.

Transparency is crucial in these situations.

3. The outcome has already been decided

Some organizations mistakenly believe it’s appropriate to gather staff in a group meeting to announce the implementation of a new team or business structure and inform some that there will be surpluses in a few weeks.

In New Zealand, a restructuring is only considered a proposal after employees have had the opportunity to provide feedback and the company has seriously considered their responses.

This process differs from other countries, particularly Australia, and can be a hindrance for companies that don’t consult employees fairly.

We have seen numerous clients recruit new people for positions that would only exist if the proposed restructuring goes ahead.

In other cases, employees have learned about the outcome of the restructuring, either accidentally or through mismanagement, before it was officially announced.

It may be tempting to try to short-circuit the consultation process, especially if the outcome seems logical and legitimate, but it’s not worth the risk.

Employees may propose a different, viable solution or point out oversights or errors in their plans. Not only do you have an obligation to consider their feedback, but it can also benefit your company.

 

Free How-To Guide: How to Restructure Your Company

4. Not Giving Employees Enough Time to Respond

Another common mistake when a company just wants to move forward is not giving employees enough time to prepare their responses.

Part of acting in good faith and following a fair and transparent process is giving employees time to consider things.

Restructurings are difficult for people, so your team members will need time to adjust and get support (and, in some cases, legal advice), in addition to preparing their comments.

Unless the changes are due to an emergency or a major change in the company, we recommend starting with a two-day period between announcing the restructuring proposal and receiving responses.

If employees request more time, it’s prudent to allow it (up to two weeks is considered reasonable).

Our best advice: Move carefully.

5. Not including everyone affected in the process

By law, you must consult with everyone whose positions could be affected by the proposed restructuring.

Even if you think you know which team members you’re likely to retain or dismiss, you should consult with everyone whose positions will be affected and make a fair and reasonable decision.

Excluding someone could justify a personal grievance.

 

6. Not referring to the employment contract

We have seen many restructuring processes fail because what the employer believed was in the individual employment contracts was not what they actually contained.

In one case, the employer proposed dismissing a specialist, claiming there was no longer enough work.

However, the employee demonstrated that the job description in his employment contract was broader than the employer believed and had to resolve the personal grievance to move forward with the restructuring.

Before proposing structural changes, review employment contracts, job descriptions, and any other clauses agreed upon in the event of dismissal (notice period, severance pay, etc.).

Keep all job descriptions up to date to reflect the reality of the position. This is important not only if you propose eliminating positions, but also if you propose adjusting their duties.

 

 

7. Lack of awareness of the obligation to relocate employees

There have been numerous cases before the ERA and the Employment Tribunal in which it has been ruled that employers failed to adequately consider options for relocating existing employees to new positions.

Companies frequently invite employees who lose their position to apply for new positions alongside external candidates, but if the new position is substantially similar (i.e., 80% or more identical) or within the employee’s capabilities, there is a risk of a personal tort claim if the employee is not offered the position directly.

 

This includes helping the individual retrain or improve their skills so they can perform the job.

Our advice is that if there is an option to keep employees with the company, even if it requires development and training, they should almost always be offered that position.

If you are considering dismissing someone, do your research and seek sound advice before making a final decision.

8. Unfair or Transparent Selection Process

Previously, I mentioned the tools the company will use to select team members for new positions or layoffs. Some employers have run into trouble because they are not fully transparent with affected employees about their evaluation methods or because they choose to lay off staff based on an arbitrary or biased selection process.

There are many ways to select employees for new or remaining positions, but whatever method is used, it must meet the requirements of a «fair and reasonable» employer.

In restructurings, it’s not uncommon to hear about «last in, first out» (i.e., the most recently hired person is the first to leave), but this isn’t the fairest way to select the best candidates.

It’s much better to use a selection matrix, where the key skills, competencies, and experience for the position are detailed, everyone is assessed against the criteria, and then the person (or people) with the highest score is selected.

Ensure that, during the consultation process, you provide affected employees with a copy of the method and criteria you plan to use, give them an opportunity to comment, and consider their comments before implementing it.

 

9. Noncompliance with labor laws regarding vulnerable workers

Under the Labor Relations Act, certain employees, such as cleaners, orderlies, custodians, and caterers, enjoy greater employment protection than others.

They are often referred to as «vulnerable workers,» and if a different employer takes over their employment, they have the right to transfer to the new employer with their current employment terms and conditions.

Employers may not be aware of these protections for their workers, whether they are protected, or the various types of restructuring they provide, but ignorance is no excuse.

Employees outside the specified sectors still enjoy some degree of protection, and every employment contract must include an employee protection clause that specifies the issues employers must negotiate with the new employer and the process the negotiations will follow.

Make sure you understand the rules and comply with them in the event of a restructuring.

Frequently Asked Questions

Can I restructure one position at a time?

Yes. There is no legal maximum or minimum number of positions that must be restructured at once (unless you have several of the same type of positions in your business, for example, five baristas in a coffee shop; see above).

However, anyone who has gone through a restructuring process knows how stressful and exhausting it can be.

Whenever possible, for the sake of your company’s culture and morale, we recommend undertaking as few restructurings as possible so you can complete the change process quickly with everyone, make the tough decisions, and then move toward rebuilding and refocusing.

When can a terminated position be filled?

If your circumstances have changed and you now need a position that you had previously terminated, we recommend waiting a minimum of three months before recruiting or hiring for that position.

There is no legal deadline, but the longer the timeframe, the better to demonstrate that your company is now in a different situation or facing different challenges.

If you’ve created a new position as part of a restructuring, you won’t be able to hire for that position until you’ve completed the process and confirmed the outcome.

What if I want to change my proposal mid-process?

If you make changes (other than minor ones) to the restructuring proposal, including changes to the consultation or selection processes, you must present them to all affected employees and give them additional time for feedback.

If the changes are significant, it may be advisable to restart the change process with a new proposal.

This is especially important if the proposed new structure affects roles other than those initially identified for change.

Get more answers to frequently asked questions about restructuring and redundancies.

 

 

 

 

 

Communicating Restructuring with Staff: How to Do It Right

The following contribution is from the Biginterview portal, which is defined as follows: Try the Big Interview training tool. Designed to boost your confidence and provide you with an interview strategy manual.

 

 

A detailed restructuring plan to use during restructurings and layoffs.

Contents

What is a corporate restructuring?

How to communicate restructuring will determine the success or failure of your employer brand.

How to communicate restructuring

Final thoughts

 

 

Communicating Restructuring with Staff: How to Do It Right

A year ago, a friend of mine packed his bags and moved across the continent to work for a company he’d been raving about for years.

It was a dream come true: a swanky office in Amsterdam, a seamless onboarding, a great team, and a fortune.

Last week, he found out he was being laid off, along with the team he led.

When I asked him how he was doing, he said, «I actually think we’re all going to be fine.»

This puzzled me greatly.

Layoffs are unpleasant. They demonstrate whether companies truly adhere to their values, expose poor internal communication and lack of processes, and reveal management’s agility in critical moments.

But I knew that, if done right, layoffs can allow you to demonstrate your value as an employer. So I investigated further.

It turned out their company had developed a robust restructuring plan and outplacement options.

Now I was intrigued. How did they communicate the layoffs? What kind of support did they offer? What can we learn from their example?

Today, I’ll go over all the details in this article.

You’ll learn the following:

 

Why restructuring communication is vital for staff,

How to organize the announcement process, and

A template and examples you can use when you need to announce a restructuring.

What is a corporate restructuring?

In business, restructuring occurs when a company undergoes significant organizational and operational changes to maintain its competitiveness, reduce costs, or overcome a financial crisis.

 

A restructuring can involve mergers, departmental reorganizations, or changes in management structure, but in most cases, it also involves staff reductions and layoffs.

It’s common for employees to be dismissed for misconduct, poor performance, or failure to comply with company standards. However, in a corporate restructuring, it’s often necessary to lay off some of the best employees or eliminate entire departments simply because those positions are no longer needed.

These circumstances require special attention.

How to communicate the restructuring will determine the success or failure of your employer brand.

Whenever a transition occurs, especially a delicate one involving staff reductions, there is one thing (albeit a very complex one) that is absolutely essential to get right: communicating the change.

Once the restructuring is announced, confusion and anxiety can pervade the workforce. Sometimes, employees aren’t even sure what exactly is happening or what kind of changes they should expect.

Am I being transferred to another department?

Should I expect a pay cut?

Are my benefits being eliminated?

Am I being laid off?

Therefore, it is up to you, as the employer, to develop a restructuring communication plan and define the process, detailing aspects such as:

– Who will inform which employees, when, and how;

– Which communication channels will be used for the announcement (e.g., in person, email);

– What your message will be and how to keep it consistent and supportive;

– What options will you offer employees to provide feedback and ask questions;

– How will you support those laid off (e.g., severance pay, outplacement services, vested rights, etc.);

If you approach restructuring strategically, you’ll avoid (or at least minimize) potential negative consequences such as:

– Affected employees leaving negative comments on social media

– A domino effect of negative reviews on employer review sites like Glassdoor

– Wrongful termination claims and lawsuits

– A direct impact on the morale and productivity of remaining employees

Remember: The National Labor Relations Board recently ruled that employers can no longer require terminated employees to remain silent about the terms of their exit packages and prohibits them from posting disparaging comments about the company as part of their severance agreements.

The key takeaway is that layoffs are something that really needs to be scrutinized.

Remember, this is a huge change that affects everything and everyone: former employees, those who remain, your employer image, your reputation, and your ability to attract future talent.

 

 

How to Communicate a Restructuring

To ensure a smooth company restructuring, here are some steps you can take:

 

Form a team to work on the restructuring project

Organize a planning meeting to review the details

Develop a business case

Create a detailed communication plan

Decide on severance pay and outplacement services

Instruct your leaders and maintain consistency in messaging

Manage logistics

Announce the restructuring and layoffs

Support remaining employees as well

Restructuring and Layoffs

Before we discuss these steps, let’s go back to my friend and his company for a second.

When they announced the restructuring, I started seeing dozens of #layoff confessions on LinkedIn, but no criticism or shaming. Most people were sad, but grateful for the time invested in the company and how the layoffs were handled.

After all, the company was doing well.

If your company is preparing for a restructuring and doesn’t know how to lay off employees clearly, carefully, and compassionately, read on.

We’ve used this example, as well as other good (and not-so-good) ones, to offer you a step-by-step guide on how to communicate a layoff.

Before you begin: You don’t have to be a company laying off thousands of employees for this to be relevant. Even if you’re a startup and only laying off a few employees, the following tips will be helpful.

Here’s how you can organize activities before, during, and after layoffs.

1. Form a team to work on the restructuring project

Step one: Create a cross-departmental team to plan and organize the restructuring process and layoffs. This working group typically includes direct managers and relevant HR staff. If necessary, you can hire an outplacement firm and let its representatives handle parts of the process.

2. Hold a planning meeting to address the details.

Once you know who will be involved in the project and what each person’s role will be, gather them in a room (or a Zoom session) to go over the details and design the restructuring strategy.

Remember that, for now, this project will remain top secret, so be sure to treat it as such.

When booking calls or the conference room, don’t name the meeting «Emergency Executive Call» or «Restructuring Plan,» as this will raise more than one red flag. Instead, give it a common, discreet name, like you would for any other meeting.

If your meeting rooms aren’t soundproof, schedule the event outside of regular business hours. Or better yet, hold it off-site or switch it to Zoom.

3. Develop a business case.

Be prepared to explain why you made this decision and use that information in all your communications. Saying a company is downsizing due to “market conditions” or the “recession and geopolitical climate” is generic and insensitive.

To make a difference as a business leader, provide affected employees with as much honesty and transparency as possible. Make sure they understand why you are doing this, what you did to prevent it, and how you will support departing employees.

Consider this excellent example from HubSpot, whose CEO, Yamini Rangan, stated in a message:

Restructuring and Layoffs

Why It Works:

In this email (soon made public on the company’s website), the CEO provided extensive background information to explain why the 7% workforce cut was necessary.

 

HubSpot was one of many tech companies that experienced a sudden surge in customer demand at the start of the pandemic.

They cite inflation, exchange rate volatility, tighter client budgets, longer decision-making cycles, and the end of remote work as reasons that influenced their decision.

They also cite specific measures they implemented to try to avoid layoffs (minimizing travel, cutting discretionary spending, reorganizing teams, and slowing hiring).

In doing so, they supported their decision with data and offered a clear explanation of why downsizing was inevitable for the success of their business.

Another recent example is Atlassian, whose co-founders…

 

 

4. Create a Detailed Communication Plan

The next step is to create a timeline outlining when and how you will communicate your decision to various stakeholders. This involves aspects such as:

– Informing the board of directors

– Informing department leaders

– Planning how you will communicate internally and externally (timeline and channels)

– Defining your message and trying to connect it to your mission and the company’s core values

– Creating a backup plan in case something goes wrong (e.g., a data breach)

5. Offer Outplacement Services

This is also the time to think about severance packages and outplacement support you will offer those laid off.

Some aspects to consider include the length of the severance package, unused paid vacation time, extension of medical benefits, visa support, what happens to the teleworking team (if any), and the details of outplacement service programs (e.g., job interview preparation, resume development, and other job search guidance).

6. Educate your leaders and maintain consistency in messaging.

Once department leaders are informed, they’ll need support to deliver the message.

This is a key step in the process, as everyone must be 100% clear about what to say and the stakes if the message is poorly communicated.

Remind your leadership team of the consequences

of poorly managed layoffs: ruined relationships with excellent employees, negative reviews on job boards, dismissed people badmouthing you on social media, or damage to your employer’s image.

To empower your leaders and maintain a united front, create and provide materials and documentation in advance, standardize the process, and organize training sessions.

This way, your managers will be more confident delivering bad news.

 

 

Train your leaders to:

– Deliver the message with empathy and respect, but with efficiency and clarity.

– Manage emotional reactions and potential outbursts.

– Answer all questions (Your HR department can provide role-playing exercises and a FAQ guide to help you prepare).

– Control their own emotions (firing a good employee is also difficult for managers).

– Follow the script (or bullet points) when speaking. Instruct them to avoid ad-libbing, as you want a unified message across all departments.

– Communicate the news to the remaining employees and work with them to smooth the transition.

7. Manage the logistics

Depending on the number of jobs being eliminated, you’ll need to plan the entire process. What practical steps should you take to ensure everything runs as smoothly as possible?

Inform your IT team and provide them with the timeline and the list of people whose access will need to be cut.

Finalize severance and outplacement plans.

Monitor social media for conversations about your company and form a team to respond according to your communications strategy.

Prepare a public statement (if you choose to do so).

Hire additional HR and security staff (in case someone needs to be escorted off the premises).

Consider timing. It’s best to notify everyone affected as soon as possible.

8. Announce the Restructuring and Layoffs

When the day arrives, you’ll need to think on two levels: 1) how to manage individual announcements; and 2) how to plan organization-wide communications.

How to Manage Individual Conversations

Notify each affected employee individually (if possible). On the day of the restructuring, schedule a 30-minute meeting with each employee and choose a private space.

If the meeting is virtual, make sure their camera is on. And if you need to do it via email, prepare your drafts in advance, personalize them, and send them at the same time.

Focus on the «jobs» and «roles» being eliminated, not the employees. Offer a brief explanation for the layoff and stick to the script. Remember to thank the employee for their contribution and assure them that they shouldn’t take it personally and that the decision wasn’t based on their performance.

Be quick (but show empathy). This day won’t be easy, and it could get nerve-wracking and uncomfortable.

Still, do your best to avoid rambling and small talk (which is why it’s best to practice in advance).

Make sure you get the message across in the first few minutes of the meeting. You can prepare the employee by starting with, «I have some bad news today.» Speak clearly.

Be direct and avoid any misinterpretation. Make sure the employee understands that the decision is permanent and what will happen next.

Invite another person into the room. For legal reasons and your comfort, it would be a good idea to have another person with you while you deliver the news.

This could be someone from the HR department or an outplacement services representative.

 

 

Explain the details of severance pay and outplacement

This is important. You need to anticipate the questions and concerns they will have. Make sure to answer questions like when their last day is, what happens to their benefits, and how you will support them as they plan their next step.

Give them a chance to ask questions. Even if you hold a town hall meeting later to inform everyone, leave room for questions in the one-on-one meeting.

Send a follow-up email with the details. Upon receiving the news, your employees may feel overwhelmed and confused, and they could easily forget the details. That’s why it’s important to repeat them in writing (a great way to avoid answering the same questions over and over again).

If you’re unsure how to be direct, you can use this restructuring communication template:

For business reasons such as [REASON] and [OTHER REASON], we have had to make some changes that affect your work. We regret to inform you that, despite everything we’ve done to prevent this, we now find ourselves in the situation of having to lay off our [EXAMPLE] department, and your position will be eliminated. [DATE] will be your last day with the company.

Regarding the next steps, you will receive [MONTHS] of severance pay. We will also pay for your unused vacation time and provide you with a professional development plan to help you with the transition. Your access to email, Slack, and [OTHER RELEVANT TOOLS] will be terminated immediately, but we have your personal email address and phone number, and we will contact you there. You can find more examples and a complete exercise here: Best Approach to Employee Outplacement and Transition.

What’s Next?

How to Manage Company and Public Announcements

A good practice is to hold a town hall meeting to share the news with the entire company and post an announcement on your website.

Make sure you reinforce your sales pitch and stick to the message defined in the initial stages of the restructuring.

Recalling the HubSpot example, this is how they communicated their decision with transparency, compassion, and clarity:

Restructuring Examples

Hubspot did an excellent job announcing their layoffs and supporting their entire team with a robust restructuring process. Here’s the link to the full message from HubSpot’s CEO.

9. Support Those Who Remain, Too

Normally, you’d think employees who weren’t affected by the restructuring would be happy to be through it. Think again.

Survivor guilt is real: some have lost team members they valued and enjoyed working with. After the restructuring, their daily roles and responsibilities may have changed. Perhaps they needed to take on additional work already done by someone who was laid off.

To keep them focused and productive, and to enhance the company’s image after the cuts, they also need support through regular meetings and training. Encourage them to ask questions and raise their concerns honestly. If no further cuts are planned, reassure them that their jobs are safe.

Final Thoughts

That’s it. Now you know all the best practices for communicating restructuring to employees. And you can always refer back to this checklist if you need additional help.

As you organize the restructuring process, here are some other resources that may be helpful:

 

Learn how to design internal promotion strategies.

Learn about the different outplacement services and how to choose the best option.

 

 

 

Restructuring and Role Changes: A Guide for Employers

The following contribution is from the DavidsonMorris portal, which defines itself as follows: we are specialists in employment and immigration law, as well as human resources and global mobility consulting.

Our multidisciplinary team brings together lawyers, human resources professionals, global mobility consultants, and former Home Office employees to provide a comprehensive and cost-effective solution that meets our clients’ HR needs.

Employers choose us because we offer a comprehensive combination of services tailored to the needs of today’s businesses and HR departments. We can help you maximize the value of your HR department’s capabilities and their contribution to organizational objectives.

We operate from London, Manchester, Cambridge, and Aberdeen.

The author is Anne Morris

Anne Morris

Founder and CEO, Anne Morris is a qualified lawyer and trusted advisor to large corporations and SMEs. She provides strategic advice on immigration and global mobility to help employers with operations in the UK meet their workforce needs through corporate immigration.

She is recognized by Legal 500 and Chambers as a legal expert and provides board-level advice on business migration and compliance risk management. She also oversees the development of new client proposals and the efficient processing of applications.

Anne is an active speaker, immigration commentator, and contributor on immigration policy, and regularly delivers training sessions for employers and HR professionals.

 

 

 

 

Restructuring and Role Changes

SECTION GUIDE

Employee Rights in Restructuring

Can employers change employees’ contract terms?

Dismissal and Reemployment During Restructuring

Relocation and Restructuring

Restructuring and TUPE

Restructuring and Redundancies

Consultation and Communication about Redundancies

Suitable Alternative Employment

Legal Risk Management

Need Help?

Frequently Asked Questions About Restructuring Rights

Author

About Davidson Morris

 

Restructuring and role changes occur when an organization makes adjustments to its structure, workforce, or jobs to better meet business needs.

Some examples include combining positions, modifying job responsibilities, or eliminating positions to improve efficiency, reduce costs, or adapt to market conditions.

However, restructuring can be a challenging and unsettling experience for everyone involved.

Therefore, employers should strive to manage this process fairly and, as tensions are often high among staff affected by restructuring, ensure they do not break the law when making any changes.

 

 

In this guide for employers, we explain the implications of restructuring processes

for employment law and human resources, examining the various legal and strategic issues they pose for employers: from employee rights when reorganizing a company to dismissals and relocation.

It is important to emphasize that, since every restructuring is unique, any company contemplating structural changes to its business should always seek advice from an employment law specialist, specifically tailored to the organization’s needs, to manage legal risk and minimize disruption to work and the impact on morale.

 

Employee Rights in Restructuring

In terms of human resources, restructuring may involve the division of an organization into separate parts, the merger of two or more organizations, or the transfer of some or all of one organization’s activities to another.

It could also involve a redistribution of work among the same number of employees, proposals to relocate some or all employees, or to modify employment contracts, and, in the case of a complete elimination of activities, layoffs.

The nature and scope of an employee’s rights during a restructuring will depend primarily on whether it will result in layoffs or the transfer of a part of the business.

If so, there are several key legal requirements surrounding aspects such as consultation, finding suitable alternative employment, applying fair redundancy selection criteria, and ensuring continued employment when the business changes ownership.

However, even when a dismissal or transfer of business is not part of the restructuring process, changes to an employee’s working conditions will generally occur, giving rise to various employment rights in relation to contractual amendments.

Therefore, while restructuring a company can often bring significant benefits to both the organization and its workforce, it can also entail significant risks, particularly the possibility of an employee’s rights being violated during this process.

If structural and contractual changes are not properly managed, and employees do not support them or have not had adequate opportunity to make informed decisions, the resulting risks can include:

– Morale and negative employee relations

– Claims for breach of contract or unfair dismissal

– Loss of valued employees, who are forced to resign

– Reduced employee engagement, performance, and productivity

– Increased work-related stress and sick leave

– Damage to the organization’s reputation and/or company image

– Strikes or other industrial action, if a union exists

Can employers change employees’ contract terms?

Even when no redundancies or company transfers are contemplated, employees will still have certain rights regarding any changes to their working conditions as a result of a restructuring.

This is because the employment contract between the employer and employee, which sets out the employee’s terms and conditions, is a legally binding agreement. This means that any variation to these contractual terms and conditions, where corporate restructuring can often equate to changes in salary, working hours, or other employment arrangements, must generally be agreed upon by both parties.

The only exception to this rule is if the employment contract includes a flexibility clause, which allows the employer to modify specific aspects of the employee’s contractual terms.

For example, under a mobility clause, the employee may be required to relocate, provided the request is reasonable.

This could be due to the closure of an office or work center following a restructuring, or a change in the work performed at a particular location. However, when assessing what is reasonable, the employee’s commute distance and the notice period before the change takes effect must be taken into account.

 

Whenever possible, any modification to an employee’s working conditions should be achieved by mutual agreement, even if the proposed change is permitted by a mobility clause or other flexibility provision.

This way, the reasons for the restructuring can be discussed with the employees affected by the changes, giving the employer the opportunity to address any concerns.

This will also give employees the opportunity to ask questions, suggest alternative solutions, and feel part of the restructuring process.

In cases where changes to working conditions are covered by an agreement with a recognized union, known as a collective bargaining agreement, the employer is required by law to consult with that union.

Union representatives can then negotiate and agree on certain changes on behalf of their members.

Otherwise, the employer will need to decide whether to convene individual meetings with each employee to seek their agreement or, alternatively, to seek collective consultations with the affected staff.

This will generally depend on the number of affected employees and whether the company has other mechanisms in place for consulting employees, such as an employee forum or staff association, or a joint advisory committee that includes both management and employee representatives.

Dismissal and Reemployment in the Event of Restructuring

If contractual changes can be agreed upon with employees, the employer must write to each affected employee within one month of the changes taking effect, outlining the new working conditions.

If a mutual agreement cannot be reached, the employer may:

– Notify the employee of its intention to amend their employment contract with effect from a specified date, or

– Notify the employee of the termination of the current employment contract and offer reinstatement under the new terms.

 

If an employer imposes a contractual change before obtaining an individual or collective agreement, it will be considered a breach of contract.

Unless the employee accepts the changes by continuing their employment without protest, they may be able to claim damages.

If the employee is forced to resign, they may also be able to claim unfair dismissal.

If the employer decides to dismiss and rehire the affected staff, they must do so with sufficient notice and following a full and fair dismissal procedure.

This means the employer must give each employee the right to appeal before offering reinstatement on the revised terms and conditions.

The employer must also provide a just reason for the dismissal.

If the reason for dismissal is employee separation, the employer must follow a fair dismissal process and, where appropriate, pay severance pay, even if it proposes to rehire the affected employee.

If it is not a severance pay, the employer must demonstrate that it had another substantial reason (SOSR) for dismissal if it is challenged before an employment tribunal.

For example, SOSR could be considered if the company is in serious financial difficulty, the employer has made exhaustive efforts to reach a mutual agreement on contract amendments, and there was no other option but to dismiss and rehire.

For employees who accept the offer of reemployment under new contractual terms, this action by the employer will not be considered a breach of contract.

The employee’s continued employment will also be preserved.

However, if the employee rejects the employer’s offer, the termination will be considered a dismissal.

This means that an eligible employee may claim constructive dismissal if they believe the dismissal decision was not made in accordance with the law.

Before taking any of these measures, the employer must initiate an appropriate consultation process to determine whether an agreement can be reached.

In the context of dismissal and reemployment, if the employer proposes to dismiss and offer reemployment on new terms to 20 or more employees, it must legally consult collectively with the union or employee representatives regarding the proposed dismissals.

The employer must also thoroughly explore all other available options, as imposing new terms, or dismissal and reemployment, carry significant legal risks.

These are essentially options of last resort.

Even when staff continue to work for the organization, the employer’s actions can seriously damage employment relationships, negatively impacting employee morale, motivation, and engagement.

 

 

Relocation and Restructuring

During the dismissal process, one of the employer’s procedural requirements is to explore all appropriate alternatives to dismissing an employee.

This could include options to relocate the employee to a different position or a different part of the organization.

The new position does not necessarily have to be similar to the original one and may involve different duties, pay, or location. It may even have a different level of seniority.

However, relocation is a complex aspect of the dismissal process, and employers must approach it carefully to ensure a fair and legal procedure is followed.

Likewise, the overall management of a dismissal process can be a complex legal matter for which specialist advice should be sought depending on the particular circumstances of the case.

Restructuring and TUPE

 

In cases where a restructuring involves a transfer of business, for example, when two organizations merge to form a new one, or when some or all of one organization’s activities are transferred to another, employees’ rights under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006 must be considered.

Under the TUPE Regulations, employees have the right to transfer to a new employer with their current employment terms and conditions while retaining most of their employment rights.

Therefore, there are important additional considerations if an employer is considering proposing changes to employment contracts after the transfer.

In addition to protection against dismissal, both before and after a transfer, where the sole or main reason is the transfer itself, employees have protection against changes to their employment terms and conditions in connection with the transfer.

The only exceptions are if the changes improve the employee’s working conditions or if the new employer can demonstrate an economic, technical, or organizational (ETO) reason that requires changes to the workforce, for example, if the organization requires restructuring.

By law, the employer can then attempt to agree with the employee on a change to their contract.

The rationale for the ETO rule, under the TUPE Regulation, is to strike a balance between the protection of employees’ rights when a business changes hands and the need for the new employer to implement measures to meet the operational needs of its new business.

Therefore, changes to an employee’s contract can be made following a TUPE transfer, and an employee can even be dismissed for justification, but only if there is a legitimate and sound business reason for doing so, and if that reason is unrelated to the transfer.

There are also strict legal rules regarding consultation under TUPE, which carry potential significant financial penalties for non-compliance.

 

Restructuring and Layoff

The terms restructuring and layoff are often used interchangeably. This is because, while some corporate restructurings guarantee continued employment for all employees, provided that a mutual agreement is reached on any contractual changes, a company’s restructuring can often result in the loss of some employees.

Layoffs in a restructuring context are viable, provided that they create a genuine redundancy situation and the employer follows a fair dismissal process.

By law, if an employee is laid off, it must be because:

– management of the company they worked for has ceased or is intended to cease; or

– a sufficient number of employees are no longer needed to perform a specific job.

If, as indicated in the second point above, your company no longer requires a sufficient number of employees to perform a specific job, you will likely need to lay off some employees.

A dismissal could also occur when the employer proposes to offer employees a new contract, i.e., a fire-and-rehire scenario.

For example, if the employer proposes changes to the contract because the number or nature of roles required to perform certain jobs has changed, or if the proposed changes significantly alter the duties of affected employees, this could result in dismissals.

In either case, the employer must follow a fair dismissal process and pay appropriate severance pay to all eligible employees.

As a result of a dismissal process, or simultaneously, employers may also restructure their organization to optimize the use of remaining employees.

 

A potentially dismissed employee may first be offered suitable alternative employment within the new structure.

As part of a fair dismissal process, employees and any union or employee representative must be consulted, including seeking ways to avoid dismissals.

The law also establishes that, when proposing the dismissal of 20 or more employees in an establishment within a 90-day period, the employer must consult with any recognized union and the workers’ elected representatives well in advance of the first dismissal. In addition to the risk of unfair dismissal in the context of a collective dismissal, the lack of collective consultation could also give rise to a claim for compensation by each affected employee.

 

Consultation and Communication Regarding Layoffs

There are laws that regulate consultation with employees and their representatives during a layoff process. The requirements are:

If between 20 and 99 employees are laid off, the consultation period must begin at least 30 days before the layoff becomes effective; and

If 100 or more employees are laid off, consultation must begin at least 45 days before the layoff becomes effective.

 

Employers are required by law to consider alternatives to layoffs when employees have worked for them for more than two years.

From the outset, it is helpful to ask employees and their representatives for their ideas on how to minimize layoffs.

You could consider temporary layoffs or reduced hours, or ask for volunteers to accept the layoff.

If you ask for volunteers, you should clarify that they can decline a request for voluntary redundancy.

You may want to do this because the employee has a long career, making it relatively expensive to dismiss them, or because you want to retain them on the payroll.

Once you have conducted a redundancy consultation and decided who to dismiss, you are still legally obliged to find suitable alternative employment for the dismissed employees until the dismissal becomes effective.

In addition, you may want to offer suitable alternative employment to an employee whose position has disappeared but whom you wish to retain within the new structure.

Suitable Alternative Employment

Suitable alternative employment refers to an alternative job offer within the organization.

Several factors are relevant to determining whether a position is suitable:

The location of the new position: Is it in the same office or workplace or a different one?

If it is a different location, will there be a longer commute or will the commute be more difficult?

How similar is the new position to the employee’s current position?

Do their current skills fit the proposed position?

Does the employee need to retrain to perform the position?

Is the new position at the same or lower level?

Is the salary the same? Even if the employee is less likely to accept it, you should offer them the position to protect yourself from future claims.

Under the law, the test for determining whether an alternative position is suitable is subjective, not objective. That is, the employee can reject the offer and accept severance pay if the new position is unsuitable, taking into account their personal circumstances.

There are different approaches. You can choose to inform employees about alternative positions within your organization and let them apply for a position, or you can contact them directly.

If you wish, you can conduct an interview. You must give the employee a fair opportunity for an interview, but if you do not consider the position suitable, you must inform them and terminate them.

If you wish to offer your employee a suitable alternative position, you must present the offer before the end of their current contract.

It is strongly recommended that you present the offer in writing and give them sufficient time to consider it.

 

The offer must include sufficient information about the position to enable the employee to make an informed decision.

The new position must begin within four weeks of the end of the previous one.

The employee is entitled to a four-week trial period in the new position.

If necessary, you can agree to an extension of the trial period with the employee. This could be because the employee needs further training.

In such a case, you should write to the employee explaining the reason for the extended trial period and its new end date.

If an employee is offered suitable employment, they may decline the offer before the end of their current position, during, or at the end of the trial period.

 

 

If they decline the offer, the employee must have a good reason for doing so.

However, the reason may be valid if it relates to their own personal circumstances. For example, a longer or more expensive commute to work in a new location, or health or family reasons, may be good reasons for rejecting an offer of suitable alternative employment.

If the employee has worked for you for more than two years, they will be entitled to severance pay.

Sometimes employers don’t accept their employee’s reasons for rejecting an offer of suitable alternative employment.

The employer may believe that the alternative position was suitable for the employee and that they simply want their severance pay.

If this situation arises, it is prudent to try to prevent it from escalating into a conflict.

If you haven’t already done so during the consultation period, you should speak with your employee to better understand their personal circumstances and motivation. You may discover that they have preconceived ideas that are incorrect.

At all times, employers should consider the long-term risks to morale and productivity within their organization if they force employees to accept alternative job offers.

Legal Risk Management

During a restructuring process, there are legal risks, as some employees may be dismissed and others will be dissatisfied with their alternative positions.

As mentioned above, you must ensure that you fully engage with your employee. If an agreement is still not reached, the employee may file a complaint or request early conciliation from ACAS and apply to the Employment Tribunal.

At the Tribunal, it will be up to the employer to demonstrate that the offer of alternative employment was suitable and that the employee acted unreasonably in rejecting it. Regarding the second point, the employee will be assessed based on their particular circumstances.

 

There are some additional considerations.

First, you should remember that an employee on maternity leave who is at risk of dismissal must be offered a suitable alternative position, if one is available, in preference to all other employees at risk.

Second, when drafting employment contracts and initiating a restructuring or dismissal process, you should consider whether they include mobility clauses. A mobility clause stipulates that the employee must be willing to work anywhere the employer directs.

If an employee’s contract includes a mobility clause and they are offered suitable alternative employment elsewhere, they must accept the job. If they refuse, they will lose their severance pay. Even so, employers who include mobility clauses should be cautious about requiring an employee to relocate a long distance or in a short period of time, as an Employment Tribunal could find this unreasonable.

If there is no mobility clause, the employee may refuse suitable alternative employment if the move would take more time or cost more. However, employers should keep in mind that if costs and time are the same, this factor alone will not allow them to refuse the work.

Third, employers should be aware that an employment tribunal may find dismissal unfair when the employee is dismissed, but there was a suitable alternative role they could have performed.

The timing of the dismissal is also important. If a suitable alternative role arises after the dismissal, this will not be relevant, as the employer was not aware of it at or before the employee’s termination.

However, as mentioned above, if an employer becomes aware of a suitable alternative role in their organization between giving the employee notice and the termination of the contract, the Employment Tribunal may find that it was unreasonable for the employer to continue dismissing the employee and that the dismissal was unfair.

Need help?

The employment lawyers at Davidson Morris can help you with all aspects of workforce management, including restructuring, amending working conditions, and recruiting employees. Working closely with our HR specialists, we offer comprehensive advice on your options as an employer and provide practical support during any process to modify contractual terms or draft new employment documentation tailored to post-pandemic conditions and requirements. For help and advice on a specific topic, speak to our experts.

 

Frequently Asked Questions About Restructuring Rights

What is restructuring?

A restructuring occurs when an organization modifies its structure, functions, or workforce to meet business needs, such as improving efficiency, reducing costs, or adapting to market changes.

How does restructuring affect employee roles?

Restructuring may involve changes in job responsibilities, combining roles, or eliminating positions altogether. Employers should consult with employees about any changes that affect their roles.

Should employers consult with staff during a restructuring?

 

Employers are required by law to consult with employees, especially if they are making layoffs. Failure to do so can lead to claims for unfair dismissal or breaches of employment law.

Can my position be changed without my consent?

Significant changes to your job title or the terms of your contract cannot be imposed without your consent. Employers must consult and agree on changes with employees or negotiate new terms.

What happens if I am made redundant during a restructuring?

In the event of redundancy, you may be entitled to severance pay, notice periods, and support to find alternative positions within the company, if available. What are suitable alternative positions during a restructuring?

A suitable alternative position is one that matches your skills, experience, and current conditions, such as salary and working hours. Employers must offer these positions whenever possible.

Can I refuse changes to my position?

Yes, but refusing may have consequences, depending on the circumstances. If the changes are reasonable and necessary, refusal could result in dismissal. Seeking advice is recommended.

What risks do employers face during a restructuring?

Risks include claims for unfair dismissal, discrimination, or breach of contract if the changes are not managed fairly and legally. Transparent communication and fair processes are essential.

Do I have rights if my contract changes during a restructuring?

Yes, you have the right to be consulted and to refuse unreasonable or imposed changes without agreement. Employers must follow fair procedures when changing contracts.

How can employers support their employees during a restructuring?

Employers can offer support such as retraining, relocation to suitable roles, severance payments, and regular communication to help employees adapt to the changes.

 

This information has been prepared by OUR EDITORIAL STAFF