Restructuring and Redundancies in the Workplace

Understanding Restructuring and Redundancies

Workplace restructuring means changes, for the employer as well as the employees. 

A restructure may result in one or more redundant roles and employees. 

Such extreme changes must be carefully planned. 

What is Restructuring?

Workplace restructuring is the process of changing the way a business or organisation and its staff are organised. Some common instances of when a restructuring may occur would be when:

1. A business is acquired
2. A Service is added or removed from the business’ offering
3. The business recognises its current processes and hierarchy is inefficient
4. A change in the organisational goals of the business
5. A loss or gain of a substantial amount of revenue or clients.

These scenarios can radically change the human resource needs of a workplace. The answer to these new needs is often restructuring. 

Departments may combine, or split. Job descriptions and the responsibilities expected of those employees in those roles may shift. 

The Restructuring Process

What are Redundancies?

A redundancy is what happens when of the following conditions are met:

1. A business no longer needs one of their positions filled or performed by anyone; or
2. A business becomes insolvent or bankrupt

Some of the scenarios wherein the above may happen are:

1. A business introduces new technology or processes (allowing more to be done by fewer staff or by automations)
2. A business slows down due to loss of business or ability to produce
3. A business ceases business and closes down
4. A. business relocates a substantial distance away (such as interstate or overseas)
5. A business restructures or reorganises following a merger, acquisition, or some other major change.

When an employee is no longer needed to fulfil the requirements of a given position, they can be considered as redundant to the operational needs of the business.

Before a redundant employee can be let go, a few requirements must be met. These requirements are laid out by the fair work act, and other relevant legislation, that work to protect employees.

The Redundancy Process

Modern awards and other employment agreements, such as enterprise agreements and employment contracts, lay out the consultation process for major changes such as redundancies. 

This consultation process must be acted upon for a redundancy to be deemed genuine. 

The following is by no means exhaustive, but below are some elements that should be included during this consult.

1. Be sure to notify any employees that might be affected by proposed changes
2. Inform the employees about these changes and their expected impacts
3. Discuss how to best avoid and minimise negative impacts on the employees
4. Gather ideas, feedback, and suggestions from employees about the changes, and take them into account.

Should this process be carried out and the need to make employees redundant still stand, it is important that you set non-biased selection criteria for determining which employees are made redundant. 

Non-biased selection for redundancy might look to performance data, KPIs, or other data points. 

Similarly, any opportunities for redundant employees to find work elsewhere within the business should be highlighted. The offering of another suitable role where able is known as redeployment.

After all the above, and other relevant steps have been completed, and the need to make staff redundant persists, it is time to select who is made redundant using the non-biased selection criteria. 

Once one or more employees are selected and deemed genuinely redundant, it is time to begin the off-boarding process. This process includes additional payments in the event of redundancy, these payments are known as redundancy payments. Similar to severance pay, redundancy payments are to be provided to a redundant employee along with other payments that they are entitled to, like annual leave.

The above is by no means a comprehensive redundancy process. In order to avoid unexpected legal risks, it is recommended that you engage with and or consult a human resource manager before you begin. 

Genuine Redundancies and Unfair Dismissal Claims

Where a redundancy has been found to be a genuine redundancy, a terminated employee will not be able to make a successful unfair dismissal claim against their employer.

A redundancy is found to be genuine where the following criteria are met:

1. The employee’s job does not need to be done by anyone
2. The employer following all of the consultation requirements the employee is entitled too

If any of the above are not met, and/or the employer failed to give the employee another position within the business where reasonably able to, the redundancy can not be considered genuine. 

An employee may lodge an unfair dismissal claim where the above criteria were not met when they were made redundant. Such a claim may be investigated by the fair work commission.