Making changes to your organisational structure can raise a number of employment and HR issues. If the restructure involves a reduction in the workforce, the employer must ensure they are following the correct legal procedures and meeting employees’ rights through the process.
Restructuring & redundancy
By law, if you make an employee redundant it must be because either:
- you have ceased or intend to cease running the business in which they were employed; or
- you no longer need as many employees to carry out work of a particular kind.
If, as per the second point above, your business no longer needs as many employees to carry out work of a particular kind, then it is likely that you will need to make some employees redundant.
As a result of a redundancy process, or simultaneously with it, employers can also restructure their organisation in order to make most efficient use of the remaining employees. A potentially redundant employee may first be offered ‘suitable alternative employment’ within the new structure.
This article will examine how to manage this process in your organisation.
Consultation and communication
There are laws governing consultation with employees and their representatives during a redundancy process. The requirements are:
- if you are making between 20 and 99 employees redundant then the consultation period must start at least 30 days before any dismissals take effect; and
- if you are making 100 or more employees redundant the consultation must start at least 45 days before any dismissals take effect.
Employers are legally obliged to consider alternatives to redundancy, where employees have worked for them for more than two years. At the outset it is helpful to ask employees and their representatives for their ideas as to how to minimise redundancies. You could consider lay-off or short-time working, or ask for volunteers to take redundancy. If you do ask for volunteers you should make clear that you may turn down a request for voluntary redundancy. You might wish to do so because the employee has long-service so will be relatively expensive to make redundant, or because you wish to retain the employee in the workforce.
Once you have carried out the redundancy consultation and decided who you will make redundant, you are still legally obliged to look out for suitable alternative employment for redundant employees right up until the time their redundancy takes effect.
In addition, you may wish to offer suitable alternative employment to an employee whose job has disappeared, but who you wish to retain in the new structure.
What is suitable alternative employment?
Suitable alternative employment is the term for an offer of alternative work within the organisation.
In order to decide if a job is suitable alternative employment, a number of factors are relevant:
- the location of the new job – is it in the same office / workplace or another site and if it is at another site, will the employee have to travel further or is the journey more difficult?
- how similar is the new job to the employee’s current job?
- is their current skillset a match for the proposed role?
- does the employee need retraining in order to do the job?
- is the new job at the same grade or lower?
- is the pay the same? – even though the employee is less likely to accept it, you should still offer the role to protect yourself against a claim in the future
In law, the test for whether an alternative role is suitable is a subjective one not objective, i.e. the employee can reject the offer and take the redundancy payment if the new role is not suitable for them, taking into account their personal circumstances.
How to offer suitable alternative employment?
There are different approaches you can take. You can choose to give employees information about alternative roles within your organisation, and leave it up to them to apply for a role, or you can approach them directly. You can conduct an interview if you wish. You must give the employee a fair chance at interview, but if you do not think that they are suitable then you should inform them of that and proceed with their redundancy.
Where you want to offer your employee a suitable alternative role, you must make the offer to the employee before their current contract ends. It is best practice, and strongly advised, to make the offer in writing, and to give them enough time to consider it. The offer should include enough information about the role in order that the employee can make an informed decision. The new job must then start within four weeks of the previous job ending.
The employee is entitled to a trial period of four weeks in the new job. If necessary, you can agree an extension to the trial period with the employee. This could be because the employee needs more training. If so, you should write to the employee explaining the reason for the extension to the trial period and its new end date.
What are the options for the employee?
Where an employee is offered suitable employment they can reject the offer before the end of their current role, or during or at the end of the trial period. If your offer is rejected, the employee must have a good reason for doing so. However, the reason can 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, can 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 then be entitled to a redundancy payment.
Sometimes, employers do not accept their employee’s reason for rejecting an offer of suitable alternative employment. The employer may consider that the alternative role was well-suited to the employee and that the employee simply wants their redundancy payment instead.
If this situation arises, it is wise to try to prevent it from escalating into a conflict. If you have not done so already during the consultation period, you should talk to your employee to find out more about their personal circumstances and motivation. You may find that you have preconceived ideas which are not accurate.
At all times, employers should consider the longer-term risks to morale and productivity within their organisation if they force employees to accept offers of alternative work.
The section below deals with the next steps in such a conflicting situation.
What are the legal risks?
During a restructuring process there are legal risks as some employees may be dismissed and others will be unhappy with their alternative roles.
As stated above, you should make sure that you engage fully with your employee. If you can still not come to an agreement it is possible that the employee will raise a grievance and / or apply to ACAS for early conciliation and make an application to the Employment Tribunal.
In the Tribunal it would be for the employer to prove that:
- the offer of alternative employment was suitable; and
- that the employee was unreasonable in refusing the alternative work.
In relation to number 2, the employee will be judged according to their particular circumstances.
There are some additional considerations.
First, you must remember that an employee on maternity leave who is at risk of redundancy must be offered a suitable alternative role, if there is one available, in preference to all other employees at risk.
Second, in drafting employment contracts, and when commencing a restructuring / redundancy process you should consider whether the contracts have ‘mobility clauses’. A mobility clause is one which states that the employee must be prepared to work anywhere the employer tells them to.
If there is a mobility clause in an employee’s contract and you offer them suitable alternative employment at another location, then they will have to take the job. If they refuse, they will forfeit their redundancy pay. Even so, employers who have included mobility clauses should be wary of requiring an employee to relocate a great distance and / or in a short period of time as an Employment Tribunal may consider this to be unreasonable.
If there is not a mobility clause then the employee can turn down the suitable alternative job if it would take them longer or cost them more to travel there. However, employers should note that if the costs and time are the same, then this factor on its own will not allow the employee to refuse the job.
Third, employers must be aware that an employment tribunal may make a finding of unfair dismissal where the employee is made redundant, but there was a suitable alternative role that they could have undertaken. The timing of the dismissal is also important. If suitable alternative work comes up after an employee has been dismissed then that will not be relevant, as the employer did not know about it at the time of, or before, the employee’s contract end date.
However, as stated earlier, if an employer become aware of suitable alternative work in their organisation between giving notice to the employee and the end of the contract, then the Employment Tribunal may make a finding that it was not reasonable for the employer to continue to dismiss the employee and the dismissal was unfair.
DavidsonMorris’ employment lawyers can help with all aspects of workforce management, including adapting to the challenges of the COVID pandemic on restructuring, changing employment terms and employee engagement. Working closely with our specialists in HR, we deliver comprehensive advice on the options open to you as an employer and provide practical support through any process to vary contractual terms or to draft new employment documentation adjusted to post-pandemic conditions and requirements. For help and advice with a specific issue, speak to our experts.
Job Restructuring Rights FAQs
Can employer change a job role?
An employer can change an employee’s job role, but usually only with their consent. Employees can find that their job role changes following a redundancy process. As part of a redundancy process an employer is legally obliged to look for suitable alternative work for the at risk employees within their organisation. If an employer make an offer of an alternative job, this may include changes to the role. Depending on the nature and scope of the changes, the employee may accept the new role after a trial period, or reject the role and take the redundancy payment. If the employee rejects the new job, they must have a good reason for doing so.
Can you demote someone due to restructure?
If the restructure is taking place at the same time as a redundancy process, the individual should be offered a role as an alternative to redundancy. The individual has the right to a four week trial period in the new job, following which they can choose whether or not to take the job.
What does a restructure at work mean?
A restructure at work can mean different things, in some cases may result in redundancies and job losses and that the remaining jobs will be reorganised into a new structure. An employee may find that their job no longer exists, but that, to avoid making them redundant, the employer will offer them suitable alternative employment, i.e. a job in the new structure. If this happens, the employee is entitled to a four week trial period in the new job, after which they can refuse the new position if they have a good reason for doing so.
Last updated: 4 February 2021