Restructuring your Business from the Employment Perspective

As a business owner you will undoubtedly have devoted significant time and effort resulting in a successful company you are proud of.

The Covid-19 pandemic and economic crisis has now hit and before you know it these external factors have precipitated the need for you to protect the business and make immediate changes.

In these uncertain times and with the sudden changing market conditions, many business owners will have the same questions. Will the business survive? Are the people in the business up to the job? What changes should I be making to the business? Does my business need to make redundancies or not?

It’s not enough to just focus on the corporate aspects; strategic planning and implementation from an employment perspective is critical, so that your business will survive and remain a success.

Re-structuring your business from the employment perspective is a sensible measure to take.  A regular review of your staffing structure; personnel; departments; and sites is always recommended. In Covid-19 times this is essential.

Some examples of these measures (all of which we can assist you with) include:

Redundancies – You may wish to remove a particular role from the business; reduce the number of employees who do the same work; close part of the business or close one or all your company sites.

Employees with over two years service have protection in law from unfair dismissal and entitlement to statutory redundancy pay. Employees may also have various contractual entitlements.

An employer has to handle redundancies lawfully or there is a risk of successful Employment Tribunal claims and where there are multiple employees the risk to the business can be substantial.

It is imperative that there is fair selection, pooling (where required) and meaningful consultation when making redundancies.

Settlement agreements can avoid redundancy disputes and employment claims.

Employee exits – take time out to consider and evaluate your staff, and take action. Exit employees who are quite simply not going to benefit the future of the company.

Termination of employment can be justified with a fair reason, for example, poor performance, ill-health, misconduct, redundancy, or re-organisation; providing a fair process is followed and your company acted reasonably.

Your company may be able to exit an employee for ill-health or poor-performance; therefore avoiding redundancy payments your business thought it might have had no option to pay out!

Settlement Agreements –The use of settlement agreements can also result in prompt, amicable, and advantageous employee exits and outcomes for your business.

Settlement agreements can also be used to fast-track employee redundancies and remove the risk of complaints and claims (including those arising from disputed redundancies) against a company and its directors and officers.

Varying employment contracts – Remember to review employment contracts regularly and to update or issue new ones, particularly in relation to employees progressing through the ranks.

In current times, your business may wish to permanently vary terms and conditions of employment for some employees. This may include changing employee’s roles, duties and responsibilities, pay, hours of work, benefits; and place of work etc.

It’s important to remember that when varying any fundamental terms of an employment contract, employers are obliged to consult the employee and obtain their consent.

The law and procedure differs where there are more than 20 employees affected as collective consultation procedures applies. Non-compliance here could result in a claim by an employee for a Protective Award for the employer’s failure to inform and consult.

Temporary changes to employment status – Your business may wish to implement temporary changes to employment status for some employees; including lay-off; short-time working and the new concept of furlough leave introduced in 2020.

Employers should take advice. Changes to employment status require consultation and consent.  After a specific period of lay-off this can lead to an automatic entitlement to statutory redundancy pay.

Disputes and Employment Tribunal claims are now arising from the 2020 imposition of furlough leave and furlough pay by many employers. These claims include breach of contract and unlawful deduction of wages for “back pay” in instances where employees have received only 80% of their pay.

TUPE – Your business may wish to: a) sell or buy part or all of a business as a going concern; b) outsource or make a “service provision change” involving either an initial outsourcing of a service; a subsequent transfer or bringing the service back in-house; or c) grant or take over a lease or licence of premises and operate the same business from those premises.

If any of these circumstances apply then the “TUPE” legislation may apply. Employees may transfer (automatically by law) to a new employer; along with their continuity of employment, terms of employment and redundancy entitlements.

We can advise and assist you as to what you have to do to comply with TUPE and the penalties for failing to do so; what the implications are if TUPE doesn’t apply, and what other steps you can take to protect your business from the effects of TUPE.

Promotions – Take action to ensure you retain the right staff in the business through promotion of key personnel (if your business is of course in a position to do so). This can act as an incentive and increases productivity.

Vary existing employment terms by offering incentives such as target related bonuses or improved pension schemes.

Recruitment – If you are in a position to do so, don’t be afraid to recruit. It may be that a new skillset or a fresh personality could afford great benefits to your company, both in the short and long-term.

Contracts of Employment – Protect your business with appropriately drafted employment contracts (whether for new or existing employees) with terms that are beneficial to your company such as probationary periods, favourable notice periods, garden leave, or even by the issuing of a fixed-term contract.  Important and relevant provisions in 2021 include furlough leave; lay off and short-time working.

How Farleys Can Help

We have expertise in all the above measures and can provide clear and efficient advice on your company’s legal position and options, and assist with implementation and communications with employees. We can be actively involved with the above measures or remain “behind the scenes” therefore guiding your business as you choose.

Farleys Solicitors specialise in employment law & HR for businesses and employees. If you or your business requires HR & employment law advice and support in relation to the restructuring; redundancy; the Coronavirus Job Retention scheme, furlough leave; flexible furlough; varying employment contracts, staff handbooks, absence from work, home-working, apprentices, recruitment, lay-off; short-time working; disciplinaries, grievances, employee exits, settlement agreements, Employment Tribunal claim or defence and representation and TUPE business transfers; please contact us on 0845 287 0939 or contact us by email.