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What constitutes a restructure or reorganisation?
These are not legal terms, so there is no exact definition, but usually they refer to changes to the organisational structure or to roles within an organisation. This may or may not involve a loss of headcount.
We are currently undergoing a restructure and a senior role is being made redundant to make way for a new organisational structure. There is an alternative position but it attracts a lower salary and has less responsibility. It seems a disservice to the senior employee to offer this – should we?
An important part of a redundancy process is to consider whether there are suitable alternative vacancies within the business (and that includes any across the group companies). Whether the role is suitable is an objective test, however, as best practice many employers choose to simply provide a list of all open vacancies within the organisation and allow the employee to indicate whether they are interested or not. Employers may also choose to red-circle an employee’s salary. There is no obligation to do so, but it may help minimise job losses.
Can we offer an alternative role on a trial basis? What happens if the trial doesn’t work out?
A statutory trial period of four weeks is set for alternative employment where the employee has been offered a role with terms that wholly or partly differ from the corresponding terms of the employee’s previous employment. An employer and employee can agree a longer trial period if they wish, although the terms of this should be agreed in writing. The trial period is for both the employer and employee to assess whether the role is suitable.
If a trial period does not work out (from either party’s perspective) then the employee is likely to be made redundant. For the purposes of the statutory redundancy payment, this will be calculated based on the end of the original contract. Complexity can arise in regard to notice – does the notice period apply from the end of the original contract or from the end of the trial period? There is no set guidance in law on this point but if an employer is intending that notice starts from the end of the original contract we recommend it is made abundantly clear to the employee before they commence the trial period,
Our business has lost a large contract. Whilst we do not wish to make anyone redundant, it seems inevitable. One manager has raised that an alternative would be to ask our employees to consider a drop in salary – can we do this?
Part of a fair redundancy process is to consider whether there are any alternatives to making redundancies. Things such as reducing salary would involve changing the terms and conditions of the employee’s employment and as such employees should be consulted with to see whether they accept such changes. Consultation periods should be reasonable bearing in mind the change being made. If employees do not accept the change then there are ways to impose the change, but these can carry risks. You should seek advice if changing terms and conditions is being considered as an option.
If you are considering a restructure or reorganisation that may result in redundancies, please contact us for a free consultation.