Business Canterbury HR/ER Consultant Michael Prisk shares his insights on how businesses can adapt in challenging times.

In the current economic environment of rising costs, high interest rates, inflationary pressure, supply chain uncertainty and compressed profit margins, it is important that employers are looking at everything in their business to streamline costs.

An important part of this is to take a ‘helicopter’ or strategic view’ and ask yourself: ‘Have we got the required capacity and capability within the workforce to take the company forward?’ This involves assessing if the organisation has the right capacity and capability in terms of number of staff with the required qualifications, skills and competencies to move the company forward. It may also require a restructure to arrive at the right number of staff with the required skills and competencies to improve commercial outcomes for the company. This could involve disestablishing existing positions and creating new roles and/or making some positions redundant.

Undertaking a restructure is one of the more challenging exercises in terms of meeting the requirements of current employment case law. To avoid any costly mistakes, it is important to follow a fair and reasonable process. Employers must go into a restructure with an open mind rather than a pre-determined view of the outcome and be open to feedback from employees who may be adversely impacted by any proposed change to their employment.

Though not legally required, it is a good idea to invite all staff to attend a meeting where an announcement is made on a restructuring proposal. This ensures all staff know what is going on and can display sensitivity to those who may be adversely affected by the restructuring access. At this meeting, employers should explain the reasons in the restructure proposal and detail in a general sense why the review is being carried out, such as a decline in revenue, introduction of new technology or the need to have new roles and skills to develop new markets to maintain commercial viability.

Employers should then meet with potentially adversely employees and have the restructure proposal explained them in detail and how they may be affected by the proposed change. This should include a detailed rationale for the restructuring proposal such as facts, data and financial information. Staff in this situation are entitled to detailed financial information such as figures around actual fall in revenue of profitability, value of contracts loss or size of cost savings to be achieved to remain profitability. Not providing this information can expose a company to a challenge of not acting in good faith by providing all relevant information related to the restructuring proposal.

Outline the number of roles to be disestablished and if any new roles are being created that potentially affected staff can apply for. If a number of roles are proposed to be disestablished or a lesser number of new roles are being proposed, employers need to detail the selection and recruitment criteria to be used to select employees for a lesser number of roles.

At this meeting, the restructure proposal should include a consultation phase or timetable for providing feedback on the proposal. Allow a reasonable time for potentially affected staff to provide feedback and access independent legal advice. Emphasise it is only a proposal at this stage as the employer is keen to receive feedback on it. Indicate where to send feedback and what form it should take, who they can direct questions to and by what date.

When the consultation period for feedback has ended, meet with potentially affected employees to provide report back on staff feedback and confirm proposal or modified proposal. Employers need to show that they have carefully evaluated staff feedback about the proposal and have considered retraining and redeployment as alternatives to making positions redundant. Formalise the final outcome in writing to affected employees and outline which positions will be disestablished and any new roles that they can apply for as applicable.

For those employees who are declared redundant, it is a good idea to offer counselling support such as Employee Assistance Programmes or help with compiling CVs or interview skills training through this very stressful time for these staff. Check employment agreements to give the required notice and any redundancy compensation that may be due. Many employers pay out the notice period to allow these staff to leave with dignity and have time to attend job interviews.

Employers are recommended to seek legal advice before commencing a restructure proposal.