How to avoid redundancies

Q: Business has been tough since Covid-19. What should I think about before starting a restructure which could lead to redundancies?

A: It’ll depend on what you’re looking to achieve. Are you trying to save money? Or are you wanting to adapt to changing times, in terms of physical workplaces, technology, and staffing structures? Or all of the above?

The key thing is to figure out what you’re trying to achieve early, but not make any hard and fast decisions on how to do it.

Then you’ll be able to figure out if you need a restructure and possible job losses, or whether there are other options, like a variation to staff’s terms and conditions of employment.

If you vary their terms, employees will need to agree to the changes – they can’t be forced on them.

Here are some of the changes we’re seeing and advising on that could avoid redundancies in the wake of the pandemic:

• Changes to workplaces. Some staff are moving to shared office spaces or working from home partly or fully.
• Hours of work. Reducing hours or days of work can be good for both employers and workers. Companies can save money as long as the work still gets done, and employees get time to spend on outside interests. We see a lot of workplaces coming up with creative and flexible arrangements which, when done well, can also help retain key staff and boost productivity.
• Track how you use staff and roles. Do some members of your team have extra capacity, while others are over-stretched? Can you spread work more evenly to fully utilise every member of your team? Diversifying roles allows staff the chance to upskill in other areas that will complement their existing role, skillset, or career.
• Consider contracts. Is it time to move to part-time and flexible arrangements, or move to contractor roles? In this way, you can allocate costs to projects according to what they need, rather than having employees with fixed salaries and guaranteed hours of work.
• Introduce new technology. An expert may be able to streamline your processes and find more efficient ways of doing things. Yes, there may be some upfront costs – but the savings may well be worth it. Teams could be more productive in the time they have.

These and other creative solutions all come with legal fishhooks you need to be aware of, so make sure you’re ready to manage them before you press ‘go’.

Get legal advice before you start, to help reduce the risk of personal grievances or breach of contract claims.

Shirker workers

Q: How do I deal with an employee who never shows up for work?

A: This depends on how often the issue is coming up, and whether you know the reason for it.

The first step is to open communications. Find out why it’s happening and don’t jump to conclusions.

For example, if an employee’s taking regular sick leave, you may need to ask them for medical certificates – and offer to pay for the certificates.

It could be a sensitive medical issue that the employee hasn’t wanted to tell you about.

It could be relationship problems, family violence, a drug or alcohol problem, or even internal workplace issues, such as bullying or harassment.

Ask them, so you know what you’re dealing with, but get some advice before you do – you need to avoid a situation where the issue is ‘asked and answered’ at this early stage, or where you then want to rely on what they say to issue a warning. If a careful process isn’t followed, that could result in a (legitimate) personal grievance.

You’ll have to carefully navigate legal processes to manage any of these issues, to avoid claims of unjustified disadvantage or dismissal, unlawful discrimination, or breach of contract claims.

Of course, it could be simply a lack of motivation! That’s likely to be a performance management issue, or a deliberate breach of instructions to turn up on time – or turn up at all, which is more likely to be a disciplinary matter.

This really has the potential to be a legal minefield, so it’s worth getting advice at the start.

Templates or individual contracts?

Q: What are tailored employment agreements – and are they a good idea?

A: Many companies use templated employment agreements to save money. They could be found online, or perhaps via a subscribed service where the employer answers questions to generate a template document.

However, there are many benefits to having an agreement that’s tailored to your business, including in the drafting of specific clauses. Here are some examples of why you should consider a bespoke solution:

• Legal compliance. A template may have ‘compliant’ clauses, but if they don’t fit exactly how your business operates, there can still be compliance issues. Take hours of work and rosters. If you don’t operate a standard 40-hour week within set business hours, or if you need staff to work overtime, these clauses can be complicated and leave you open to significant liability if they’re not tailored correctly for your business.
• Industry-specific clauses. Is there something about your workplace that’s unique? Do you provide tools, cover the costs of memberships, or require training or special health and safety rules? A tailored agreement makes sure specific issues are covered in a way that best suits the business.
• ‘Onerous’ clauses. We often see template agreements where the contractual obligations are actually more stringent than what’s set out in law. This is unhelpful, because if you contract to a higher standard, that is the standard you’ll be held to account to, if issues arise.
• Familiarity. With a tailored agreement, your legal team will already be familiar with the clauses, so if issues arise, they can hit the ground running to resolve them.

Steps to a restructure

Q: What legal steps should I take if I restructure my business?

A: Your main obligation is to outline the reason for the proposed change, provide details of what is proposed, and explain how you consider the proposal may achieve the goal, if it is implemented following consultation.

This all needs to be communicated as (and genuinely be) a proposal, which could change based on feedback from potentially affected employees.

The proposal also needs to include or attach any relevant information sitting behind it – the rationale – so employees can give informed feedback.

This could be financial information, organisational charts, in fact any information the management considered when they were coming up with the proposal.

There can be ways to do this that avoid disclosing highly sensitive information, but you should seek advice on how to do this and if you should.

All of that sounds pretty straightforward and obvious – but in fact we often see restructure processes go wrong (to varying degrees), leading to legitimate personal grievances.

It’s important to understand that there is no safe, ‘one size fits all’ process.

Each proposal and process needs to be tailored to the rationale, the drivers, and the staff involved.

Again, spending some money on upfront professional advice can save you a lot of grief and legal costs later, defending claims from disgruntled staff members.

Morrison Kent’s employment law expert Tess von Dadelszen provides general legal information in this Q&A. This information is provided for your general understanding. We recommend you seek legal advice with respect to your individual circumstances.

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