So, you are restructuring (and this may mean downsizing and making people redundant)? What are the key steps to get right?

We are in unparalleled and unprecedented times. COVID 19 has affected the world and our economy in ways many of us were simply not prepared for. It has affected almost all industries and means many businesses will review and possibly reduce their labour costs and head count.  Any type of restructure can be difficult but when accompanied redundancies this becomes even more challenging. The people side of this is important and critical to get right. 

What we know is that COVID 19 has not paused or changed an employer’s obligations under employment law. A fair process  must  be followed and the obligation to act in “good faith” still applies. But what does this actually mean?  In short, this means being honest and transparent in your communication and acting fairly and reasonably. Treating those affected with respect, compassion and dignity should be a key consideration and this is the basis for the applicable legal principles. It can also help to protect your brand. 

Getting the Process and Steps Right 

Regardless of the circumstances, employment law obligations apply  to all employment relationships. A key rule to remember is – if you are considering changes to an employee’s job you must consult and if you are seeking changes to the employees terms and conditions (such as pay rate or hours of work) you must agree

While the below steps are not an exhaustive list of your obligations this summary is aimed at reminding anyone considering any form of change not to forget their legal obligations and to consider the impact from a psychological and humanistic perspective. 

NB: For more detail, the workplace change process on www.Employment.Govt.Nz provides a comprehensive outline of the process an employer should follow when working through a change process however this is not a substitute for seeking specific advice relevant to your circumstances.  Other support might include training in the process, accessing information on various websites, talking with an experienced HR practitioner or employment lawyer. 

1. Check

Check first the employment agreements for any special arrangements. While this may seem obvious,  it is frequently a missed step.

2. Communicate

Communicate and present the proposed changes to employees (individually if possible, via video-conference if necessary) who may be directly affected (e.g. losing their jobs) as well as those who may be impacted (e.g. some changes to their position description or reporting to a different manager).  Note that, in all circumstances this must be based on genuine business reasons.  While employers have a right to make changes to their businesses, this should NOT be used as a means of getting rid of someone or avoiding managing a performance issue.  You are also required to provide sufficient information for the employees to understand the “why” of the proposed changes and the desired outcomes so they can provide  meaningful  feedback.  This should include but is not limited to position descriptions for any proposed new roles , a business case/proposal, letters, organisation charts, FAQs and so on. Most employers do not provide sufficient information.  

During these conversations be compassionate and kind.  Ask yourself how would you like this information presented to you and how would you like to be treated during the process. Ask the individual to keep the information to themselves until all of those affected have been spoken to. There is nothing worse than people hearing about changes that affect them informally.  Following this meeting have the supporting documentation ready to go to the person. 

3. Consult

Consult, gather feedback and allow the opportunity for people to ask questions. This step is so employees can provide you with alternatives to what you have proposed. As well as complying with your legal obligations consultation gives employees a voice and helps to ensure you have all the correct information before you make a decision. Note that in situations in which roles are disestablished and people need to apply for new or merged roles, you must also consult on the proposed selection process and criteria before this commences.

Ensure you provide sufficient time for people to seek advice and give their feedback.

4. Consider

Genuinely consider all feedback and don’t make a final decision without doing this. While some employers may use the consultation process as a ‘tick the box’ exercise or treat the proposal as a done deal, the fact is that your employees may have thought of solutions you may not have yet considered.

If further investigation based on the feedback is required, then do this.  Keep in mind that if this causes you to change elements of your change proposal then you are likely to have to re-consult.

Keep people updated. Communicate more than less. 

5. Decision

Make a decision. Once consultation has been completed and you have considered all feedback, you will need to make a decision and communicate that decision and any new structure both in writing and via a meeting. If there are positions available, you must offer these first to the employees whose jobs no longer exist.  The only exception to this is if the new jobs are a higher level or contain a technical skill (e.g. accounting knowledge).  If there is more than one employee in this category you may need to go through a selection process.

Ensure that affected employees are advised of their rights to seek advice and bring a  representative to any of the meetings.   

Providing support for those affected and those involved. 

In normal circumstances, a restructure can be a stressful time for everyone. However for many, the implications of COVID may exacerbate this even further. Therefore, having support in place is a must.  At a fundamental level this will include communicating regularly with staff and being genuinely available throughout the process and ensuring that all managers and staff involved know what is expected of a ‘reasonable’ employer and what it means to act in ‘good faith’.   It will also ideally include:

  • Allowing people the time off they need to prepare their feedback on the change proposal, attend and prepare for interviews, or deal with other issues that may arise through the change. 
  • Offering EAP or other counselling support, and if redundancy is a likely outcome of the change process, make sure there is support available on the day. 
  • Outplacement support to assist staff who are made redundant to commence their job search, prepare a CV and practice for interviews. 

A few final tips:

  • Maintain a focus on communication throughout and at each stage of the restructuring process. 
  • Do not disguise performance issues with a redundancy.
  • Make sure you provide employees with the opportunity to comment, ask questions, provide feedback and get advice.  
  • Include all relevant employees. In some cases casual employees may also need to be consulted. 
  • Make sure there is enough support available (outside of work, on the day the change is announced and on an ongoing basis) for employees wellbeing. If you feel concerned, encourage people to contact employee assistance providers like EAP, OPC or similar. 

And as a final reminder this article is not intended as a substitute for seeking specific advice on change management and/or consultation processes or advice relevant to your circumstances.