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What employees’ rights are when a business decides to restructure

Kirsten Cluer

With the recent news that Marks & Spencer, Debenhams and House of Fraser are to close stores across the UK amid heavy falls in profit, it has raised questions around what employees’ rights are when a business decides to restructure. Contributor Kirsten Cluer, HR Consultant and owner – Cluer HR.

House of Fraser, the most recent established UK retailer to feel the squeeze on the High Street, announced it is to close more than half of its UK stores, including its flagship on London’s Oxford Street, putting 11,000 jobs at risk.

When a company or organisation enters a period of transition, the major changes can be swift. During this time, businesses will often consider cutting costs, restructuring, downsizing or streamlining operations and making redundancies.

If, in the unfortunate circumstances that a company needs to dramatically restructure and carry out redundancies in order to avoid administration, consultation should start at least 30 days before the first dismissal takes effect. This would be the case if 20 to 99 employees were to be made redundant over a period of 90 days or less.

But companies looking to make 100 or more employees redundant, as is the case with House of Fraser, must begin consultations at least 45 days before the first dismissal.

At this early stage of restructuring, it is worth exploring whether there are any employees at the company who would take voluntary redundancy. The advantage of this is that it may have a less demoralising impact on the workforce, as the affected employees have some degree of control over their dismissal.

The disadvantages, however, are that voluntary redundancies can be more expensive than compulsory redundancies, as it is often the longer-serving employees who volunteer, leading to potentially higher redundancy payments and the loss of valuable experience. It is therefore important to be clear from the outset that the company reserves the right to decide whether to accept an employee’s application for voluntary redundancy.

If too few employees volunteer, the process will be prolonged as the business will need to go through both the voluntary and the compulsory stages.

The company may receive enough volunteers to either negate the requirement to make any compulsory redundancies or at least reduce the number of compulsory redundancies.

If, after this stage, the company has insufficient, unsuitable, or no volunteers, it will have to resort to making compulsory redundancies, which is achieved through a competitive selection process.

If restructuring entails outsourcing any parts of the business, employers can seek specialist advice as to whether TUPE (Transfer of Undertakings (Protection of Employment)) applies. These are regulations that preserve employees’ terms and conditions when a business or undertaking is transferred to a new employer.

Consideration must also be given to any other vacancies that might exist within the business, into which employees ‘at risk’ of redundancy could be redeployed. But care should be taken not to make assumptions about the skills and experience people might have for alternative roles.

In instances where a business has alternative jobs to offer to redundant employees, an employee on maternity leave, who has been selected for redundancy, must be offered a suitable vacancy before any other employee.

When the redundancies are made, a company can help those who have left employment by offering outplacement support such as help with writing CV’s, applying for jobs and preparing for interviews.

Overall, when a business is forced to restructure and carry out redundancies, professionalism and correct legal procedures must form the foundation of the process.

This will ensure that the company can protect itself from any potential unfair dismissal claims and the prospect of an expensive and lengthy employment tribunal. It will also ensure that everyone involved in the process has been treated fairly and that the company has exhausted all avenues to ensure it has complied with employees’ rights.

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