Offshore Services - Jersey

At some point a business may require restructuring and this may involve redundancies. There are many reasons for restructuring (eg, merger, technological change or loss of business). This update provides guidance on the planning and implementation of a restructure.

If a business restructure is being considered, it is important to bear in mind that some employees dislike change. Therefore, the business must establish a clear and fair system and retain the confidence of its staff to ensure that the restructuring process is successful and problem free.

The decision to restructure a business is ultimately one for the organization and if an employee brings a claim, the Jersey Employment Tribunal (JET) is unlikely to overturn the decision to restructure unless it was a sham or clearly designed to ensure certain people were made redundant. To ensure that there is minimum risk to the business, the employees must be continuously informed and consulted, and all steps taken throughout the restructuring process must be recorded.

Plan Ahead

The importance of planning cannot be overemphasized. The first issue is to identify the objective of the restructure. This should be answered by reference to roles and not individuals. The first step in ensuring a successful restructure is to appoint a manager who is not affected by the proposed changes to oversee the process. Structure charts, contracts, job descriptions and roles should all be looked at. Employment policies and procedures for change and redundancies (if applicable) should be reviewed before any steps are taken.

Is There a Need for Redundancies?

Yes

In some situations redundancies are unavoidable. In Goguelin v Stuart Banks (Carpenters & Builders ) Limited, the JET established that an employer should:

• consult with employees to obtain feedback and invite comments;
• warn the employees in writing that redundancy is a risk, giving detailed reasons why;
• establish fair criteria for the selection of employees for redundancy; and
• explore alternatives such as salary cuts, reduced hours or redeployment.

The steps taken should be documented so that the business can demonstrate a clear paper trail. These documents are likely to be disclosed to the JET if a claim is brought by an employee.

No

If redundancies are not necessary the business should:

• consult the group as well as individuals on the restructuring and proposed changes;
• inform employees of the consultation results;
• issue draft revised contracts of employment for consultation;
• deal with any queries;
• issue final contracts for signing; and
• support and train employees (if appropriate) in their new roles.

If an individual is unwilling to sign the contract or discuss his or her concerns, it should be made clear that his ir her job is at risk.

Good Redundancy Practice

If redundancies are necessary, the following processes should be observed:

• general consultation with employees - no decisions should be made before general consultation;
• individual consultation - a chance for employees to voice opinions and put forward suggestions;
• identification of the redundancy selection pool;
• written notification of individuals if their jobs are at risk;
• further consultation with employees - on an individual basis again; and
• scoring of employees against fair selection criteria - this should be done by someone who knows them and also by a moderator.

Consultation on the scoring gives employees a chance to feedback on, and appeal against, their individual scores. Only after the process has been exhausted should letters of termination be sent. Those selected for redundancy should be notified of their right to appeal and, if the employee chooses to do so, a further meeting should be held and the employee notified of the decision.

Pitfalls

Businesses often make mistakes when restructuring. Some common errors include:

• making the original announcement sound final - we 'will' do this or 'have' done that leaves employees with the impression that they have no say in decisions;
• pre-identifying employees for redundancy and then trying to adjust the process to gain the desired result (eg, selecting biased criteria);
• including the project leader in the redundancy selection pool which shows poor planning and selection of candidates to run the process;
• not analyzing potential problems - this can lead to difficulties later on in the process;
• starting too far down the process - skipping important steps in the process can lead to confusion and an undesired final result;
• focusing on people rather than roles; and
• not having a predetermined policy document, which leads to the business not achieving what it set out to do.

Mistakes which lead to claims are often a result of poor planning or not following accepted practice. If the business has a clear plan on restructuring and an appropriate leader, and takes into account accepted practice, policies and procedures, the restructure is more likely to be successful and productive.

ILO