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Redundancy and Restructing Planning

Published 10 Jul 2013

In forming a restructure proposal and deciding whether to implement a restructure, employers will need to:
  • give careful thought as to the basis for the proposal to restructure and how it is to be presented to the employees who may be affected:
  • be prepared to explain further the commercial justification in simple and straightforward terms and carefully consider any alternatives suggested;
  • have clear and supportable reasons for not adopting any other possibilities suggested by employees,; and
  • consider whether the decision the employer is proposing to make is one which a reasonable employer could reach in the circumstances.
Employers will also need to be prepared to produce documentary evidence setting out the rationale behind a redundancy proposal and their consideration of any alternative submissions provided by employees, including evidence as to why they rejected them in favour of the final decision.

The express necessity of having a robust and justifiable proposal has arisen because of the recent decision of the Employment in Totara Hills Farm v Davidson, where the Chief Judge confirmed that the Court can assess the business decision behind a redundancy to determine whether the decision, and how it was reached, were what a fair and reasonable employer could have done in all the relevant circumstances.

Employers are reminded that where a redundancy is contemplated one of the primary steps is to consult the employees whom may be affected.

(a) Consultation requires more than mere prior notification and must be allowed sufficient time. It is to be a reality, not a charade. Consultation is never to be treated perfunctorily or as a mere formality.

(b) As consultation must precede change, a proposal must not be acted on until after consultation. Employees must know what is proposed before they can be expected to give their view.(c) Sufficiently precise information must be given to enable the employees to state a view, together with a reasonable opportunity to do so. This may include an opportunity to state views in writing or orally.

(d) Genuine efforts must be made to accommodate the views of the employees. It follows from consultation that there should be a tendency to at least seek consensus. Consultation involves the statement of a proposal not yet finally decided on, listening to what others have to say, considering their responses, and then deciding what will be done.

(e) The employer, while quite entitled to have a working plan already in mind, must have an open mind and be ready to change and even start anew.

source : DOL