Thinking about restructuring or redundancies, here’s what you need to know.

Often restructuring and redundancy go hand in hand but not always.  There is a lot to think about if you find yourself contemplating redundancies, it is not an easy decision and there is a strict process to follow. 

Firstly, lets think about restructuring you might do this for several reasons.

If your business has grown and you have needed to employ new members of staff but haven’t put in a structure, you might find that everyone is reporting into you.  Having 4 or 5 direct reports is not an issue, scheduling one to ones and team meetings should be manageable, any more than this, in addition to running a business, and you might find that you don’t have time to spend with your direct reports and / or you are inundated with people issues.  When I talk about people issues it doesn’t have to be problems but could be things like managing holiday, appraisals, one to one meetings, queries relating to deadlines or workload, everyday things that pop up but are distractions.

If it is a small business you don’t need lots of levels and hierarchy, that doesn’t help, but maybe a manager between you and the rest of the team to deal with the issues mentioned above.  In this instance a simple restructure could involve simply moving an existing employee into a manager role and moving reporting lines.  These should be non-contractual changes and are easy to implement.  You may know who you want to promote and offer them a new role.  Top tip, you could offer this on a secondment or trial period to ensure it all works out, especially if you promote someone with no management experience.  They will need your support and guidance in the short term to help them manage the team, if they are not suited they can return to their original role.  Alternatively, you might decide to recruit someone with experience and create a new role. 

Redundancies however are a different ball game, if you need to remove roles from your structure and replace them with different roles or if you need to reduce headcount and have identified roles which are no longer required.  Remember redundancy is about roles no longer being required in the business and not about the people.

What should you do before you announce any changes?

Undertake a review of your current structure, at this point your probably have an idea of what you want but you need to look at the roles you have in place and identify ones with similar responsibilities.  For example, if you have a standalone role which is no longer required and no-one else in the business does a similar job then that is straightforward.  However, if you have say 10 team managers in operations and you only need 8 then all team managers will need to be put at risk, in addition though you may pool similar roles.  So you will need to identify if there are any other team managers in the organisation where the roles are broadly the same and these roles would all be put at risk and everyone in those roles would be considered. In addition to the above you should also ensure that you put a freeze on any recruitment so that you can offer vacant roles to those employees who are placed at risk. 

Pregnant employees have protected rights and must be offered a role if there is one available.   These protected rights apply, from the time the employee informs their employer they are pregnant and ends 18 months from the date of birth.  In addition protections apply around adoption, neo-natal care and shared parental leave, so make sure you understand if any employees fall under this protection.

If less than 20 employees are affected you will need to consult individually within them, there is no legal timeframe however, they should attend at least one meeting.  If there are more than 20 redundancies then you must undertake collective consultation, at least 30 days before the first redundancy takes place and 45 days if there are more than 100 employees at risk.

You must follow a fair, documented process.  Any employee with more than 2 years service will be entitled to redundancy pay, in addition to notice period.  Statutory notice will apply if it exceeds the contractual notice.  Example, if an employee has been employed for 6 years and their contract asks for 1 month notice, the statutory notice would be 6 weeks which is greater than the contractual notice and so that is the amount of notice they are entitled to.  However, if the contractual notice exceeds the statutory notice, then the contractual notice applies.

You will need to calculate the redundancy pay based on age and length of service, which gives you the ready reckoner and that is multiplied by the weekly statutory amount, currently capped at £719.  You will need to make sure that you recheck this figure once you have a leave date, the amount may change if they have had a birthday or work anniversary. 

Changes to the redundancy process are expected in the summer 2025, around how the number of employees at risk are calculated.  Currently, it is based on location and not across the organisation as a whole.  This is likely to change so that all locations under a single employing entity will be included.

You will need to ensure that the selection process is fair, transparent and does not discriminate.  You should also consult around the selection process as getting agreement from those at risk, regarding the criteria is good practice.  Employees can also appeal against redundancy if they believe that a fair process has not been followed. 

There is a lot to think about when restructuring and making redundancies.  You need to ensure you have a good understanding of the process and have thought through who is at risk, consultation, selection criteria, redundancy costs, applying the new structure and supporting both those employees exiting the business and the ones who remain as they will undoubtably be unsettled.

Need HR support with managing a redundancy process contact me at BDHR for guidance and practical support.