Restructure process – Covid-19

Restructure process – Covid-19

What do I do First

Always check your employment agreement to ensure that you follow all steps required as outlined in the agreement.

Is there impact on redundancy’s if you claimed the wage subsidy

If you applied for the COVID-19 Wage Subsidy for any employees before 4pm on 27 March 2020, you need to try your best to retain your employees you are currently receiving the COVID-19 Wage Subsidy for.

If you applied for the COVID-19 Wage Subsidy for any employees after 4pm on 27 March 2020, you must retain those employees for the period of the subsidy or you will be in breach of your obligations.

Why restructure

It’s important to regularly check that your business is structured the best way for success. Having the right roles structured the right way means you can meet the needs of your customers and take your business to the next level.

If things have changed and you think a new structure could improve the way your business operates, you might want to investigate restructuring. This doesn’t necessarily mean making employees redundant (though that could happen) but it might mean peoples’ roles change. Please note that employment laws protect some groups of employees in certain restructuring situations.

Restructuring can involve:

  • adding new roles
  • merging two or more existing roles
  • losing roles that are surplus to requirements
  • a combination of these things.

Genuine business reasons

You need a genuine business reason to restructure your business. You’ll need to state this clearly as you go through the process.

Genuine reasons include:

  • realignment of brand
  • changing your product or service offerings
  • financial issues resulting in the need to downsize or realign
  • no longer using a department
  • wanting to outsource certain business functions
  • merging with another business.

How to restructure — the principles

If a restructure might impact people’s jobs, there’s a process you need to follow. As with anything involving employee relations, it’s underpinned by the principle of ‘good faith’ — meaning you and your employees act fairly in your dealings with each other.

This means you:

  • are communicative and responsive
  • don’t mislead or deceive one another
  • are active and constructive in establishing and maintaining a productive relationship.

During a restructure, ‘good faith’ means that employees who might be affected have the right to comment on and feed into the restructure. When you propose the new structure, you need to genuinely consider any feedback, including their thoughts and suggestions.

Throughout the restructuring process you can keep some information confidential — but there has to be a good reason. Examples include:

  • following statutory confidentiality requirements
  • protecting your employees’ privacy
  • protecting your business’s commercial position.

How to restructure — the step-by-step process

Step 1. Document your proposal

You need to put your proposal in writing, so you can communicate it to your team.

Your proposal needs to talk about roles, not people. It needs to clearly state the reason for the restructure, and the expected benefit — though you can keep the details high level.

You need to clearly explain:

  • your genuine business need to restructure
  • what you propose the new structure to be
  • how that will impact the current structure
  • roles that are being disestablished or substantially changed in this proposed restructure.

If you include specific facts, like how much money you need to cut from the business, you need to make sure those facts are right. You have to be able to back up what you’re saying if you’re asked in a grievance process.

Step 2. Invite people to a meeting

Email or write to your employees, letting them know that you’re proposing a restructure and inviting them to a meeting to hear about it.

You must:

  • Advise and invite people whose roles might be affected (but you might want to include your whole team).
  • Let people bring a support person or representative to the meeting, and tell them they can in the invitation.
  • Leave enough time between the invitation and the meeting date so they can digest the news and get support in place, but not so much time it leaves them hanging. Two or three working days will be about right.

Step 3. Hold the meeting

The meeting can be with everyone at once. It can be informal and be via the internet.

In the meeting, you should talk through your proposal and give your expectations on timeframes. You should:

  • Talk them through the proposal document, and provide the proposal as a handout.
  • Outline the process that you’ll be going through to determine the restructure, and provide the process in a handout.
  • Set expectations regarding timeframes for the process, and provide timeframes in a handout
  • Be clear on the roles that are affected under your proposal.
  • State that anyone can provide written feedback to you, or request a private meeting to give feedback, and that they may bring a support person or representative to that meeting (they’ll need to tell you that they want a meeting, so you can schedule it in).

Step 4. Gather feedback

Your employees can submit feedback in written form or in meetings with you. It’s important that you consider what they have to say about your proposal.

Give them enough time after the proposal meeting to digest your proposal, think of suggestions and get support, before you close feedback — but not so much time that it leaves them hanging.

The feedback process will usually be for at least a week (especially if there is a chance an employee will lose their employment).

Step 5. Genuinely consider the feedback

You must genuinely consider the feedback that you’ve received, and whether you’d benefit from a different structure than you proposed. This process takes time — leave yourself at least a couple of days after closing feedback for consideration.

If you still think your original proposal is best, go to Step 6.

If you want to change your proposal, you should go back to Step 1. This is particularly important if your new proposed structure affects different roles.

Step 6. Confirm the structure

This step assumes you’re happy with your proposed structure — if you’ve made changes to your original proposal, you need to go back to Step 1.

You must provide the outcome of your consideration in writing, to the affected people. You need to:

  • Confirm that the proposed structure will be the new structure.
  • Outline the feedback you considered, and your decision regarding that feedback.
  • Be clear about the affected roles and what this means, including details of follow-up meetings and a notice period if relevant.
  • Offer to have individual meetings to discuss the outcome.

Step 7. Meet to discuss what next, if required

Schedule and hold meetings with affected employees to discuss next steps. Give them the option to have a support person or representative at the meeting, and enough time to organise them to come.

When dealing with downsizing and redeployment, legal advice might be valuable.

Restructuring task list –

  • Step 1 – Task = Document restructure proposal
    Suggested Timeframe = Complete before announcing restructure
  • Step 2 – Task = Invite people to a meeting to hear about the proposed restructure
    Suggested Timeframe = Allow a few working days between sending the invitation to the meeting and holding the meeting
  • Step 3 – Task = Hold a meeting to discuss the restructure
    Suggested Timeframe = Allow enough time during the meeting to discuss the proposal and to answer questions
  • Step 4 – Task = Gather feedback about the proposal
    Suggested Timeframe = At least one week
  • Step 5 – Task = Consider feedback and make a decision. If you still think your original proposal is best, go to Step 6.  If you want to change your proposal, go back to Step 1.
    Suggested Timeframe = A few days after the feedback deadline
  • Step 6 – Task Confirm the structure in writing to all employees. For those roles affected (made redundant or change in responsibilities) you’ll need to provide personalised written notification. If any roles are being made redundant, go to Step 6 of the Redundancy task list.
    Suggested Timeframe = As soon as you make your decision

Common mistakes

To reduce the risk of a personal grievance, don’t fall into these common traps:

  • Treating the proposal as a done deal before you’ve heard and considered feedback.
  • Leaving too little time between stages — your employees need time to consider things and arrange support.
  • Not being clear about what the proposed structure is.
  • Giving out confidential information, or refusing to give out information that you should disclose.

Prepared by Victor Storey, NZCB Finance Manager

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