There are many reasons why you might want to consider a restructure or reorganisation of your business, whether you are resizing, joining forces or responding to economic circumstances. It is crucial that this process is well organised and that the legal implications of decisions that you want to make have been carefully considered.
1. Be wary of Redundancies
A redundancy is where you are dismissing a member of staff because the role that they fulfill is no longer needed. This is the only dismissal that will count as a redundancy and, unless you are making this decision for valid reasons such as closing down a location or introducing a new piece of machinery, then you could find yourself on the receiving end of an unfair dismissal claim. Make sure you are aware of employee redundancy rights, such as the right not to be unfairly selected for redundancy and the right to notice.
2. Consult on Changes in Job Description
The Information and Consultation of Employees Regulations apply to businesses with more than 50 employees and provide protection against employers making changes to job descriptions. There may be an obligation to inform and consult employees, especially if this is something that has been requested by the workforce. There may be financial penalties where the Regulations have not been followed and, regardless of the law, there are significant benefits to ensuring that employees feel involved and part of your restructure or reorganisation.
3. Implement Best Practice
If your restructure is upsizing and you are increasing the size of your business dramatically then this is an important time to ensure that you have some best practice basics in place. Make sure you have a written statement of terms that every new employee signs, which covers everything from basic pay, to overtime, holiday entitlement and place of work. Include a clause that allows you to amend the terms in case you should want to make future changes. Do you have a solid understanding of legal entitlements to minimum wage, maternity leave, statutory holiday and sick pay? It is in the moments before a business begins to expand that these need to be put into place or you will constantly be playing catch up.
The Transfer of Undertakings (Protection of Employment) (TUPE) Regulations apply to business transfers and service provision changes. This could include where part of a business moves from one organisation to another, for example during a merger. It is crucial to take advice on whether your reorganisation or restructure may fall within TUPE as there are obligations to meet, such as in relation to the consultation with and notification to employees as to how their contracts are transferred. Where TUPE affected transfers are not properly dealt with, this may open a business up to compensation claims, such as a claim for unfair dismissal.
5. Moving Assets
If you are transferring assets from one entity to another then make sure this is done cautiously and with professional advice. There are numerous issues that could arise when moving corporate assets, for example where you are transferring assets out of a company that is facing insolvency and into another. This could be seen as an attempt to block creditors’ claims.
Discuss the legalities of restructuring your business with one of Goodharts’ experienced solicitors today.