Amidst general sentiment about the economic downturn, many organisations and leadership teams are battening down the hatches and preparing to ride out the storm. Attentions are focused on maintaining financial sustainability, finding cost savings through “right-sizing”, and cutting discretionary spend.
It is vital that employers carefully consider implementing such measures in a way which minimises legal risk. We set out the key “need to knows”.
Minimum obligations
All employers have a duty to:
· act in good faith;
· act fairly and follow proper process; and
· consult with employees.
Not only are these duties important legally, but adhering to them will likely produce beneficial business outcomes.
What do they mean and why does it matter?
Good faith
The duty to act in good faith requires employers to be open and honest, not act in a misleading or deceptive way or with hidden motives, be responsive and communicative, and provide employees with adequate information and time to offer input before reaching any conclusions or decisions – including those which may result in job losses.
By acting in good faith, employers not only fulfil their legal obligations; they also foster a sense of trust and understanding with their employees.
Acting fairly and following proper process
Acting fairly and following a proper process is crucial, particularly during restructuring and where redundancies are likely. Failing to follow correct process alone is sufficient for an employee to commence a personal grievance for unfair dismissal.
Consulting with employees
Consultation is key when proposed changes have the potential to impact jobs. Proper communication and consultation is not only legally necessary, it also opens avenues for employees to raise viable alternative solutions which could genuinely make a difference. Open dialogue may reveal options like reduced hours, remote work arrangements, or role adjustments, easing the restructuring process for both employers and employees.
Unsure what this means?
At K3, we are well equipped to guide you through these processes, ensuring legal compliance and, hopefully, better outcomes for all involved.
If you are involved in, or considering, a restructuring process, and you aren’t sure of your rights and obligations, please get in touch.
