Considering a Restructure

12 July 2023

Over the last seven years, companies have had to grapple with major “uncertainty shocks”, including the Covid-19 pandemic and, most recently, the Ukraine war. These shocks are reflective of the new normal of greater global turbulence and the rise of economic uncertainty.

The changing economic environment has had a large impact on many organisations and has, in many cases, led to companies considering structuring.

A business may consider a restructure in a number of circumstances, including:

  • A need to reduce costs.
  • To maintain competitive advantage.
  • New technology has become available resulting in a change to the nature of the operations of the organisation.
  • Sales decline and, as a result, a reduction in work for current employees.
  • Relocation of a business.
  • An opportunity for the employer to improve the efficiency of the business.
  • A merger or takeover.

In the instance you find yourself considering restructuring your organisation, as a diligent employer you should consider all potential risks prior to seeking to implement such changes. Business restructuring certainly raises several questions in regard to employee rights.

In order to ensure compliance with key industrial instruments, it is important to be aware of the way in which you must consult your employees regarding any potential major workplace change. The Fair Work Act, modern awards and enterprise agreements provide specific guidance regarding consultation. The key points include:

  • notify any employees who might be affected by the proposed changes, and their representatives.
  • discuss the proposed changes with the affected employees and any representatives as soon as possible after a decision is made.
  • provide them with written information about the changes, how they might affect employees, and any measures the employer will put in place to prevent or reduce any adverse effects.
  • give prompt consideration to any matters raised by the employees and their representatives.

A failure to comply with the terms of the relevant industrial instruments may result in severe penalties for the employer. 

If you’re considering restructuring your business and would like more information regarding your requirements as an employer, please contact us via the link below.