Redundancy & Restructuring Solicitors for Employers

In legal terms, redundancy is a specific form of dismissal that can occur when an employer needs to reduce its workforce. However, it’s crucial to distinguish redundancy from other types of dismissal: redundancy is about the role, not the person. It does not relate to an individual’s performance, conduct, or personal attributes.

Under the Employment Rights Act 1996, a redundancy situation generally arises in three scenarios:

1. Business Closure: The employer has stopped, or intends to stop, carrying on the business for the purposes of which the employee was employed.
2. Workplace Closure: The employer has stopped, or intends to stop, carrying on the business in the place where the employee was employed.
3. Diminished Requirement: The requirements of the business for employees to carry out work of a particular kind have ceased or diminished (or are expected to do so).

While often used interchangeably with redundancy, restructuring is actually a broader concept. It refers to the act of reorganising the legal, operational, or ownership structure of a business to make it more profitable or better organised for its present needs.

Restructuring might involve:

• Changing the hierarchy or reporting lines within the company.
• Merging departments to eliminate duplication.
• Introducing new technology that changes the nature of certain roles.
• Changing terms and conditions of employment (contract variation).

Restructuring does not always lead to redundancies; sometimes, it results in the creation of new roles or the redeployment of staff. However, if the new structure requires fewer people or removes specific types of work, a redundancy process will likely be triggered.

Navigating the intersection of restructuring and redundancy requires a strategic approach to ensure that the “new” business is legally compliant and operationally sound.