Work Wonders
Back in late 2021, we decided that instead of chatting to each other about the challenges and triumphs of people management in small businesses, we should invite you to join the conversation. And the Work Wonders podcast was born! Managing people is serious business. We bring you all the latest, practical advice without the pain. The podcast is brought to you by Aster HR https://www.asterhr.com.au/ and your hosts are Angela Gauci and Susan Rochester
Work Wonders
S5 Ep 9: When restructuring is needed
Have you ever faced the daunting task of navigating a business's restructuring or pondered the right way to handle potential redundancies?
In this episode, we dig into the complexities of reshaping a company. We're not just talking about the why, but the how—offering strategic insights on realigning roles and departments. From retraining to transferring staff, we dissect the sensitive process of restructuring with a focus on maintaining operations.
We then unpack the crucial notion that it's the role that becomes redundant, not the person, and the importance of a transparent consultation process. We shed light on the legalities involved, particularly when it comes to constructive dismissal and large-scale redundancy procedures. As you listen, you'll gain a deeper understanding of how to stay fair and compliant during these challenging transitions, ensuring your company not only survives but thrives through change.
You can find the show notes for this episode here
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Brought to you by Aster HR, the Work Wonders Podcast is hosted by Angela Gauci & Susan Rochester and is recorded at Launch Pad at Western Sydney University.
All information or advice included in this podcast is general, has been developed as a starting point for your business, and should be tailored to your specific requirements. It should not be considered legal advice. We have made every attempt to ensure the accuracy and currency of this information at the time of recording. However, references to things like employment laws are subject to change. For specific advice relating to your business, please get in touch with us.
Welcome to the Work Wonders podcast brought to you by Asta HR, where we simplify the human side of business. I'm Angela.
Speaker 2:And I'm Susan. Let's dive into today's episode and find out what you've been wondering about.
Speaker 1:In today's episode we're going to talk about sometimes when things change in your business and things might get moved around, which is called a restructure. It might include changing people's jobs or who people report to, or, in some cases, even redundancies. We'll give you some context into when and why it may happen and then also take you through how to do it appropriately. So let's get started. This is the Work Wonders podcast.
Speaker 2:Hi Susan, hi Angela.
Speaker 1:So restructure. So we're talking today about when things are getting moved around a bit like I don't know a game of musical chairs.
Speaker 2:Yes, let's hope it's that much fun.
Speaker 1:So maybe we should start by talking about when this might happen. Let's give it some definition. What would you say?
Speaker 2:Well, there's often times when you need to change the structure of the business because of external things that are happening in your business environment. So, economically, you know you might need to downsize, but equally there might need to be a quick increase in numbers in your business in terms of the employees and the work that gets done. There's also those situations where you have to pivot. Remember that word that became so popular back in the COVID days let's all pivot, let's all pivot. But, yeah, you might be pivoting from one specific area of your industry into another or even expanding your remit across different areas.
Speaker 1:So there's times when it could affect your entire team, your entire workforce and times when it may not. I'm thinking about an example where you might be a funded organisation to deliver a particular service and you lose that funding with just that particular team, not the whole business just one program. Let's say and if you lose that funding, you no longer have the need for those positions. So just those positions alone would be lost.
Speaker 1:Another thing that might trigger a restructure is if you have somebody leave and you decide well, well, we don't really need that yeah anymore, for whatever reason yeah or you decide to shuffle people around into a different structure within that area of the business yep, or like an amalgamation, if you see oh look, actually that department and that department could work better together exactly. We only really need one manager over that, not two we're going to get a different role? Yeah, those sorts of things. What about location? If we were opening a new area or relocating to a different area? And perhaps that might need reshuffling who works where and with whom?
Speaker 2:Okay, so there's a lot of situations where it could be an issue in your business, right?
Speaker 1:Yeah, the big question from a manager or business owner might be am I allowed to do this I think I've had that said to us before, you know and is it okay for me to make that decision to just change that person's job? Well, yes, I feel like there's an asterisk to that. Yes, yeah, that's right.
Speaker 2:See below. So I guess the biggest concern about restructuring is redundancies, Right? So that's where the risk is, the biggest risk for employers. I suppose, although I think it's useful to look at restructuring without redundancies first.
Speaker 1:Yeah, let's put that out of the way.
Speaker 2:Let's finish off on that first, and then we'll move on to redundancies.
Speaker 1:Let's do that. So when you're restructuring and not making people redundant, that might look like changing someone's job description. Let's say I have a new system of technology of some kind or a new piece of equipment that I now need you to also do, and so I'm going to be increasing that and putting that into your job description. There you go, that's yours now.
Speaker 2:That sort of thing is not redundancy, that's just changing things around around and now that you're saying that, I'm thinking well, you could really. You know, in some cases where you're changing the reporting line, that could be a restructure without any sort of redundancy as well yeah, we've worked with some clients where a restructure has meant for them.
Speaker 1:you know reporting lines are changing and so this position no longer exists, but this one does, or these two are amalgamating, or we're now calling it something different and like, if you think of an organisational chart and you might have a picture of that in your head and if that's changing, that might be a restructure in terms of who's reporting to whom.
Speaker 1:Does payroll sit under HR or does it sit under finance that age old problem, that sort of thing, and you can probably in some cases get away without redundancy, in that it just might be changing who reports to who.
Speaker 2:Yeah, so that's a restructure. Dear listener, I wish you could have seen Angela's hands, then what she was saying would have made a lot more sense.
Speaker 1:Arms going in every direction.
Speaker 2:Okay, let's get serious. Let's get serious about redundancy, because it is a bit of a scary topic.
Speaker 1:Yeah, yeah, it can be. Ending anybody's employment can be a tough one.
Speaker 2:Yeah, so they're under the sort of legal you know what's right and what's wrong side of things. The first thing you need to decide before you commence redundancies is whether it's necessary or not. Maybe you could transfer that staff member to somewhere else in the organisation where they could be used, or you could retrain them.
Speaker 1:Oh yeah.
Speaker 2:Or simply redeploy them. So this is something that's probably worth discussing with the people who are going to be affected.
Speaker 1:Yeah.
Speaker 2:There are rules around consultation, and they can be quite complex, yeah, so we're not going to go into them in detail here, but that's just one aspect of the consultation. But then, before you even do that, it's probably worth considering whether this is a genuine redundancy. So you, angela, and myself probably both experience a situation where people don't want to dismiss someone, so I decide to make them redundant.
Speaker 1:Yeah, unfortunately, it can be something that people might use to say, oh look, we don't need you. Sorry, it's not about you, it's about us. And if it's not genuine.
Speaker 2:What you're getting at there is I'm really hiding behind the word redundancy, but it's not really redundancy, that's right, and if it's not a genuine redundancy, you can be able to do an unfair dismissal claim. Yeah. So what makes a redundancy genuine? There's two parts. One is the job doesn't need to be done anymore, and the second is that you follow consultation requirements. And if you've done both those things, or both those things apply, then the people affected can't claim unfair dismissal.
Speaker 1:So the key part you said there was that the job, not the person. We don't like you. You're not performing well, none of that. You said the job doesn't need to be done Exactly. So that is really important, because it's that we no longer need that job in our team. We no longer need those tasks to be done in that way. So that is now being exited from that all chart. We no longer are going to have anyone doing that work, and that's actually quite a high bar to meet.
Speaker 2:If you think about it, I'd agree. So what the Fair Work Commission would look at if somebody claimed an unfair dismissal due to being made redundant or the role being made redundant is does that job still need to be done? And the obvious sign of that would be that you've given that work, those tasks, to another employee, or even employed somebody else to do what that person was doing.
Speaker 1:I've got an unfortunate example of that myself, where a person was made redundant and told oh look, that position doesn't exist anymore. All the best to you. And then four weeks later somebody else started with the word senior in front of their name, and it was exactly the same role. It was just somebody else in it, and so that is definitely an example of a non-genuine redundancy.
Speaker 2:Yeah, exactly, and I've seen the same thing, but in reverse, so where a manager X Y Z has been made redundant and then the X Y Z team leader or whatever has been hired, but they're actually doing the same PD with a change of name. So don't do that.
Speaker 1:No, you said consultation as well, susan. So the rule of thumb there is include the employee in the discussion and give them the reasons why that's happening and be very clear about the reasons.
Speaker 2:There was one more aspect to judging whether the redundancy was genuine or not.
Speaker 1:Yeah.
Speaker 2:And that is whether the person could have reasonably be given another role in the organisation.
Speaker 1:So that's about going okay. Well, yes, the business is going in this direction, which means the role's no longer needed, but we've done what we could to find where else you might fit in the team and this is what we've come up with. Yep, now, sometimes that might be, we had no option. It might be Other times it might be. Actually, if you're willing to, there's this position, if you'd like to move into that one.
Speaker 2:And then that's back onto the employee and that does not. I feel the need to say this, although I wish I didn't. That doesn't mean saying we don't have your role anymore at this pay rate, but we're introducing a new role, similar to what I said with the manager and then team leader, you know. But we are bringing in a more junior role and you know you're welcome to apply for that or we can redeploy you into that role.
Speaker 1:What you're getting at there is you can't use that idea of redundancy to disguise what you're really doing.
Speaker 2:Yeah, exactly.
Speaker 1:Another thing, Susan, is constructive dismissal. Now that's a term that you and I are familiar with.
Speaker 1:Our listeners might not be but basically a constructive dismissal is where the employee is put in such a position that they are almost forced to resign because the employer has made the environment of the workplace really hostile, and an example might be making work conditions unbearable, making it really difficult for them to do their job, or giving them no other option because the job's shifting or changing or something they can no longer do or be qualified for or whatnot, forcing them with no other option but to resign.
Speaker 2:Yeah. So the example I gave earlier about saying we're no longer having your role, but they're introducing a lower level one which may be reduced pay. The employee can't afford to earn less. That would be a constructive dismissal.
Speaker 1:I think yeah, bottom line. What we're telling you is you need to be aware of the reasons that you can terminate someone's employment and when you can't. And you know there are definitely ways that you can lawfully do that if you need to, if it's a valid business decision.
Speaker 1:Exactly so. Another area that can be a little nervy for business owners is unfair dismissal and avoiding that action after terminating someone's employment. Look, that's another whole other subject in itself, and we'll do another episode about how to protect yourself from unfair dismissal. So look out for that. Did you know that we have lots of free resources available to you on our website, things like templates that you could download, or a checklist for a process, or even recordings of our previous workshops? If you're looking for help in a particular area or just some inspiration, check out the resources page on our website, astrhrcomau. And now it's back to the episode. Our website, asthrcomau. And now it's back to the episode.
Speaker 2:Now let's look at your obligations. If you're actually going to make people redundant, okay If you have 15 or more employees. Sorry if you're terminating 15 or more employees you're legally required to advise Centrelink Okay, or Services Australia. So just something to keep in mind. Hopefully that's not the case for most of our listeners, but just in case, you do need to know that the next thing you really need to do is check the relevant awards or agreements, whatever the industrial instrument is that covers the employment of your employees.
Speaker 2:In terms of what the notification is required and the consultation expectations.
Speaker 1:Some of them can be specific, so that's a good point, yep.
Speaker 2:It's also worth talking to unions if you have unions involved in your workplace about the proposed redundancies. So this will mean that you're notifying your employees and also the unions. Nobody likes a surprise.
Speaker 1:No.
Speaker 2:Especially not before Christmas. Yeah, Please don't do it.
Speaker 1:Yeah absolutely Right before Christmas.
Speaker 2:Unfortunately that tends to happen a lot in Australia I've noticed. Yeah, you will need to contact an accountant because there's going to be costs involved, yep, so that the accountant can help you work out what they will be how you're going to pay it.
Speaker 1:There's a whole payout, isn't there? Yes, you obviously pay that notice period that you're talking about. Depending on the size of your business, there might even be a redundancy pay, so a bit of extra pay. There's other things like they might have leave that need to be paid out.
Speaker 2:Exactly, and things dependent on the employee's age at the time of the redundancy, if they're over 45. So there's a lot of things to be considered and we can certainly advise you on what those things are, but we'd say, talk to your accountant about what it's going to cost you yeah, because in some cases, if you're dealing with an employee that's been there quite a while, it might be quite a bit oh yeah.
Speaker 1:Or if you're making that bigger restructure, like you said, where you're letting more than 15 people go, that would be a big thing as well.
Speaker 2:Exactly. Always have a look at the Fair Work Ombudsman website.
Speaker 2:There's lots of fact sheets and things on there about particularly about consultation and what needs to happen, what the minimum requirements are. We can link to the appropriate pages in the show notes and we'll do that. So, while there are these obligations and the intolerance that your employees have when they're made redundant, always seek advice. I'd say yeah, because your situation is going to be unique and it's good to talk to somebody first to work out the pros and cons, the ins and outs of restructuring, and if you're going to be doing it, it's usually a big enough project that you're thinking about it in advance.
Speaker 2:Exactly. It's usually a big enough project that you're thinking about it in advance, exactly. So, speaking of the employees, you want to make it as easy as possible for them. Presumably, the restructuring isn't caused by them, so it's not a punishment for something that they've done. So you need to be very clear about why you're doing it and what your criteria are for deciding who's leaving and who's not.
Speaker 1:One of the things that we might help a client through with Susan in terms of keeping employees informed is again if you're planning that sort of in advance and you've got a bit of a piece of work to understand what it's going to look like once you're done, you could communicate with your employees throughout that process. You may not tell them everything that's okay, no of course not, but you might you know.
Speaker 1:Let them know we're going through this piece of work because ABC is coming or something, something's lost or different. Exactly, let them know, hey, this is happening. We want to keep you informed. Do you have any questions, any ideas, any ideas? And keep them informed through the process can be a really nice way to approach it. Yeah, what's your thoughts on doing it in person rather than over email or phone?
Speaker 2:Well, what do you think? Of course you'd want to do it in person wouldn't you? I mean you wouldn't want to. Most of us wouldn't want to do it in person.
Speaker 1:But it's the right thing to do. Yeah, I think employees would appreciate that.
Speaker 2:Yeah, and then, for your own guidance, be very clear and consistent about what's going to determine who is made redundant. So is it those jobs because we don't need them anymore, or is it people with those qualifications because we don't need them anymore, or is it people with those qualifications because we don't need them anymore? Or is it going to be based on length of experience or whatever you decide needs to be both consistent and fair. Yeah, yeah that's true.
Speaker 2:there are resources that are provided online in terms of going through a retrenchment process and, as we discussed, we can help you with that as well, but we'll be linking to resources as well. So we talked about communicating and communicating well, but it needs to be enough notice given as well, so that it's not a last-minute shock. I think we mentioned that earlier.
Speaker 1:Well, look, that can be it for employees, can't it? It can be just the shock of it and going oh well, I need a job. What?
Speaker 2:am I going?
Speaker 1:to do. So yeah, if you're giving them that notice, it gives them a chance to decide what's right for them, whether they're happy to see it out and follow you, depending what's going to happen, or just wait and see, or whether they're going to make another decision to resign or that sort of thing. That's fair. I think, some other nice things that you could do. You could actually, you know, offer people some additional support, so by that I mean you might offer them outplacement services, which is helping them with their resume Exactly Interview skills.
Speaker 1:Yeah, that sort of thing, Sort of understanding that, yeah, look, we get it. It's tough, you need to go somewhere else and let's try and help you.
Speaker 2:And understanding that, yeah, look, we get it. It's tough, you need to go somewhere else and let's try and help you, and that might also include, you know, helping them access health and wellbeing services.
Speaker 1:And, as you said, centrelink as well, or services, whatever they call themselves. Now you've got to let them know when you are letting go of more than 15 people, but you can also let the employee have a form for Centrelink if they're being made redundant, so they can go ahead and do that without too much trouble.
Speaker 2:Start going through that process.
Speaker 1:Yeah, so we hope that episode was helpful for you, whether you're in a position of changes coming up for you in your workplace or not, just wanting to know what your obligations are. We talked about when restructure can happen where there's no redundancy and people aren't losing their job, that things are changing, and then also going through the different areas of when redundancy applies and when it's genuine, and how to handle that appropriately. I wonder what you got from that. Please jump on LinkedIn and let us know today. We always enjoy knowing what's been valuable for you and, as we said, we'll put all the links to those relevant documents and websites on the show notes. Thanks for listening to the Work Wonders podcast brought to you by Asta HR. Hit the subscribe button now to never miss an episode, and if you'd like to continue the conversation with us, you can find us over at astahrcomau. See you in the next episode.
