How can employers evade legal complications?
In a challenging time, when mass layoffs become inevitable, how can employers cut staff in a fair, honest and respectful way? The restructuring process can sometimes be painful – but it doesn’t have to be inhumane, one lawyer advises.
“Employers are under a number of ‘overarching’ legal obligations, which must be followed to avoid legal issues that might arise, and also to ensure that a mass restructure process is both appropriate and humane for those affected employees,” said Andrew Shaw, managing partner of Lane Neave who specialises in employment law.
“The first obligation is that of ‘good faith’ under Section 4 of the Employment Relations Act 2000. This means, that employers must be active and constructive in establishing and maintaining a productive employment relationship; be responsive and communicative with employees; and not directly or indirectly do anything that will mislead or deceive the employee,” Shaw said.
“When looking specifically in the context of mass restructuring, this obligation means that employers must ensure they have good communication in place with staff; provide staff as much information on the proposed changes as they can; give staff a reasonable amount of time to give feedback on the proposed changes; and also genuinely consider this feedback,” he said.
“The second obligation is to provide employees with a healthy and safe workplace under the Health and Safety at Work Act 2015. Not only does this mean ensuring your workplace is physically safe, but also psychologically safe,” Shaw said.
“This is a stressful time for many in the workplace, so make sure you are aware of any triggers and provide employees with as much support as is reasonably practicable. We recommend having Employee Assistance Programme services in place for all employees, but especially those affected by any workplace changes,” he said.
Read more: How to manage contract changes amid COVID-19
Even with businesses exploring cost-cutting measures during the pandemic, employers will still have to offer a reasonable argument for cutting staff. “The starting point, when beginning a conversation about undertaking a restructuring process, is to establish that the legal test to justify redundancy will be satisfied: is this an action that a fair and reasonable employer could take in these circumstances?” Shaw said. To establish a legally justifiable redundancy, employers must:
“At the moment, due to the impacts of COVID-19, it is likely that a good commercial reason for the need to downsize a workforce will be evident,” Shaw said.
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