Successfully communicating a reorganisation – the legal perspective
23rd June 2023
For a successful reorganisation, the partnership between Internal Communications, HR and Legal is crucial to ensure messaging is clear and legally compliant, potential risks are minimised, and employee trust and morale is maintained.
H/Advisors Maitland’s Transformation & Change team speaks to Jane Amphlett, Partner and Head of Employment at London law firm Howard Kennedy, about the legal considerations that Communications (and HR) teams need to be mindful of when communicating a business reorganisation.
When businesses go through reorganisation, what are common pitfalls from an internal communications perspective?
When undertaking a restructuring or redundancy process, there are often tensions between the legal requirements to consult and the desire to give other employees and stakeholders clarity and certainty. Employers should remember that, while the redundancy consultation is ongoing (and until final decisions made and any notices of termination served), redundancies are and should be described as “proposals” and “subject to consultation”. This is crucial to avoid giving the impression that the consultation is not genuine and that the outcome is predetermined, which could render any dismissals unfair.
Employers sometimes overlook the fact that proposals can change during consultation – for example, an employee who has been selected for redundancy based on selection criteria might challenge their scoring successfully and another employee could end up being made redundant instead. Employers should be wary of giving premature reassurance to individuals who are not provisionally selected for redundancy, as that may change.
It’s also essential to respect the privacy of employees – any “all staff” announcements should avoid mentioning the names or individual job titles of those whose roles are at risk of redundancy.
At the same time, however, employers should not lose sight of the impact of redundancy processes on other staff. Those retained staff may also need to be consulted over any changes to their roles. It’s also common for other staff to feel unsettled so internal communications to all staff should be carefully planned as a key element of any major restructuring or redundancy process, to minimise conjecture and reassure other staff that the business is acting ethically and lawfully. Any perception that the business has acted unfairly is likely to have a negative impact on retention and recruitment, particularly as it’s very easy for details to enter the public domain via social media.
In the UK, what are the legal requirements for informing and consulting with employees during a reorganisation, and how do these affect internal communications?
Where 20 or more employees are proposed to be made redundant (which includes terminations by reason of a reorganisation) any at one establishment (often – but not always – meaning one location), the employer is obliged to consult collectively with a trade union (if it recognises one for these purposes) or elected employee representatives. The employee representatives must be given certain written information and information must also be given to the Government’s Insolvency Service. The employer must then consult with them collectively for at least 30 days (or 45 days if 100 or more redundancies are proposed) before the redundancies are put into effect.
If the reorganisation includes an internal transfer to another employer, there will likewise be a requirement to consult collectively under the Transfer of Undertakings Regulations, known as TUPE (although consultation can take place directly, rather than through representatives, if the employer employs fewer than 10 staff).
Employers making any redundancies must also consult individually with the employees whose redundancy is proposed. This entails notifying them in writing that they are at risk of redundancy and explaining why, meeting with them to discuss alternative roles, any challenge to the redundancy or any queries, confirming the outcome of the consultation in writing, serving notice of termination and giving them the right to appeal.
Are there any legal requirements for communicating a reorganisation to employees in a certain way, for example, through email or face-to-face meetings?
Certain information must be given in writing to employee representatives when consulting collectively. Formal notification to an employee that they are “at risk” of redundancy and the outcome of the consultation should always be in writing (and it will usually be a contractual requirement to give notice of termination in writing).
There is no requirement that consultation meetings must take place face-to-face, but we would recommend this unless it is impossible in practical terms. Remote meetings are less easy to manage effectively and may be less conducive to providing the appropriate support and sympathy than a face-to-face meetings. They may also make it less easy to facilitate a discussion about settlement terms, which employers may be keen to progress. Remote meetings also increase the risk of covert recording and breaches of confidentiality. As some businesses have discovered, they can also result in negative publicity.