Guide to Restructuring & Role Changes for Employers 

Businesses sometimes need to restructure or change roles as a result of changes in business strategy, cost reduction programmes, role redundancy, and mergers/acquisitions. In this guide, we will explain the essential elements of restructuring and role changes for employers, including the key laws, the rights of employees, the redundancy process, and the implications of TUPE. 

What does ‘restructuring’ mean?  

‘Restructuring’ refers to changes in the organisation of a business, often with a view to making it operate more efficiently, cost-effective and/or effective. Businesses restructure for many reasons, including to change business model or strategy, save money, move into new markets, or as a result of a merger with or acquisition of another business.  

Business restructuring may mean that some employees need to be made redundant or transferred to a newly acquired business. It is imperative that employers follow the correct legal processes at each step of the way to avoid reputational damage and/or a claim for wrongful, unfair, or constructive dismissal by an employee if their employment rights have been breached.  

Any failure to adhere to the law and best practice when restructuring and changing roles can also lead to impaired workforce morale, reduced productivity, the loss of valuable team members, increased workplace stress, and even trade union action.  

Can I change the terms of an employee’s contract? 

No, you cannot change the terms of an employee’s contract without their agreement to do so. This is because an employment agreement is a legally binding contract signed by both parties and as such, changes cannot be imposed by one party over the other.  

Varying an employee’s contract of employment 

If you want to change the terms of an employee’s contract, for example, to reduce or increase their working hours, you may need to: 

• Propose a change and have this agreed upon by your employee 

• Renegotiate the terms of a trade union’ collective agreement’ or 

• Exercise a flexibility or variation clause within the existing employment contract, which will allow you to make a change. For example, the contract may include a flexibility clause that allows the employer to vary the office the employee works from or the working hours. Even if a flexibility clause exists, it is always recommended to consult with the employee before imposing the change. This will ensure that they have the chance to discuss any concerns and be comfortable with the new arrangement. Not doing so may result in the employee feeling frustrated with the change being imposed on them. 

The key point here is that you must get an agreement to vary the terms and conditions of employment before any change is made that may affect the rights of workers. Changing the terms and conditions of employment offers a great opportunity to discuss any concerns with the employee and to address these before finalising the new arrangements. 

Dismissal and rehire 

It is not possible to reach an amicable agreement on any proposed role changes. Other options may be available to you, including rehiring the employee on a new contract with revised terms (‘dismissal and rehire’) or giving them notice of any proposed changes. If you decide to dismiss and rehire on a revised contract, it is essential that you follow the correct process, including: 

• Ensure that you have a fair reason for dismissal (e.g. redundancy or a substantial reason such as financial issues or lack of any other option) 

• Follow a fair dismissal procedure (e.g. the redundancy process) 

• Provide sufficient notice 

• Provide the employee with the right of appeal against their dismissal 

You must ‘collectively consult’ if you intend to dismiss and rehire 20 or more employees at a single location and within a period of 90 days or less. The consultation process should aim to avoid or reduce the number of dismissals and limit the negative consequences of the dismissals. Failure to collectively consult may result in compensation being ordered in the form of a ‘protective award’ by an employment tribunal. 

If you are unsure of the correct process to follow to dismiss and rehire, it is recommended that you follow the Department of Business and Trade’s Code of Practice on dismissal and re-engagement in accordance with the Trade Union and Labour Relations (Consolidation) Act 1992. Not following this code of practice may result in any award being increased by up to 25%. 

What is the redundancy process in the UK? 

Sometimes, restructuring necessitates redundancy. This may happen, for example, if, due to a change in business strategy, some roles are no longer required. Before considering redundancy, it is important to check if it is needed. Other options may include: 

• Offering voluntary redundancy 

• Varying working hours 

• Offering alternative roles in other parts of the organisation or 

• Halting the employment of new staff. 

If you have concluded that redundancy is required and that the option of voluntary redundancy is not suitable or taken up, it is advisable to create a redundancy plan setting the options considered and the steps you will follow to ensure a fair process. Redundancy can be a lengthy process, including: 

• Advising staff of the risk of redundancies, how many roles may be affected, and what will happen next 

• Write to any employees who are at risk of redundancy, explaining that they are at risk of redundancy and their options 

• Holding consultations with employees regarding the proposed changes, how to reduce the impact of the proposals, any concerns raised, and the selection criteria for redundancies 

• Select employees to be made redundant using a fair selection system 

• Work out a redundancy pay package 

• Give appropriate notice to those being made redundant 

• Offer alternative employment if it is possible to do so 

• Offer an appeals process and 

• Support your staff through the process. 

Remember, if you do not follow a fair and complete process for redundancy, any employees made redundant may be able to make a successful claim to the Employment Tribunal for unfair dismissal. This may then have serious reputation and financial and legal implications for your organisation.  

If you are considering redundancy, we recommend following the best practice process set out by ACAS. This explains everything you need to know about employee rights during redundancy, how to make staff redundancies, collective consultation for redundancy, redundancy protection for pregnancy and new parents, and TUPE. TUPE (or the Transfer of Undertakings (Protection of Employment) regulations) gives employees the right to continuity of employment if they are transferred to a new employer (e.g. as part of an acquisition or merger). Continuity of employment means existing employees have the right to have the same or comparable contractual terms following the transfer process.