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Restructuring: Advantageous for employer and employee?

This post is also available in: Afrikaans

By Christo Bester of the LWO (Agricultural Employers’ Organisation)

A business concern is run in a challenging environment where the economy and other external factors leave a business with few options to remain competitive and viable in the labour environment. Options fluctuate from reorganisation to restructuring, and even staff retrenchment.

What is restructuring?

Restructuring is the process of reorganising the structures (legal, ownership, operational or otherwise) to function more profitable afterwards, or comply better with operational requirements of the undertaking. It is imperative that employers always follow the correct procedures, as required by Labour Law, when any changes are contemplated regarding the terms and conditions of employment, especially when the possibility exists that employees may lose their jobs as a result of the restructuring process.

The correct procedure

Restructuring demands meticulous planning as it leads to dramatic changes in the business setup. It is of the utmost importance for the employer to follow the correct procedure at all times to ensure stability and prevent one-sided changes in the contract of employment. The procedure followed in the restructuring process, should always include the following:

  • Review the service contract, job description, duties, responsibilities and aims of all employees. Confirm available resources, as well as how the resources should be utilised to exercise their duties and realise their aims.
  • Establish structures and operational procedures. We advise employers to draw up a conceptual organigram of the business to provide a visual concept of the personnel structure, reporting channels, and the various levels of seniority. In many instances employees are not sure of exactly where they fit in the bigger structure and what role they play the make the undertaking successful.
  • Develop a structure that includes the proposed changes. The organigram mentioned above, should also form part of the proposed structure.
  • Inform employees of the proposed consultations regarding the planned restructuring. This should be done by means of a written memorandum with at least 48 hours’ notice before the proposed consultation to find alternative viable solutions. If an employee is a union member, the union should also be informed. The proposed structure should also be circulated amongst the employees.
  • Consult with the employees: Consultation provides opportunity for both parties to become involved in the search for alternatives, to limit changes, to establish timelines for the follow-up of proposed considerations, and to lessen the negative impact of restructuring. The employer should act in good faith at all times, keep an open mind and consider all alternative proposals put on the table.
  • Consider feedback, including proposals for voluntary separation packages for employees who are not willing to consider and accept the proposed changes.
  • Ensure that the correct procedures regarding staff retrenchment are adhered to should a position become redundant as a result of the proposed changes.
  • Confirm new appointments and/or re-assignments in writing.
  • Should job descriptions and duties show considerable changes, new service contracts should be negotiated. Ensure that both parties sign the new contracts.
  • Identify training requirements regarding skills and proficiency (management, technical, inter-personal and other skills). It is important to draw up a plan of how and where training will take place.

Be pro-active

Should an employer consider restructuring or organisational changes in the near future, it is important to take notice of the following: Communication: Making changes is difficult and may lead to employees becoming anxious. We recommend that employers be clear and honest regarding the reasons for the changes, and to explain the aims and needs of the business. Employees should be informed regularly regarding progress.

Consult with employees on proposals and ideas; also to receive feedback. A combination of ideas may lead to the best solution. It may be easier for the employee to identify challenges which the employer might not have foreseen.

Plan in advance: The gradual introduction of changes will influence the speed and efficiency of finalising the process Employers should be aware that, should unilateral changes to the terms and conditions of the service contract be made, the employee has the right to refer the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA).

With restructuring, changes are inevitable. Every workplace is unique and will react differently to changes, but with careful planning, well-considered strategies and meaningful communication, restructuring may – in the end – serve to be largely to the advantage of the company.

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