Risks of Workforce Restructuring

Risks of Workforce Restructuring

Sometimes businesses need to change. There could be a need to reduce costs, or quite opposite, expand the company. The corporate world is always shifting, and as a business owner, it is your responsibility to adapt as needed. Restructuring is when a business decides to internally redesign their business model because of an external or internal factor giving that business the incentive to evolve. The motivation to alter a business model may be to downsize, upsize or to re-distribute employees.

With any change, there are some risks that should be recognized before moving forward. It is important to always assess the risks so that if an issue arises, an action plan can be in place to swiftly and accurately resolve any problem.

Risks involved in restructuring

The risks that are involved with restructuring a business usually pertain to the reduction of employees. As an employer, you have to be mindful that you are following your employment contract with your employees and respecting their rights. The risks of downsizing my include:

  • A redundancy risk. Redundancy means that when reducing the workforce, there are certain jobs that may no longer be needed. This would not apply if the employer were to hire someone else in place of the person who was terminated, only when that job is completely discontinued. It is very important that, as an employer, you are keeping track of what jobs you are making redundant and should consider consulting KCY at LAW to keep track of what job you claim to no longer be required.
  • Constructive dismissal risk. There is a risk that an employee could file a constructive dismissal claim if their job has been altered or even terminated without proper loyalty to their employment contract. It is very important that you follow the proper procedure when changing or halting an employee’s work duties. If an employee believes, on reasonable grounds, that their employer has breached their contract in any way, a constructive dismissal claim can be filed.
  • Discrimination risk. When reducing the workforce, it is absolutely vital that when an employer terminates or reworks an employee’s responsibilities, that it is not for a reason that could be found discriminatory under the law. It is important as an employer to know and respect the rights of every employee, and to have an action plan if something were to go wrong. If you want to know more about how to be proactive and ensure that the rights of your employees are protected, see our article on Preventing Human Rights Violations.

If you want to know more about the risks of restructuring or how to better manage the transition, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today!