Business Restructuring is Changing – FAQ

What is the difference between restructuring and redundancy?

Business restructuring is the process of changing the way an organisation operates so that it better supports its commercial objectives. Redundancy may be one consequence of that process, but it is only appropriate where the business’s need for employees to carry out work of a particular kind has genuinely reduced or ceased. Many restructures result in redesigned roles, new opportunities or improved efficiency without any redundancies at all.

When should employers begin planning a restructure?

The best time to begin planning is before any conversations take place with employees. Early planning allows employers to identify the commercial rationale for change, consider alternatives, assess legal risks and develop a fair consultation process. Once employees have been informed, many of the key strategic decisions have already been made.

Can poor performance be managed through redundancy?

No. If the real reason for ending employment is poor performance, capability or conduct, redundancy is unlikely to be the appropriate process. Employers should always be clear about the genuine reason for dismissal, as attempting to use redundancy to address unrelated issues can significantly increase legal risk.

What makes a redundancy consultation fair?

A fair consultation is one in which employees have a genuine opportunity to understand the proposals, ask questions, suggest alternatives and influence the outcome. Consultation should never be viewed as a procedural exercise designed simply to confirm a decision that has already been made.

How will the Employment Rights Act 2025 affect employers?

The reforms being introduced through the Employment Rights Act 2025 will significantly increase the importance of careful workforce planning. With unfair dismissal protection expected to arise after six months’ service and the statutory compensation cap due to be removed, employers will need to ensure dismissal decisions are supported by clear evidence, sound business reasons and fair procedures.

Should employers consider settlement agreements during a restructure?

In appropriate circumstances, yes. Settlement agreements can provide certainty for both employer and employee and often represent a sensible commercial solution where both parties wish to achieve an agreed exit. They should always be considered alongside appropriate HR and legal advice.

Business Restructuring Checklist

Before beginning any restructuring exercise, ask yourself whether you can confidently answer the following questions.

Have we clearly identified the commercial reason for restructuring?

Is this genuinely a redundancy situation, or is another issue driving the decision?

Does our current organisational structure reflect the future needs of the business?

Have we considered whether technology, process improvements or role redesign could achieve the same objective?

Have we explored suitable alternative employment wherever possible?

Have we documented the business rationale for our decisions?

Have we planned a consultation process that is genuinely capable of influencing the outcome?

Have we sought professional HR advice before communicating proposals to employees?

If the answer to any of these questions is no, it is worth taking a step back before moving forward. Time invested in planning is almost always repaid through better decision-making, reduced legal risk and a smoother transition for everyone involved.