Restructuring your business during the COVID-19 PANDEMIC
Everyday we are making decisions about our businesses that we never thought we would have to make in such rapid succession. With conditions and information changing every day the rules of the game are changing faster than we can keep up or so it may seem. It’s important that we do not make knee jerk reactions that may have long term negative effects on our businesses.
It’s a matter of working fast and slow at the same time. Set aside some time to gather recent external information, gather current internal information about your business and then make your decision keeping one eye on the here and now and one eye on the longer-term impact on your business.
Prior to the Pandemic, businesses were being encouraged to look at both short-term and long-term strategies to build a sustainable business. In these times of disruption continue to consider the longer-term impact when implementing short-term strategies.
The tools available to us to manage this time may not be ones we have considered or needed to use in the past but do not be put off. As employers, if we have run a successful business up to now, we need to be open to utilising every option open to us during this period of disruption. We will all have a hope of still having a business, whatever that may look like at the end, to achieve this we need to be incredibly flexible in our approach to our decision making and be willing to draw on assistance where ever we can.
- Keep a close eye on your finances, particularly your cashflow and what income you have coming in, and what expenses are you going to have to pay out – what changes could you make?
- Work closely with your accountant to get the correct financial advice
- Renew your relationship with your bank manager, particularly if you haven’t spoken in a while, to see what options might be available to you – you may not need them straight away but good to know what your options might be
- Read information regarding the Government Support for businesses- know when and if you qualify – particularly around the Wage Subsidy – what information do you need to gather during this time to so show you qualify if you decide that you may need this
- What insurances do you have for your business – understand what might be available to you – particularly Business Interruption Insurance, and what this covers as policies differ significantly
- Consider Restructuring the business for the short-term and the long-term
At this time, it is important that we do not bury our heads in the sand, but take a proactive approach, gathering information and applying it when needed; remember informed decisions carry much less risk.
Considering a Restructure: Consult, Consult, Consult
The Employment Relations Authority (“ERA”) requires Employers to provide two obligatory components for a justifiable restructure. Firstly, the Employer must provide a true and honest (genuine) reason(s) for a restructure and secondly that the restructure is achieved by following a fair and reasonable process. This discussion with potentially affected employees will focus on the reason for a restructure and the distinction between disestablishing a position and terminating an employee on the basis of redundancy or making a change to the terms and conditions of a continuing employee.
Remember – even during a period of substantial business disruption the employee retains their full rights to raise a personal grievance if they believe that any change to their terms and condition of employment or employment status has been undertaken in an unjustified manner.
As a business is required to undergo rapid change, we need to re-think how the human capital will be best placed to support the continued viability and success of the business. This could mean that:
- The number of employees overall may need to be permanently reduced, or
- The functions of ongoing positions may need to be temporarily changed, or
- The hours of workers may need to be temporarily decreased, or
- The ordinary weekly earners of staff may need to be decreased, or
- The methods or locations of work may need to be temporarily changed, or
- The business as a whole may need to go into a period of temporary operational suspension
Other than the permanent disestablishment of roles, or the termination of an individual’s employment, any required change, subject to consultation with the affected employees will require a variation to the employee’s terms and conditions of employment to be documented. In the midst of the need to therefore make urgent changes within the business do not forget the need to ensure that any changes are well documented as this will prevent a potential dispute at a latter date.
Finally, with regards to consulting with employees, generally we allow a period of seven (7) to 10 days to do this, however within the current business environment where changes may need to be made in haste it may be possible to utilise considerably shorter consultation periods of two (2) to three (3) days in order that required changes can be implemented in urgency.
If you need to consider any form of restructure because of the changing needs of your organisation, please feel free to contact us to discuss the options and processes that are available to you.