The difference between Restructuring and Redundancy

In the current economic climate, your business may be exploring cost-saving options, including reorganising or downsizing your workforce.

If you are looking at restructuring and the possibility of redundancies, you need to understand the difference between the two, as they often get mistaken for the same thing.

Getting either wrong could cause you issues, delays, or personal grievance claims and potential financial penalties.

Restructuring

Restructuring is a process. The aim is to get the right roles set up in the best way so your business can deliver its products or services more efficiently and effectively.

It can involve creating new roles, merging existing roles, disestablishing roles that aren’t needed, or a combination of these things.

Every restructure needs to be driven by a genuine commercial reason – e.g. a change in market demands, financial constraints, brand realignment, merging with another company – and this reason must be clearly communicated during the restructuring process.

Redundancy

Redundancy is an outcome, usually of the restructuring process. In the course of a restructure, roles that are identified as surplus to the company’s commercial needs become redundant (or are disestablished). So, a restructure can lead to a redundancy, but a redundancy cannot lead to a restructure.

It’s important to remember that restructures and redundancies centre on the roles (or teams) doing work not on the people doing the work. Also remember that a restructure is only a proposal that all affected employees have a right to give feedback on, and the business has to genuinely consider that feedback.

This article gives you a good overview of the differences between restructuring and redundancy and covers the procedures your business needs to go through in order to get them right.