Since the introduction of the Covid-19 pandemic early 2019, effectively creating all kinds of changes in our daily lives, businesses especially has struggled to keep up.
So many companies have seen no viable options but to close its doors, which only further contributed to the vast figures of unemployment and economic disaster.
Although, for a lot of the companies, closure was perhaps the only option to survival because of the forced closure of certain sectors, many companies failed to implement the one option which could have been their knight in shining armour.
Restructuring of a company mostly implies a negative change, but the ultimate goal here is to retain and save as many jobs as possible. Therefore, this method not only give companies a fighting chance, but also the chance to keep a family’s head above water.
Now, what does it mean to restructure your company? Restructuring is the method in which a company make changes to its financial or operational structure. Considering this, a business can either then re-evaluate its wage structure and implement a new structure or evaluate current positions and how they effectively contribute to the overall organisational objectives.
But, before a process of restructuring can commence, one has to follow due process. The Labour Relations Act (No. 66 of 1995) requires a procedurally fair and substantively fair process in which the restructuring will be conducted.
To be substantively fair, the reason for the restructuring should have valid grounds. In most cases the grounds would be for financial reasons. It is important to remember that employers must be able to prove financial vulnerability should they end up retrenching employees that does not wish to slot in with the proposed changes.
Positional restructuring can be for a lot of reasons. Namely, the redundancy of certain positions that does not slot in this day and age anymore or restructuring teams/ shifts in a smaller, more efficient manner. It has become common for teams to work more efficiently in the work place when they are focussed on a single objective and reduced to the basic requirement to perform the task at hand.
Yes, a restructuring process ends up making unilateral changes to conditions of employment of existing employees, therefore, due consultation is imperative. For procedural fairness, Section 189/A of the Labour Relations Act (No.66 of 1995) shall apply.
Section 189/A, gives a step-by-step guideline to follow, starting with a Section 189(3) notice to all consulting parties. It is important that recognised Trade Unions form part of the proceedings.
It is not wrong for the restructuring process to require employees to reapply for their jobs, but there are inherent risks to this method. In refer Aiery & other v GE Security C218/06 LC, a company conducted a restructuring. They required employees to reapply for jobs in the company within the new structure. Three (3) employees ended up not being employed, because they did not reapply for any jobs in the new structure and they were subsequently retrenched. The Labour Court held that it was procedurally unfair, due to inadequate consultation and that the employees could have been employed in jobs they were qualified for.
Failure to comply with procedural fairness will result in the employees being reinstated with hefty compensation.
Once again, it is imperative that a fair procedure is followed at all times. In light of this article, restructuring should not be used as a “method” to get rid of employees that you simply don’t “like”. The aim here is to save a business and the jobs of its employees.
If the reason for restructuring is due to salaries simply being too high, and the company just cannot afford it anymore. It is important for business owners to remember that South Africa a National Minimum Wage Bill (NMWB) which must be complied with.
It does not matter, what you and the employees/ organised labour agree to. You are required to comply with the NMWB, and you may not go any lower than the prescribed rates as per the NMWB or the Main Agreement in your sectoral determination.
Restructuring can offer you a new start, or simply give you the means to become competitive again in the market by offering lower quotations than your competitor.
Yes, reduced salaries might not look like a positive change, but it will give a company the means to survive this economic disaster and let it retain employment. Business closure should not always be the 1st or only option available to employers, the time has come to start thinking out of the box.
Before embarking on such a process, seek the advice of professionals who have a proven track record in such matters. HR City has assisted several employers in restructuring with a view of saving as many jobs as possible while ensuring that the Company remains viable during these harsh economic times. Do not hesitate to Contact us for assistance.