1 (833) 247-3652

Restructuring Risks: Here’s What Employers Need to Know


The COVID-19 pandemic has dealt a severe blow to the world economy. Though businesses have begun reopening, a possible second wave in Fall may once again lead to ramping up of restrictions. As you prepare your business to survive the current recession, you may want to consider the option of restructuring.

Restructuring will help you adapt your business to the new normal, but there are some risks involved that you should keep in mind.

What does restructuring mean?

Restructuring, in the context of HR, is when an organization makes changes to its internal structure as a response to existing challenges. It may involve redistribution of human resources or downsizing or both.

Internal factors such as an ageing workforce may be a reason behind restructuring. External pressures such as the current pandemic may also make restructuring essential.

Understand the why

To begin with, be very clear why you are restructuring and the goals you hope to achieve. Next examine the options that’ll help you best achieve those objectives. For example, you may need to upskill your staff, or downsize certain departments, or shut down some services.

Redundancy risks

Restructuring your business may lead to job redundancies. We recommend that you seek professional advice before dismissing your redundant staff. It is crucial that you understand your duties under your province’s human rights legislation, such as the Ontario Human Rights CodeBC Human Rights Code and Alberta Human Rights Act. There are many redundancy-related risks that may lead to an unfair dismissal claim.

Constructive dismissal risk

When you alter major terms of employment without contractual rights or your worker’s consent, it is a constructive dismissal. The employee is then entitled to severance pay. Major changes include changing the employee’s salary, working hours, location or job profile.

Discrimination risks

Under human rights legislation, employers must not discriminate against workers on the basis of any protected ground – e.g. physical or mental disability, age, race, sex (including pregnancy), sexual orientation, religion.

Discrimination related to COVID-19 is also prohibited when it involves a protected ground (disability).

It is important that you keep these protected grounds in mind while restructuring. If an employee files a complaint, the employer will have to prove that their decision to end the employment was not discriminatory.

Things to keep in mind post-restructuring

It is important that you carry out restructuring in a fair and transparent manner. Doing so will ensure it does not adversely affect the morale of your employees who stay on in new work roles. Clear and timely communication is key to a smooth transition. You should also provide relevant support to employees who lose their jobs due to restructuring.

Need help restructuring your business for a COVID-19 world?

Let our HR experts guide you on the risks and your options for restructuring your business. For advice on HR policies during the pandemic, call us today at 1 (833) 247-3652.

Don't miss our upcoming webinar on
Best practices on hiring and retaining top talent
Thursday, March 23, 2023 | 2:00PM ET
Secure Your Spot