This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to workplace restructuring and unfair dismissal risks in England and Wales, explaining redundancy law, consultation requirements, selection criteria, legal obligations, tribunal claims, discrimination issues, protective awards, and practical steps to reduce legal exposure.
Workplace restructuring is a common feature of business life in England and Wales, particularly where employers need to adapt to changing markets, technologies, mergers, or economic pressures. While restructuring can deliver strategic benefits, it also poses significant legal risks for employers, especially the risk of unfair dismissal claims from affected employees. This article explains how restructuring interacts with employment law, the rights and obligations of both employers and employees, key legal processes and risks, and practical considerations to minimise legal exposure. Authoritative sources and statutory requirements are referenced throughout to provide a clear, authoritative overview.
What Is Workplace Restructuring?
Workplace restructuring refers to any systematic realignment of an organisation's workforce, roles, or reporting structures. It can arise from redundancies, mergers, reorganisations of departments, changes to contractual terms, or technological transformation. Although restructuring itself is not unlawful, how it is implemented can determine whether dismissals arising from it are fair or unfair in law.
Restructuring, Redundancy and Unfair Dismissal
Redundancy as a Restructuring Tool
In UK employment law, making an employee redundant during restructuring is lawful only if there is a genuine need to reduce the workforce because the employer's requirement for employees ceases or diminishes. A dismissal for redundancy that arises without such justification may automatically be considered unfair.
Selection and Fairness
Employers must use objective, fair selection criteria when deciding which roles to make redundant. Criteria can include skills, experience, performance or length of service. Subjective or discriminatory selection can expose an employer to unfair dismissal and discrimination claims under the Equality Act 2010.
Legal Obligations During Restructuring
Meaningful Consultation
One of the most important legal obligations during restructuring is consultation with affected employees. Consultation must be meaningful - not merely a formality - and genuinely consider employees' input and alternatives to dismissals. Failure to hold genuine consultation can in itself lead to claims for unfair dismissal.
Individual and Collective Consultation
- Individual consultation is required in all redundancy situations.
- Collective consultation is required where 20 or more employees are at risk of redundancy within a 90-day period at a single establishment. Employers must consult with trade unions or, in their absence, elected employee representatives. Failure to collectively consult may lead to liability for a protective award of up to 90 days' pay per affected employee.
When Consultation Must Start
Consultation must begin in good time. For collective redundancies:
- At least 30 days before the first dismissal if 20–99 employees are affected;
- At least 45 days before the first dismissal if 100 or more are affected.
Failing to meet these timelines can lead to statutory claims and compensation.
Practical Risks of Mismanaged Restructuring
Unfair Dismissal Claims
Employees with sufficient service (usually two years, subject to legislative change) can bring unfair dismissal claims if they believe the employer failed to act reasonably in the restructuring process. This includes failing to consult, using flawed selection criteria, or not considering alternatives to dismissal.
Breach of Contract and Constructive Dismissal
Restructuring that imposes unilateral changes without consultation or agreement may also give rise to claims for breach of contract or constructive dismissal, where the employee resigns because of the employer's conduct.
Discrimination Claims
If an employee is selected for redundancy for reasons connected to a protected characteristic (for example age, sex, disability or race), the restructuring process could also lead to a discrimination claim with potentially unlimited compensation awards under the Equality Act 2010.
Protective Awards
Failure to conduct collective consultation attracts a separate statutory liability known as a protective award, even where dismissals themselves might be fair. Employers may face significant financial penalties for procedural failures alone.
Reputational and Workforce Impact
Beyond legal liability, poorly managed restructuring can damage employer reputation, reduce morale, and hamper recruitment and retention, with indirect legal and commercial consequences.
Steps to Reduce Unfair Dismissal Risks in Restructuring
Plan Early and Consult Promptly
Engage employees early in the process and follow statutory consultation timelines. Explain the reasons for restructuring, proposed changes, and explore alternatives to redundancy or dismissal. Genuine and open dialogue reduces legal exposure.
Apply Objective Selection Criteria
Ensure selection for redundancy is based on fair, consistent, and objective criteria. Consider factors such as performance, skills and experience rather than subjective views or bias.
Explore Alternatives to Dismissal
Before making decisions, employers should explore alternatives such as redeployment, retraining, flexible working options or voluntary redundancy. Offering suitable alternative roles can reduce the likelihood of unfair dismissal claims.
Document the Process
Retain clear records of consultations, decisions, and criteria used. Documentation provides evidence that the employer acted reasonably and fairly, which is critical if disputes escalate to an employment tribunal.
Seek Specialist Advice
Employment law is complex and evolving. Engaging legal advice early in the restructuring process can help ensure statutory compliance, minimise risks, and tailor strategies to workforce realities.
Common Questions
Can an employee claim unfair dismissal during restructuring?
Yes. Employees who believe the employer failed to follow a fair process, used unreasonable selection criteria, or did not genuinely consult can pursue a claim at an employment tribunal, subject to qualifying service requirements.
What happens if an employer fails to consult?
Failure to hold meaningful consultation, especially collective consultation where required, can lead to tribunal claims for unfair dismissal and protective awards of up to 90 days' pay per affected employee.
Are there protections against discriminatory selection?
Employees are protected under the Equality Act 2010. Selection for redundancy that disproportionately affects individuals with protected characteristics may give rise to discrimination claims.
Final Thoughts
Workplace restructuring is a legitimate business tool, but it carries significant legal risks if not conducted in compliance with employment law. Fair process, meaningful consultation, objective selection criteria, and consideration of alternatives are central to reducing the risk of unfair dismissal, discrimination claims, and statutory penalties. Employers and employees alike benefit from understanding their rights and obligations during restructuring, backed by clear communication and, where necessary, specialist legal advice. Proper planning and implementation not only reduce legal exposure but also support a more stable, engaged workforce.
