Navigating Business Change with Confidence: Avoiding Employment Law Pitfalls
By Katie Selves
Business change, whether through investment, acquisition, or restructuring, puts employment law under the spotlight and mistakes here can be costly, both financially and culturally.
In this article, we explore the common pitfalls in employment law during times of business change, and why early and comprehensive legal guidance is essential to avoid them.
Redundancies and Restructuring
Redundancy is never easy for employers or employees. When considering restructures or redundancy processes, it’s critical employers correctly determine whether the statutory definition of redundancy is met and whether collective consultation obligations apply. Even if there is no obligation to collectively consult, employers must follow fair procedures and apply them consistently and ensure individual consultation is undertaken to avoid claims challenging dismissals as unfair. A misstep here can result in costly tribunal claims and damage longer-term morale of those who stay with the business.
Contract Variations: Handle with Care
Changes to employment terms (such as notice periods, restrictive covenants, or job responsibilities) must be managed carefully as the legal enforceability of variations depends on proper process and clear communication. Under the Employment Rights Act 2025, the controversial ‘fire and rehire’ and ‘fire and replace’ practices are now largely unlawful. Dismissals for refusing to agree to changes in certain core contractual terms will be considered automatically unfair, except where businesses face severe financial difficulty and have no alternative. This is a significant shift and employers need to plan ahead.
Discrimination: a Hidden Risk
Change initiatives often carry hidden risks of discrimination. Employers must ensure that proposals and implementation processes are not directly or indirectly discriminatory under the Equality Act. This includes making reasonable adjustments for employees with disabilities and considering the impact of changes on protected groups. On this risk, managers play a critical role; they need training to recognise and address potential discrimination issues early so these issues don’, undermine the success of the change programme.
TUPE: Know when it applies
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) safeguard employees when a business changes hands, but they don’t apply in every situation. When TUPE does apply, employees are entitled to protection from dismissal, there are restrictions on changing terms of employment post-transfer, and employers must comply with obligations to inform and consult. Early legal advice is essential to assess applicability and plan communications.
Legal Vs Ethical Obligations
Sometimes, what’s legally permissible isn’t culturally sustainable. Leaders must balance compliance with empathy, with the goal of implementing commercial solutions that manage change pragmatically, mitigate legal risk, maintain employee morale and reflect company values. This balance is challenging, and early, specialised legal advice is essential to achieve it.
Final Thought
Employment law is complex at the best of times, but during periods of business change, the challenges multiply. With the Employment Rights Act 2025 introducing stricter rules on contract variations and expanding unfair dismissal rights, the obligations on employers will only increase. Failing to prepare can lead to costly mistakes, reputational damage, and disruption to your business. The key is proactive planning and expert guidance.
I help businesses navigate pivotal moments with clarity, confidence, and care. If you have change plans for 2026, contact me to discuss how I can help you deliver effective change that protects your reputation and culture.
This article is for general information purposes only and does not constitute legal advice. Specific legal or strategic advice should be sought separately and tailored to the particular circumstances of your business. If you would like to discuss how these issues apply to your organisation, please get in touch.
