Internal staff reorganization – What you need to know before modifying your organizational chart

1. Internal staff reorganization: between “sense” and “sensibility”

While necessary to cope with the developments, trends or other events that irremediably impact the life of a business, modifications to the organizational chart and reshaping of positions regularly leads to (open) conflicts with some employees.

These conflicts are generally very sensitive and difficult to resolve since the business rationale often opposes the employee’s (longstanding) history with the company, his own career plan, his sensibilities, and the way he assesses the global situation and his own abilities.

This newsflash will recall the main principles applicable to unilateral changes in the working conditions and outline the different possible scenarios before providing some guidance on how to handle a conflicting situation.

2. What do you need to consider before reshaping your internal organization?

Unless otherwise agreed, the position is a substantial element of the employment contract. Any modification to the scope of the existing position, even the title, must therefore be mutually agreed upon by both parties.

As a rule, the party who unilaterally modifies a substantial element of the employment contract, such as the remuneration, the position, or the workplace, irregularly terminates the employment contract.

This principle needs to be tempered:

(a)  Itisgenerallyacceptedthattheemployerhastherighttounilaterallymodifytheaccessoryelements of the employment contract (whether they are accessory in nature or are considered as such by the parties) as well as the conditions that have not been expressly agreed between the parties.

For instance, if the employment contract provides that the employee is recruited as “administrative employee” without further specification, the employer can unilaterally define and modify the “administrative” tasks provided they are in line with the employee’s qualifications.

(b)  Only a significant and unilateral change to a substantial element of the employment contract leads to an irregular termination.

Whether or not the situation qualifies as a significant change to the employee’s position is ultimately assessed by the labour courts. The following elements are considered (non-exhaustive list):

  • Whether or not the change is requested further to a company reorganization or restructuring or in the context of a difficult economic situation.
  • Whether the job description is broad without a tangible list of tasks or, on the contrary, very specific.
  • Whether or not the employee has already accepted changes in his function in the past.
  • Whether or not the employee has a managerial function that requires more flexibility.
  • Whether or not the changes have an impact on the remuneration package.
  • Whether or not the change meets the essential qualifications of the employee.
  • Whether or not the new position is of comparable responsibility and hierarchical level.
  • Whether or not the change significantly impacts the quantitative or qualitative level of the work.
  • Whether or not the change can be regarded as a demotion.
  • Whether or not the change implies a loss of autonomy or a reduction of responsibility.
  • Whether the new position title is not comparable or lower.

A clause of the employment contract indicating that the function is not a substantial element allows more flexibility but cannot be used to justify an imposed demotion or another significant and detrimental change.

Please also note that modifications of the organizational chart which only imply the creation of new positions (e.g., an additional reporting line between the Board and the Exco or a new line manager) without modifying the current scope and titles of the existing positions are generally not regarded as unilateral modifications.

3. What can happen next?

If, after having duly verified whether the changes you require are accessory or insubstantial, and you wish to proceed with their implementation, several scenarios may subsequently occur, depending on the employee's reaction to the required changes.

1) The employee expressly or tacitly accepts the new working conditions

The employee may accept the proposed new working conditions either expressly, in a written addendum (recommended), or tacitly.

An employee must object to the imposed modifications within a reasonable period. An employee, who continues to perform his employment contract under the modified conditions, will, after a while, be deemed to have tacitly accepted the modifications and, henceforth, will not be able to contest them.

2) The employee refuses the changes to his or her position

It is also possible that the employee, without accepting or challenging the modifications, just ignores them and continues to perform the employment contract under the previous terms.

Under those circumstances, we recommend sending formal notice and/or warnings requiring the employee to perform the employment in accordance with the new terms. If after several warnings, the employee continues to ignore the modifications, a dismissal (for serious cause) can be considered for insubordination.

3) The employee invokes a constructive dismissal
The employee could also invoke a constructive dismissal or an immediate termination for serious cause and

claim compensation in lieu of notice before the labour court.

This is a risky strategy for the employee since his employment contract will be terminated without notice or compensation (at least in the short term). In the absence of an agreement on termination modalities, the employee would have to bring an action before the courts to obtain compensation in lieu of notice.

Strelia Employment Newsflash –March 2022

4) The employee requests the judicial termination of the employment contract

The employee could also bring an action before the labour court to seek a judicial termination of the employment contract with payment of damages (equivalent to the compensation in lieu). An accelerated procedure is also possible if the employee can prove the urgency. The employment contract remains in force during the court proceedings.

4. Conclusion

In conclusion, obtaining the consent of employees on the modifications (after possible further discussion) remains the best option. The alternative scenarios might lead to a dismissal and/or a court proceeding, the outcome of which are often uncertain.

The best way to avoid court action, is to first have an open and upfront discussion with the employee(s) concerned, before implementing any changes and, if possible, before any disclosure. Such preliminary discussions allow identification of minor or major sticking points (e.g.: function title) and to seek possible remedies which are generally easier to facilitate when the new internal organization is yet to be disclosed.

If, despite the discussions, no agreement can be reached between the parties on the new position, you can consider the termination of the employment contract: dismissal or termination by mutual agreement depending on the elements at hand. The fairer the proposed changes, the better your position when negotiating.

Herman Craeninckx - Partner - herman.craeninckx@strelia.com

Pauline Van Parys - Senior Associate - pauline.vanparys@strelia.com