In the current economic climate, many businesses are navigating a challenging mix of higher operating costs, cautious consumer and client spending, trade and supply chain uncertainty, technological change, and pressure to remain competitive. Even where an organization remains viable, these conditions can force employers to take a hard look at staffing levels, reporting structures, compensation costs, and operational efficiencies. As a result, restructuring is often a necessary business decision. Employers may need to reorganize teams, eliminate roles, consolidate departments, respond to financial pressures, or adapt to changing market conditions. However, even where the business rationale is sound, the legal and practical risks can be significant if the restructuring is not planned and implemented carefully. 

For employers, a poorly managed restructuring can lead to wrongful dismissal claims, human rights complaints, reputational damage, employee relations issues, and avoidable disruption. For employees, a restructuring can create uncertainty about severance, benefits, references, and next steps. Below is an outline of key considerations from both perspectives, with practical guidance for employers planning workforce changes and employees who may be affected. 

This article is for general information only and is not legal advice. Employers and employees should obtain advice tailored to their specific circumstances. 

1. Start with a Clear Business Rationale 

Before announcing or implementing any staffing changes, employers should clearly document the internal business reasons for the restructure, such as financial pressures, operational efficiencies, strategic changes, duplicated roles, technology changes, or reduced work. A clear rationale helps decision-makers stay consistent, supports internal communications, and can be important evidence if the restructuring is later challenged. It also helps ensure the process is based on legitimate business needs rather than subjective, inconsistent, or potentially discriminatory considerations. 

2. Review Employment Contracts and Legal Entitlements Before Making Decisions 

One of the most important early steps is to review the affected employees’ contracts, compensation plans, policies, and benefits documents. The enforceability of a termination clause can make a significant difference in the employer’s potential obligations. 

In Ontario, the Employment Standards Act, 2000 sets minimum requirements for termination notice or pay in lieu, and statutory severance may also apply in certain circumstances. However, many employees may have potential common law entitlements that exceed statutory minimums unless a valid employment contract limits those entitlements. Employers should assess risk and get proper advice before presenting packages or trying to rely on contractual language. 

3. Avoid Discriminatory or Retaliatory Selection Criteria 

Employers should use objective, well-documented criteria when deciding which roles will be eliminated or which employees will be impacted. Criteria may include business needs, role redundancy, skills alignment, qualifications, performance history, location, or operational requirements. Whatever criteria are used, they should be applied consistently. 

Employers must also ensure that decisions are not influenced, even in part, by protected grounds under human rights legislation, such as disability, family status, pregnancy, age, race, religion, gender identity, sex, or other protected characteristics. Employers should also avoid decisions that appear to penalize employees for exercising statutory rights, raising workplace concerns, requesting accommodations, or taking protected leaves. 

4. Consider Alternatives Before Termination 

Depending on the circumstances, employers may wish to consider whether alternatives to termination are available. These may include redeployment, voluntary exit programs, reduced hours, role changes, or temporary cost-saving measures. However, employers should be cautious: significant unilateral changes to compensation, hours, duties, reporting relationships, or location may create constructive dismissal risk if not handled properly. 

Where an alternative role is offered, employers should consider whether it is genuinely comparable and reasonable, whether the employee has enough information to evaluate it, and how the offer will affect any termination entitlements if it is declined. 

5. Best Practices for Termination of Employment During a Restructure 

Where terminations are necessary, employers should plan the process carefully. The goal is to meet legal obligations, preserve dignity, minimize disruption, and reduce avoidable risk. 

• Prepare complete termination packages – be mindful of statutory minimum including benefits and vacation pay. Include all statutory minimums e.g. continuing benefits and vacation pay accrual until the end of the statutory notice period at a minimum, any additional offer, vacation pay, benefits continuation, bonus or commission treatment, outplacement support is recommended, and a full and final release (for any amounts offered above the statutory minimums).  

• Plan the meeting. Keep the termination meeting brief, respectful, and private. Ideally, have two employer representatives present and provide written materials for the employee to review after the meeting. We also recommend following a communication script. 

• Do not pressure employees to sign immediately. Employees should be given reasonable time to review the offer and obtain legal advice before signing a release. 

• Avoid any mischaracterization of the termination. A restructuring is generally a without-cause termination. Alleging cause inappropriately will significantly increase risk for an employer and undermine the employer’s credibility. 

• Protect confidential information and business continuity. Coordinate access changes, return of property, data preservation, client transition plans, and internal communications in a way that is organized and effective. 

• Maintain dignity and respect. The manner of dismissal matters. Bad faith conduct, misleading communications, or insensitive treatment can significantly increase exposure and damage morale among remaining employees. 

6. Communicate Carefully With Remaining Staff 

After a restructuring, remaining employees often have concerns about job security, workload, reporting lines, and morale. Employers should communicate what has changed, what remains confidential, and how the organization will move forward. Communications should be honest but measured, avoiding unnecessary details about individual employees or personal circumstances. 

Managers should also be prepared to address practical questions about reassigned responsibilities, client coverage, deadlines, and support resources. A thoughtful communication plan can help stabilize the workplace and reduce speculation. 

7. Lessons for Employers: Process Matters 

As we have discussed in past wrongful dismissal commentary, termination risk is not only about the amount offered. Courts will often look closely at the employment contract, the contents of the termination package, how the dismissal was communicated, whether compensation components were properly addressed, and whether the employer acted fairly and in good faith. A careful process at the front end can prevent costly disputes later. 

For Employees Impacted by a Restructure: What Should You Do? 

If your role has been eliminated, your employer may describe the decision as a restructure, downsizing, redundancy, reorganization, or business change. In most non-unionized employment relationships, the label is less important than whether you received the compensation and protections you are legally entitled to receive. 

• Do not sign a release right away. A release usually prevents you from pursuing additional entitlements later. Take the documents home and review them carefully. 

• Save your documents. Keep your employment agreement, amendments, compensation plans, policies, pay records, benefits information, termination letter, and severance offer. 

• Review what is included and what may be missing. Employment standards legislation sets minimum requirements, but many employees are entitled to more depending on their contract and circumstances. Review whether the package addresses salary, vacation pay, benefits, bonuses, commissions, pension or RRSP contributions, equity, allowances, and other compensation. 

• Watch for deadlines. Employers may set response deadlines, but that does not mean you should sign without advice. Seek advice before the deadline expires whenever possible. 

• Consider references and transition support. A positive reference letter, outplacement services, or extended benefits may be important parts of a negotiated resolution. 

• Get legal advice before accepting. An employment lawyer can assess whether the offer is fair, whether your contract is enforceable, and whether negotiation is appropriate. 

How Rodney Employment Law Can Help 

Restructuring decisions can be complex, time-sensitive, and emotionally difficult. Our team assists employers with planning restructures, reviewing contracts and obligations, preparing termination packages, managing communications, and reducing litigation risk. We also help employees understand their rights, review severance packages, and negotiate where appropriate. 

If you are an employer considering a restructuring, or an employee whose role has been affected by one, contact Rodney Employment Law for practical advice before taking your next step. 

If you are navigating any of the issues outlined above or have any employment law concerns, please feel free to contact Rodney Employment Law at info@rodneyemploymentlaw.com or by completing our contact form here.