An insight into business restructuring in a unionised environment within the Trinidad and Tobago jurisdiction.
A restructuring/re-organization of a business is the prerogative of management. However, before an Employer embarks upon such an exercise, good industrial relations practices require engaging in consultation with the Recognized Majority Union (RMU).
The Court has advocated in Trade Dispute 191 of 1998 between OWTU and Petrotrin at page 8, as follows:
“The court is limited by the jurisdiction as placed upon it by the Industrial Relations Act 1972, as amended. The Act limits this jurisdiction to the determination of trade disputes over what the terms of employment of workers should be or over the rights of workers under their existing terms of employment. It does not empower the Court to make an order as to how an employer should organise or carry on his business or even, indeed, whether he should continue to carry it on.
If an employer reorganises its workforce, the recognised union has the right under the Act to bargain about the terms of employment of the workers in the new situation”.
In Trade Dispute 43 of 2001 between OWTU and NP, the Court reiterated the principle of restructuring being a management prerogative, on pages 13-14, where it states as follows:
“Organizational restructuring is seen by many corporate executives as a necessary strategy in promoting efficiency and achieving economies in building gateways to the future.
Unfortunately, the transformation agenda typically includes downsizing and portfolio rationalization.
If all outstanding/retroactive claims disappear after a worker is retrenched,
In our opinion, the management of a company cannot be denied the faculty of promoting efficiency and attaining economies through a study of what units are essential for its operations. To it belongs the ultimate determination of whether services should be performed by employees or contracted to outside agencies. While there should be mutual consultation, eventual deference is to be paid to what management decides”.
According to the pronouncements of the Court, the decision to optimise its operations can be seen as a legitimate business decision to reduce operational costs. In this case, it can therefore be argued that management would rather reduce operations considered to be financially unproductive or re-evaluate its market conditions, and shift focus to restructure its operations consistent with the type of business it is engaged in.
The Court has also pronounced that where management chooses to reduce its operations, the employees are considered to be retrenched and entitled to severance benefits in accordance with The Retrenchment and Severance Benefits Act, Chapter 88:13 or those equal or more beneficial terms and conditions within a Collective Agreement.
