How to Plan an Organisational Restructure in Australia

Thinking about an organisational restructure? As a small business owner, you might be redesigning your team to cut costs, improve efficiency or set up for growth. That’s smart - but it does carry legal and people risks if it’s not handled carefully.

The good news is, a restructure doesn’t have to be overwhelming. With the right plan, clear communication and compliant processes, you can reshape your organisation while protecting your business and looking after your people.

In this guide, we’ll walk through what an organisational restructure involves in Australia, the key legal rules to follow, and the practical steps and documents you’ll need to get it done the right way.

What Is An Organisational Restructure (For Small Businesses)?

An organisational restructure is any planned change to the way your business is set up. It can be big or small. Examples include changing reporting lines, merging teams, introducing a new layer of management, outsourcing a function, or removing roles that no longer align with your strategy.

In a small business, the most common outcomes are role redesign, redeployment (moving staff into different roles) and, sometimes, redundancies where a role is no longer required.

The focus is on roles and the structure of your business - not the performance of individual employees. That distinction matters legally, especially when you’re making decisions that affect people’s employment.

When Should You Consider An Organisation Restructure?

There’s no one right time, but common triggers include:

• Introducing new technology or processes that change how work gets done
• Rapid growth or expansion into new locations or markets
• Downturns or cost pressures that require streamlining
• Regulatory or risk requirements (for example, adding compliance or WHS capability)
• Preparing for investment or sale, which often requires cleaner reporting lines and documented roles

If your structure no longer supports your strategy, it’s time to review it.

Step-By-Step: How To Run A Compliant Organisational Restructure

1) Clarify Your Business Case And Design The Future Structure

Start with the “why”. Document the goals, financial assumptions and risks. Sketch an org chart showing the new structure and roles you need (not the people you have). This will guide fair and defensible decisions.

2) Map Current Roles To Future Roles

Compare your current roles with the proposed structure. Identify:

• Roles that remain unchanged
• Roles that change significantly (new duties, reporting lines, capabilities)
• Roles that will no longer exist
• Potential redeployment opportunities (vacant or new roles that employees could reasonably perform with training)

3) Check Awards, Contracts And Policies

Your obligations will be shaped by the National Employment Standards (NES), any applicable modern awards or enterprise agreements, and each employee’s contract. If you plan to vary duties, location or hours, review whether the contract allows this and whether consultation is required under an award.

Where you need to change role duties or hours materially, follow a careful process and consider a formal variation - our guide to changing employment contracts covers the legal steps and risks.

4) Plan Your Consultation

Most awards require genuine consultation about major workplace changes, which includes providing information about the changes, their expected effects and discussing measures to avert or mitigate adverse effects.

Draft a consultation timeline, talking points and documents (for example, proposed org chart, role descriptions). Build in time to consider feedback and alternative proposals.

5) Assess Redeployment Before Redundancy

Redundancy is only “genuine” if the role is no longer required and you have considered reasonable redeployment within the business or any associated entities. If you operate multiple entities, think about whether a role could be moved across - our overview on transferring employees within group companies explains how this can work in practice.

6) Make Decisions And Communicate Clearly

After consultation, confirm the final structure, selection criteria for affected roles, and decisions on redeployment or redundancy. Keep clear, contemporaneous notes setting out your rationale and the alternatives you considered.

When informing staff, be direct, empathetic and consistent. Provide letters that outline what’s changing, why, and next steps (including notice, consultation continuation, redeployment options or redundancy entitlements if applicable).

7) Implement Legally And Compassionately

• Issue written variations for changed roles and updated position descriptions
• If a role is redundant, give proper notice, calculate entitlements accurately and consider whether payment in lieu of notice is appropriate
• If parting ways by agreement, a tailored separation agreement can help finalise terms and reduce risk
• Schedule handovers, systems access changes and offboarding tasks

8) Stabilise Post-Restructure

Support your team as they settle into new roles. Update organisational charts, job descriptions, KPIs and policies. Provide training where role requirements have shifted. Keep communicating progress against your restructure goals.

What Laws Apply During A Restructure?

Employment Law And Fair Dismissal Rules

Restructures often intersect with unfair dismissal and general protections laws. If roles are removed, a redundancy must be “genuine” to avoid unfair dismissal risk - the Fair Work Commission looks at whether the role is no longer required, whether consultation obligations were met and whether redeployment was considered. The factors in section 387 of the Fair Work Act also guide what a fair process looks like.

Award And Enterprise Agreement Consultation

Most modern awards require you to notify affected employees, provide written details of the proposed change, discuss the effects and consider ideas to mitigate adverse impacts. Skipping or “rubber stamping” consultation can invalidate a redundancy and create penalties.

Changing Contracts And Duties

If you need to alter duties, reporting lines, location or hours, check the contract and any flexibility clauses. Even with a clause, changes must be reasonable and not breach awards or the NES. Put agreed changes in writing; a properly drafted Employment Contract or variation letter helps avoid disputes.

Privacy And Communications

Handle employee information confidentially during planning and consultation, and limit access to a need-to-know basis. Plan internal and external messaging carefully to avoid confusion or reputational damage. If you’re collecting or using staff data in new ways, ensure your Privacy Policy and processes reflect that.

Directors’ Duties And Governance

Directors must act in the best interests of the company, for a proper purpose, and with due care. Record your decision-making and business case. In many cases, it’s prudent to pass a board approval - a simple directors’ resolution can formalise the restructure decision, especially where it involves material changes or costs.

Transfer Of Business

If your restructure involves moving assets or functions to a new entity (for example, centralising operations into a service company), that can trigger “transfer of business” rules under the Fair Work Act. These rules affect how service counts, accruals and award coverage apply for transferring employees. Get advice early if you’re considering this pathway.

Work Health And Safety (Including Psychosocial Risks)

Change can be stressful. You have a duty to manage health and safety risks, which includes psychosocial hazards like job insecurity and high job demands during a restructure. Plan support and communication to reduce risk.

Do You Need To Make Roles Redundant? Key Rules And Payments

Not every restructure involves redundancies - many are achieved through role redesign or redeployment. Where a redundancy is necessary, keep these points in mind:

• The role (not the person) must no longer be required due to operational changes
• Genuine consultation must occur where an award or agreement applies
• Reasonable redeployment options must be explored across associated entities (where applicable)
• Provide notice (or pay in lieu) and all accrued entitlements
• Eligible employees receive redundancy pay based on continuous service

Getting the calculations right is critical. If you’re uncertain, seek tailored redundancy advice and use a clear, consistent letter and process - Sprintlaw also offers a practical redundancy document suite to help standardise your approach.

Which Documents Will You Need?

The exact documents depend on your change plan, but small businesses commonly rely on the following:

• Business Case And Org Chart: A written rationale, cost/benefit analysis and future org chart to support directors’ duties and fair, consistent decisions.
• Consultation Pack: Notification letter, summary of proposed changes, new role descriptions and a consultation schedule.
• Employment Contract Or Variation: Updated terms for employees moving into redesigned roles; a current, compliant Employment Contract is essential.
• Redundancy Letter And Entitlements Calculator: Clear notice of redundancy, redundancy pay, notice or payment in lieu of notice, and instructions on next steps.
• Deed Of Release (Separation Agreement): A tailored settlement deed can finalise claims and set out confidentiality and return of property - see our guide to employee separation agreements.
• Workplace Policies: Update your organisational chart, role descriptions and any change-related procedures in your Workplace Policy pack or staff handbook.
• Board Approval: Where appropriate, formalise with a board minute or a directors’ resolution and keep it with corporate records.
• Company Constitution (Optional But Helpful): If you’re refreshing governance or delegations as part of the restructure, review whether your Company Constitution supports the changes.

Not every restructure will need every document, but getting the core communications, contracts and approvals right will make the process smoother and more defensible.

Common Pitfalls And How To Avoid Them

• Deciding first, consulting later: If consultation is required, it must be genuine. Share information early, consider feedback, and keep records of alternatives you assessed.
• Confusing performance issues with restructure: Performance management and misconduct need their own fair process. Don’t disguise performance terminations as redundancies.
• Role vs person: Redundancy is about the role no longer being required. If you still need substantially the same duties performed, redundancy may not be genuine.
• Skipping redeployment checks: Document what roles you considered across your business and associated entities, the capabilities required and why each wasn’t a reasonable option.
• Contract variations done informally: Avoid handshake changes. Issue written variations and confirm acceptance to reduce disputes - especially for hours, location or reporting changes.
• Underestimating people impact: Change is stressful. Plan training, reasonable transition periods and extra check-ins. This helps with WHS duties and culture.
• Poor record-keeping: Keep copies of your business case, consultation materials, notes, letters and approvals. Good records are your best defence if a claim arises.

Key Takeaways

• An organisational restructure focuses on roles and structure - not individual performance - and should be driven by a clear business case.
• Plan early: map current and future roles, check awards and contracts, and design a genuine consultation process with time to consider feedback.
• If roles may be redundant, test redeployment options first and follow the legal rules for notice, entitlements and redundancy pay.
• Use clear, consistent documents: consultation letters, contract variations, redundancy notices and, where appropriate, a separation deed.
• Protect the business with solid governance and records; a directors’ resolution and updated policies help formalise the change.
• Getting targeted legal support on restructures, contract changes and redundancies reduces risk and helps you implement changes with confidence.

If you’d like a consultation on planning an organisational restructure for your small business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.