Restructuring and Redundancies: A brief guide for employers
As the New Zealand economy slows, many businesses are considering downsizing through restructures resulting in staff being made redundant.
If you are an employer preparing to restructure, it is important that you comply with your employment obligations to minimise the risk of legal disputes.
We have prepared a summary of key information employers need to be aware of when carrying out restructures:
Genuine business reason: There needs to be a genuine business reason for a restructure - the process should not be used as an excuse to get rid of poor performing employees.
It is the position not the person that is considered redundant: The focus needs to be on whether the role itself (rather than the person currently doing that job) is still needed by the business after the restructure.
Employers must consult with affected staff before any final decision is made: Consultation requires engaging with staff feedback and taking time to consider all other options (such as redeployment) before deciding to make an employee redundant.
Any selection process needs to be fair and transparent: If there is a selection process for staff, such as downsizing a sales team from 15 to 10, the criteria for selection must be fair and transparent.
Employers must act in ‘good faith’ towards their employees throughout the process: This includes, among other things, being responsive and communicative with staff.
Employees can raise personal grievances: If an employee is made redundant and they believe that it was unfair, they may raise a personal grievance claiming unjustified dismissal. As an employer, following a proper process based on expert advice can minimise the risk of a grievance being raised or succeeding.
If you are currently considering a business restructure, our specialist employment team can assist with each step of the process to ensure that you comply with your legal obligations.
If you would like to discuss your needs, please call our team on (03) 379-3880 for a free initial consultation.
