Redundancy, Your Step By Step Guide For New Zealand Employers. 

The following business owner redundancy guide has been written based on many years of experience and a deep understanding of the Employment Relations Act 2000 of New Zealand. If you are considering redundancy, please contact us for an initial consultation. We have helped many of our clients around New Zealand, including Wellington, Auckland, Christchurch, and many other employers across NZ.

For more information please visit: https://www.employment.govt.nz/ending-employ

Introduction

A company restructure involves modifying key employment terms and conditions, sometimes resulting in redundancy, where certain roles are no longer needed. This can happen due to changes in business focus, a sale, or financial difficulties. This guide offers a general overview of redundancy procedures and what constitutes a fair process under relevant laws. It is not intended as specific legal advice, and for tailored guidance on redundancy, it is recommended to consult a professional. This guide does not address redundancies within business transfers.

What is Genuine Redundancy?

The primary consideration when determining redundancy is whether the situation is genuine. A redundancy is legitimate when an employer no longer requires a particular role due to changes in operational needs. It is not genuine if the decision is related to an employee’s performance rather than the business’ need for the role. In such cases, performance management is the appropriate course of action.

Employer Responsibilities

Our redundancy legal advice. Employers are obligated to follow a fair and reasonable process, acting in good faith throughout. This typically involves consulting with affected employees, providing relevant information, and allowing feedback before any final decision. Employers should:

• Give adequate notice before each meeting
• Explore alternatives to redundancy
• Consider employee feedback
• Offer counseling or career advice, if feasible, and provide time off for job interviews once redundancy is confirmed

The “At-Risk” Meeting

If redundancy is being considered, employers should develop a proposal outlining the potential changes and meet with the affected employees to inform them that their roles are at risk. It’s important to note that no final decisions have been made at this point. Employers should document this meeting and allow employees to bring a support person to future discussions. A copy of the proposal should be provided, along with an invitation to a consultation meeting. Timing is crucial to avoid surprising employees, which could lead to upset.

Consultation Meeting

After the at-risk meeting, employees should be invited to a consultation meeting to discuss the reasons for the potential changes and allow the employee to provide feedback before decisions are made. Sufficient time should be allowed for the employee to review the proposal and seek advice if desired. Employees may bring a support person or representative.

This meeting is an opportunity for the employee to ask questions, suggest ways to avoid redundancy, and provide feedback. Multiple consultation meetings may be necessary, especially when employees are selected based on criteria, such as skills or experience. The employer must genuinely consider the feedback, and no decisions should be made or implied during this stage. Get it right and avoid a personal grievance claim.

Selection Criteria

When only one role is being eliminated from a group of employees with similar skill sets, employers should apply objective selection criteria. Examples include:

• Qualifications or skills
• Experience
• Length of service

Criteria must avoid potential discrimination, such as using attendance records, which could disproportionately affect employees with disabilities.

Alternative Employment

During the consultation process, employers should assess whether affected employees can be reasonably redeployed within the company. What constitutes reasonable redeployment will vary depending on the specific circumstances, so professional advice may be necessary.

Protected Employees

Certain employees, such as those working in cleaning, catering, caretaking, or security services, are protected from redundancy if a business is sold or a contract is taken over by another party. These rules can be complex, so employers should seek advice if they believe these protections may apply.

Final Consultation Meeting

The final consultation meeting should review the reasons for potential redundancy and the selection criteria used. The employer should explain the efforts made to consider alternatives, such as redeployment. If no further comments arise to prevent redundancy, the employer can confirm the decision verbally and discuss the employee’s entitlements, such as notice periods.

Redundancy Confirmation

If redundancy is confirmed, the decision must be provided in writing. Under the law, written notice of termination is required.

Employee Entitlements

Redundancy pay is not automatically required unless specified in the employment contract. The employer must follow any contractual provisions and consider reasonable requests for time off to seek alternative employment.

Personal Grievance

Employees may raise a personal grievance if they believe the employer acted unfairly or did not follow the correct process. Employers must be prepared to demonstrate that the redundancy was genuine and that a fair and reasonable process was followed.

Further Information

This guide provides a summary of key issues related to redundancy. For specific advice, it’s recommended to contact a legal or HR professional.