Redundancy can be a challenging process for everyone, whether you are the employer or the employee.
For employers, ensuring that the process of redundancy is fair and lawful is key to minimising the risk of personal grievances. Understanding your legal obligations in redundancy situations can help you manage the process effectively and avoid potential disputes.
So what are the rules regarding redundancy? For specific advice regarding your circumstances, please contact our team of redundancy law experts.
Legal Requirements for The Redundancy Process
Employers in New Zealand must adhere to strict legal principles when implementing a restructure proposal. Redundancy must be genuine, meaning the role, not the individual, must be surplus to the organisation’s requirements.
Employers must follow a fair process that involves fair and genuine consultation, clear communication, and offering alternatives to dismissal where possible.
Fair Process in Redundancy
The process of redundancy needs to be considered fair, and that generally includes the following steps:
- Consultation: Employers must engage in meaningful consultation with affected employees. This includes providing sufficient information about the proposed redundancy and allowing the employee a genuine opportunity to provide feedback before a final decision is made.
- Selection Criteria: If redundancy affects multiple roles moving into a single role, ensure the selection criteria are fair, objective, and transparent.
- Alternatives to Redundancy: Should a redundancy be confirmed, employers are required to consider and discuss alternatives, such as redeployment to another role or reduced hours.
- Notice and Entitlements: If the redundancy proceeds, employees are entitled to the notice period stated in their employment agreements and any redundancy compensation if it is provided in their employment agreements.
What Constitutes an Unfair Redundancy?
An employee may raise a personal grievance if the redundancy was not genuine or if the employer failed to follow a fair process. For example, if the employer used the process of redundancy as a way to dismiss an employee for performance reasons, this would likely be seen as unjustified.
An employee may be able to successfully challenge a redundancy if the process was flawed, even if the decision was substantially justified.
Potential Examples of Fair Redundancy
- A company undergoing restructuring due to technological changes, with employees consulted and offered redeployment options.
- A business closing a branch, with affected staff being given notice and compensated in accordance with their employment agreements.
- A role becomes surplus to requirements, where its duties can be absorbed into other roles.
Practical Tips for Employers
- Plan Ahead: Ensure that redundancies are based on genuine business needs.
- Follow Proper Procedures: Engage in consultation and document all steps taken to show a fair process.
- Seek advice: The best way to avoid a grievance is to seek legal advice throughout the process. Edwards Sluiters is a team of redundancy law specialists that advises on the process of redundancy every day, so we understand the rules regarding redundancy to the nth degree.
Conclusion
Following legal obligations and a fair process is essential in redundancy situations to avoid grievances and potential legal claims. For specific legal advice on managing the process of redundancy, contact Zachary Pentecost.
