Unfortunately, the requests for advice from employers often come after the process has been started or even worse, after it has been completed, and the employer has received a grievance from an unhappy employee.
Despite its apparent simplicity, restructuring (and associated redundancies) is a complex legal landscape that requires careful navigation.
Employers need to be clear about why they are doing what they are doing, ensure their reasoning to reduce roles is genuine and, perhaps most importantly, follow a proper process. This last hurdle is where, too often, we see employers fall.
We regularly see employers seek legal assistance too late—after initiating the redundancy process or even after receiving grievances from disgruntled employees. Timing is important, and I would say this of course, but investing in legal advice before embarking on a restructure is an investment that always pays dividends for employers.
For employees, knowing when to get advice relating to a restructure is more difficult. Do you act when you have an inkling “something is up” or wait until your job loss is a certainty? The answer lies somewhere between the two – too early and your lawyer doesn’t have any facts to advise you on, too late and the employee may have already forfeited some entitlements.
Redundancy law, like all employment law in New Zealand, is designed to ensure fairness and equity for employees. Different industries or job types are subject to additional rules, and non-compliance can lead to costly legal disputes and damage to a company’s reputation. While a business is entitled to structure itself as it deems appropriate, it must do so in a compliant way.
New Zealand employment law requires employers to engage in meaningful consultation with affected employees.
This step is not merely procedural but a legal obligation aimed at exploring alternatives and minimising the impact of redundancies.
Skipping or inadequately conducting this consultation can result in claims of unfair dismissal and potential legal action. Beware of carrying out a “tick box” consultation or relying on unreasonable timeframes.
What is appropriate or reasonable depends on the nature of your business operation, and your lawyer can advise on that.
When multiple roles are restructured into one, employers must apply fair and transparent criteria when selecting employees for redundancy.
Without legal guidance, there is a risk of unintentionally applying biased or discriminatory criteria, exposing the company to discrimination claims.
Often there may be other options to explore, too, such as voluntary redundancy with a more attractive exit package attached than might otherwise be required by an employee’s contract.
While the very nature of redundancy is a consequence of trying to save money, paying an additional one month’s salary to an employee exiting voluntarily may be less expensive than defending a volatile personal grievance, and a lot less stressful. However, the devil is in the details, and advice about how and when to pitch such an offer is critical to avoid a constructive dismissal claim.
Redundancy, while a necessary business strategy in challenging economic times, is fraught with potential pitfalls.
Skipping legal advice can lead to severe consequences, affecting financial outcomes and professional relationships.
For employers, the cost of legal oversight can far exceed the expense of professional guidance. For employees, inadequate legal support can result in missed opportunities and unfair treatment. Engaging qualified legal professionals is not just a prudent decision but a necessary step toward ensuring a fair and compliant redundancy process.
