Whether you view redundancy through either an Employer’s or Employee’s lense, it can be an unfortunate and unwelcome challenge. Let’s explore a snapshot of the basic concepts around the process of redundancy.
By Rod Ewen – Partner
The last year has been a difficult, perplexing and troublesome year for all New Zealanders because of COVID-19 and the effects it has had on us all.
It is inevitable that many businesses must restructure and it has always been a fundamental right of employers to undertake business restructuring. However, there are restraints and limitations on the redundancy process which has not changed throughout the last 12 months. The Employment Relations Authority and the Employment Court have held to the same rules that apply in less extraordinary times. There are two basic rules that apply to a redundancy situation:
- Firstly, the redundancy must be for genuine reasons and the Court is entitled to look beyond what appears to be genuine and determine whether or not the employer is applying an objective standard of what a fair and reasonable employer would do. In other words, the Court is entitled to enquire into the merits of the redundancy business decision but in doing so the genuineness of the redundancy remains the key focus; and
- There must be a fair procedure followed by the employer. Most employers who are exposed to a real risk of a personal grievance is because they have not followed the proper procedure.
Therefore any employer looking at making employees redundant would be wise to seek legal advice before embarking on the process. What is fair in one circumstance may be different in another. Essentially the process requires:
- Consulting with the employees in good faith;
- Giving the employee an opportunity to comment on information before a decision is made to make any position redundant;
- That opportunity to provide feedback should be real, and open discussion is vital;
- The employer should adequately explain the rationale for the proposed redundancy and then have a second meeting where the employee can provide feedback;
- The employer must have an open mind and consider that feedback and allow time for reflection;
- The employer if it still wishes to proceed with redundancy should meet again with the employee and also consider (normally during the feedback period) any opportunities for deployment such as reduced hours, other roles, whether that employee may go onto an independent contract, job sharing and other options that may be available depending on the particular industry and the employer’s situation.