Navigating Redundancies in a Tough Economy

Navigating Redundancies in a Tough Economy

In the current economic climate, redundancies are becoming more common across New Zealand’s industries. Rising living costs and slower business growth are hitting both individuals and small-to-medium business owners hard.

So, what exactly is redundancy? It occurs when:

  • A position is no longer needed within the company, or

  • An employer makes a commercial decision to discontinue employment.

It’s important to note that redundancy focuses on the position, not the individual. Therefore, it cannot be used to dismiss someone for misconduct or poor performance. Such actions could lead to claims of unjustifiable dismissal.

Under the Employment Relations Act, employers must act in good faith when proposing redundancy or any action affecting an employee's job. This means:

  • Employers must be proactive and communicative in their employment relationships.

  • Employees should have access to relevant information about decisions affecting their employment.

  • Employees must be given a chance to provide feedback before any final decision is made.

Consultation is a key part of this process. It involves discussing any potential redundancies or restructuring with the affected employees as early as possible. While employers and employees don’t have to agree on the final decision, employees must have a genuine opportunity to share their views, and employers need to consider this feedback thoughtfully.

The extent of consultation will depend on factors like the size of the business and the urgency of the redundancy.

Challenging Redundancy

If employees believe they’ve been unfairly treated, they can raise a personal grievance. If the grievance isn’t resolved through internal discussions or mediation, the Employment Relations Authority or Employment Court will assess whether:

  • The redundancy is genuinely for commercial reasons

  • The terms of relevant employment agreements have been followed

  • The process was handled fairly and reasonably

Remember, redundancy shouldn’t be used as a cover for dismissing someone due to personal issues like performance problems.

Navigating the redundancy process can be complex. For assistance and to ensure your process is on track, contact one of our People Partners at 09 299 2525.

We're here to help you support your employees effectively.

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