Redundancy

An employer can make a position redundant where there is a genuine business reason for changing or removing the role. But simply calling a dismissal “redundancy” does not make it justified. The business rationale, the actual effect on the position, consultation, disclosure, selection and consideration of alternatives can all matter.

Two separate questions: substance and process

Redundancy cases are often misunderstood because there are really two different questions. First, was there a genuine commercial reason to disestablish or materially change the role? Second, did the employer deal with the employee fairly and in good faith while reaching and implementing that decision?

A redundancy can be genuine in substance but still badly handled in process. Equally, a minor procedural imperfection does not automatically turn a genuine redundancy into an unjustified dismissal. The whole factual picture matters.

Substance: was the position genuinely redundant?

Redundancy is about the position, not simply dissatisfaction with the person occupying it. We look at the work before and after the restructure, the employer's stated rationale, the financial or operational information relied on, and what happens to the employee's duties after the role is removed.

Questions that often matter include:

• What business problem is the restructure actually intended to solve?
• Is the work genuinely disappearing, reducing or being reorganised?
• Are substantially the same duties being transferred to another employee or a newly-created role?
• Has the employer produced information that supports the stated rationale?
• Were performance, personality or relationship concerns already in the background?
• Did the employer decide it wanted a particular employee gone and then construct a “redundancy” process around that outcome?

Good faith and disclosure

Where an employer proposes a decision that is likely to adversely affect the continuation of employment, the Employment Relations Act's good-faith obligations ordinarily require affected employees to have access to relevant information about the proposal and an opportunity to comment before the decision is made. There are limits where information is properly confidential, but “confidential” is not a universal answer to a request for the material needed to understand and respond to the proposal.

Meaningful consultation is difficult if the employee is told the business case but is denied the information that supposedly proves it. Depending on the proposal, relevant material might include sales trends, workload information, organisation charts, role descriptions, selection criteria, projections or other information relied upon by the decision-maker.

Process: was consultation genuine?

Consultation must happen while the outcome is still genuinely capable of being influenced. It is not enough to announce a finished decision and then invite the employee to comment on it afterwards.

• Was the change genuinely still a proposal when consultation began?
• Was enough relevant information provided for the employee to understand the rationale?
• Was reasonable time given to consider the proposal and provide feedback?
• Were questions answered rather than treated as resistance or disloyalty?
• Were alternatives and the employee's feedback genuinely considered before the final decision?
• If more than one employee could be affected, was any selection process fair and supportable?
• Were redeployment and other realistic alternatives properly explored?

Redeployment and alternatives to dismissal

Redundancy should not be treated as the automatic next step merely because an existing position is changing. Employers should consider whether there are reasonable alternatives that could preserve employment. That can include redeployment into an available role, a modified role, changed duties, reduced hours, job sharing or other workable options depending on the business and the employee's skills.

This does not mean an employer has to invent a job that does not exist. It does mean obvious alternatives should not simply be dismissed without proper consideration, particularly where the employee has transferable skills or there are vacancies or new roles within the proposed structure.

Selection processes

Sometimes a restructure removes a number of positions but fewer replacement positions remain. In that situation the employer may need a selection process. The criteria should be relevant to the new roles, applied consistently and capable of being explained. A selection exercise can become vulnerable where the criteria are vague, heavily subjective, changed part-way through, or appear designed to produce a pre-selected result.

Common warning signs

• Your replacement is hired under a different title but substantially the same work continues.
• The “proposal” was announced internally as a decision before you were consulted.
• The business case is vague and supporting information is withheld without a proper reason.
• The employer refuses to answer reasonable questions about workload, sales, structure or the rationale.
• Selection criteria appear only after the employer already knows who it wants to remove.
• New or vacant roles exist but your suitability for them is not genuinely considered.
• Obvious alternatives such as reduced hours or changed duties are rejected without real consideration.
• Performance or relationship concerns suddenly reappear as “redundancy”.
• The process is rushed even though there is no obvious business reason for urgency.

What should you put in your consultation feedback?

Good consultation feedback is not just “I disagree”. It should test the proposal and give the employer something concrete to consider. Depending on the circumstances, that may include:

• Questions about the evidence supporting the business rationale.
• Corrections to assumptions about your role, workload or skills.
• Alternative structures or cost-saving options.
• Redeployment proposals and roles you could perform.
• Questions about selection criteria and how they will be applied.
• Requests for further information needed to make an informed submission.

Redundancy compensation and final pay

There is no universal statutory redundancy-compensation payment that every New Zealand employee automatically receives. A redundancy-compensation entitlement commonly depends on the employment agreement, collective agreement, workplace policy or an agreed settlement. Notice, annual-holiday entitlements and other final-pay obligations still need to be dealt with correctly.

Even where the employment agreement says no redundancy compensation is payable, an employee may still have claims arising from an unjustified process or other breaches. Those are different issues from contractual redundancy compensation.

A real example: genuine redundancy, unfair process

Consultation still underway?

It is usually better to intervene before the decision is final. We can review the proposal, identify information that should be requested, help prepare consultation feedback and represent you through the process. We have a separate page focused specifically on representation while a restructure is underway.

Redundancy Meeting Representation

Already been made redundant?

We can assess whether the business reason was genuine, whether the consultation and selection process was fair, whether redeployment was properly considered, and whether a Personal Grievance should be raised. Suitable matters may be accepted on a No Win No Fee basis after assessment.

Many disputes resolve through direct negotiation or mediation. Where settlement is not achievable, a claim can be progressed to the Employment Relations Authority.

Related redundancy issues

Redundancy Meeting Unfair Dismissal How Resolution Works