Redundancy & Restructuring – The Requirement of Good Faith

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Redundancy Law New ZealandThere are many factors that might lead an employer to consider a restructure of the workplace. Two examples are reduced revenues due to an economic downturn, or a change in business focus to take advantage of new markets.

A restructure can seem daunting but the employer can implement decisions that affect employees with ease, as long as its obligations under employment law are met. The biggest change in the last few years, in employer obligations, has been the increased obligations on the employer in terms of good faith and fair and proper process. Timely and practical legal advice can assist.

So what does an employer need to think about before embarking on a restructuring process?

1. There must be a full review of business needs in the proposed area of change. This may involve financials, forecasts, and sales figures, contracting out, changes in available technology, changes in product, changes to markets and any other relevant matters.

2. The process may involve reviewing business objectives and productivity against staffing levels and positions.

3. If certain positions are identified as being subject to potential change then the employees holding the positions affected must be consulted, in good faith and without any prior determination. These employees must be given a chance to submit feedback to the proposed changes.

4. The feedback given must be properly considered, again in good faith, before any decision is made.

5. If, after this review and consultation process, it is decided that a redundancy is required by the business then, subject to any redundancy provisions in the particular employment agreement, the employer may commence the redundancy process. The steps required will depend on the particular circumstances.

The obligations of good faith and prior determination have been the subject of many personal grievance claims brought before the Employment Relations Authority and the Employment Court. The difficulty is that the threshold for meeting these requirements will depend on the facts in each case.

The key to successful and stress free restructuring is getting timely advice, tailored to your business, from an employment lawyer experienced in redundancy and restructuring, as early as possible in the process. This way, you can ensure that your good faith obligations, as an employer, are met and that the financial benefit of a restructure is not outweighed by a costly personal grievance claim.

 

In accordance with our obligations under the Lawyers and Conveyancers Act 2006, we cannot provide legal advice unless you have become a client of Smith and Partners and have received our Terms & Conditions of Engagement and Info for Clients. 

If you would like advice on any employment law related matters, please contact Suzanne Sumner, Personal Assistant to employment law expert, Carolyn Ranson to find out how you can become a client of Smith and Partners and to set up an appointment to discuss your employment matter with Carolyn. 

Suzanne Sumner

Ph: 09 837 6840

Email: Suzanne.sumner@smithpartners.co.nz

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