Jonny Sanders from IR Thompson
and Associates
– Specialists in Employment
Law
Cutting Back…
The past few months have seen
a continuing increase in the number of redundancies
occurring in New Zealand. The consequences for
an employee who is made redundant should not be
underestimated. Nor should the obligations be
on an employer to conduct the redundancies according
to legal requirements.
A redundancy is a dismissal.
Employees have the right to challenge a redundancy
by raising a personal grievance claiming that
the dismissal was unjustified. The employee can
seek remedies such as reinstatement, lost earnings,
compensation for humiliation, hurt, and injury
to feelings. To justify a redundancy, an employer
must be able to show that the redundancy was for
a fair reason, and that a fair process was conducted.
Fair Reason
Redundancy must be the result
of a genuine commercial decision where a position
is surplus to requirements. It cannot be used
as a cover for a dismissal for other reasons such
as poor performance. The employer must be prepared
to provide evidence to back up the genuine commercial
grounds on which they wish to justify redundancy.
Fair Process
Before deciding to make a position
redundant, the employer must consult the employee
or employees who may be affected by the proposed
changes.
This will typically involve writing
to the relevant employee(s) setting out
At the meeting the employer should
ensure that the employee understands the proposal.
The employer should then listen to the employee
with an open mind.
The meeting should be adjourned
before any decisions are made. The employer must
do this to take time to consider the employee’s
input. It may be necessary for the employer to
investigate an alternative the employee has suggested.
If the proposal proceeds then the employee should
be given written confirmation of the redundancy.
The terms of the employment agreement between
the parties relating to notice period and redundancy
compensation must be satisfied.
If an employer is considering
making a position redundant where more than one
employee performs the same role, then the employer
will generally need to involve all employees performing
that role in the consultation process. Further,
the employer will need to develop a selection
criteria to determine which of the employees is
made redundant, should redundancy occur.
What Else?
This is a brief summary of some
of the key principles of redundancy. Employers
considering any restructuring that may result
in redundancies are strongly encouraged to seek
legal advice prior to taking any action. Any employee
facing a potential redundancy, or who believes
they may have been made redundant unfairly, should
also seek professional advice.
For further information, both
employers and employees can contact I.R. Thompson
Associates Ltd and ask for Jonny Sanders or Robert
Thompson on 379 4288, or email thompson.associates@xtra.co.nz
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