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Redundancy — Short Explanation

Published 01 Jun 2009

Redundancies are, generally speaking, highly stressful for all involved. Employers downsize and restructure their business to save money, so the last thing you need is a successful claim against the business because a fair process has not been followed.

With that in mind, we set out the mandatory requirements for a fair process:
  • Remember to comply with your good faith obligations under the Employment Relations Act. This includes being responsive and communicative, and providing employees with access to information and an opportunity to comment where there is a proposal to make a decision that will or is likely to have an adverse effect on the continuation of their employment.
  • Decide on a clear process before any action is taken. This will vary depending on the circumstances. Feeling your way through a redundancy does not provide a clear path for you as an employer or for the employees affected.
  • Where a number of employees are applying for the same position, advise them of the criteria against which they are to be measured and ultimately selected.
  • Consider re-deployment where possible.
  • It is vital to keep a clear paper trail. Reduce all notifications and discussions to writing.
  • Comply with all relevant provisions of the employee's employment agreement.
  • Provide employees with an opportunity to respond to any proposal before making a final decision.
You should note that while the Courts recognise employers need to be able to make their business more efficient, you still need to show that there is a genuine commercial reason for the decision to make employees' positions redundant.

Employer Support Package members please use our System of Redundancy from the Library section of the Employers Toolbox online, others maypurchase the system online.