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Post Covid-19 Redundancies

Published 25 May 2020

No one in business foresaw the pandemic causing a global shut down with such short notice. New Zealand went from alert levels 2 to 4 in 3 days forcing the majority of business to completely cease trading. Such unprecedented actions forced business into unprecedented change and no business was exempt from that.

With the new business landscape emerging in the post covid19 economy, all companies will be looking very carefully at their financial position and forecasts. Many businesses will have change forced on them and will need to adjust their staffing structures accordingly.

The fact that business got put on hold during the pandemic does not mean Employment Law did too. Restructuring, redeployment, reducing hours and redundancy all come under the banner of 'Change Management' and the rules and processes around that are still as important as ever. Justification for a restructure may be obvious but the process must still be transparent and fair with all parties acting in good faith.

We're already seeing the Employment Relations Authority (ERA) hearing cases of disputed redundancies and with mediations continuing to be held online the dispute process appears to be tracking faster than usual.

Kathmandu has already been in front of the ERA for a potential unfair dismissal of one the their managers who got culled in a post covid19 restructure. 4 days after delivering a proposed restructure with staff he received a termination letter outlining no position was available for him in the new company structure. Having not responded to the manager's request to be considered for other roles, he sought an ERA injunction to block the company from further hiring for the managerial positions.

While the ERA member agreed there is a case for unjustified dismissal, he would not impose the injunction to cause the business further problems in achieving their new structure going forwards.

It is a company's right and duty to run the business viably and profitably and it's collectively in the employee's best interests for this to be the case also. This view clearly reflected in this ERA determination. However, when redundancy is used to cull staff for personal or performance issues or processes get shortcut, you can expect pushback and fast-tracked personal grievances.

Most business owners and managers know there must be a consultative approach throughout a restructure, but adopting a rigid cookie-cutter approach is dangerous. Any and all suggestions from staff during a change process must be thoroughly and demonstrably considered and often means extra meetings and consultations, and if suggestions are not adopted why this is the case must be explained.

There are tough times ahead and change management is often very emotional time for the employer and employees. Be familiar with what is required for a fair process and justifiable staff selection criteria. Read our guide on Change Management, it covers an in-depth discussion on the issues and provides templates for the same.

This is in the Library section of the Employers Toolbox for members or non members can purchase it here: