Redundancy

Workplace downsizing and redundancies

Redundancy Law NZ


Are you looking to make redundancies in your business?  Employers need to prove that they acted in a fair and legal way or face legal consequences.

Redundancy arises where the role becomes superfluous to the requirements of a business.  Redundancy focuses on the role itself and not the individual.

An Employer needs to be able to justify the redundancy, and follow fair procedure throughout the process. Employers are also under an obligation to act good faith at all times during the employment relationship.

Pre redundancy process:

Employers should assess their options carefully before initiating a redundancy process, and only initiate it if the Employer identifies a real possibility of a redundancy. Employers should inspect the Employment Agreements with staff  before initiating the process to check what processes and entitlements the parties in a redundancy situation have agreed upon.

During the redundancy process:

Insofar as justification goes, a business can face a number of situations that place them in a position to consider redundancies. Whatever the reason for requiring redundancies at the business, this must be legitimate and communicated in depth with staff. If the Employer is taken to task over a redundancy they may have to prove the reasons in court, and explore what alternative solutions a 'reasonable Employer could have done'.

Once the Employer has identified the possibility , they need to follow fair procedure and observe the rules of natural justice to ensure that all Employees are treated fairly.

Post redundancy process:   

Broadly speaking, if a redundancy eventuates the Employee will either workout their notice period or be paid in lieu if this is agreed upon in the Employment Agreement.
Offering staff time off to attend interviews, support and counselling, cv and reference assistance is commonplace and should also be offered.

The final payment made by the Employer will be considered as a wage or salary, and will therefore be taxable at the Employee's usual rate tax rate.

For further information on redundancies please refer to our 'Downsizing  and Redundancies' book online. This is available in the library section of our Employers Toolbox for our Employers Support Package members.
If you are considering redundancies please give us a call on 0800 15 8000 before doing anything.