Redundancy should be a last resort, used only after all other options have been considered, and must be for a legitimate purpose, carried out fairly and reasonably.
Recently, Meta (the Facebook and Instagram parent company) announced its intention to restructure poor performers then backfill the roles later in 2025.
Meta’s approach to use a restructure process to weed out poor performers and rehire would be offensive to NZ employment law which clearly states it is the superfluity of the role, not the person in the role that is required – so cutting the slack through a restructure is arguably not a legitimate restructure exercise.
To be justified, redundancy must be for proper purpose (i.e. genuine business/organisational imperatives and the role is surplus to those imperatives) and must be fair and reasonable in the circumstances.
Last year saw many redundancies in the private and public sector.
In the private sector the redundancies were due to economic downturn. In the public sector the redundancies were politically motivated by a government desire to balance competing budget imperatives.
The latter arguably having no consistency or rationale aligned with the severed role and performance of that role within the organisation. It arguably was a slash and burn exercise.
Redundancies should be a last resort after all other options have been explored and considered.
The profound impact on individuals, organisations, and society generally should not be overlooked. Redundancies can cause severe emotional and psychological distress, financial instability, and social isolation. They affect mental health, lead to loss of identity and self-worth, and put strain on relationships. Organisations must care for their employees’ wellbeing during such transitions. In Wellington you can see the result of public sector redundancies has had on the city, reduced vibrancy and economic growth due to increased unemployment and decreased consumer spending.
Negative effects for organisations should be weighed up. Loss of talent, experience, and institutional knowledge. Low morale and engagement. Poorly managed restructures send unsettling messages of fear and anxiety. Legal challenges are a costly and very real risk.
At Buckettlaw, we are witnessing a troubling trend: the use of vague, insincere, rhetoric, laden to support restructure delivered through meaningless and disingenuous PowerPoint presentations.
These thinly disguised presentations fail to critically analyse the business case for restructuring, and it is no surprise that both the Courts and the Employment Relations Authority have been inundated with successful challenges to restructures. Restructuring presentations can be challenging to get right. The getting wrong potentially causes severe harm and damage to both parties.
It is important that before an employer embarks on such an exercise that all options are considered, and engagement, transparency, and good faith is at the forefront.
Common pitfalls include:
Lack of clear rationale and business case.
Vague justifications and inconsistent messages create mistrust or be challenged.
Insufficient transparency and detail, causing uncertainty and anxiety.
Overreliance on presentation tools over personal engagement.
Ignoring employee suggestions and concerns.
Lack of empathy for emotional psychological, and physical impacts.
Incorrect solutions caused by misunderstanding or ignoring root issues.
Undervaluing organisational capabilities, leading to mismatched new structure and the workforce.
Failure to consider redeployment and other employment opportunities.
By avoiding these pitfalls, organisations can create a more effective and supportive restructuring process and work environment.
Hopefully getting it right with less impact and damage to the employment relationship and the lives and wellbeing of affected employees will mean harmonious workplaces and better employment relationships, less disruption and displacement.
Far too often we see employers seeking to capitalise on a restructure by improperly using it to “exit” employees past there used by date. A redundancy for “mixed motive” is considered to be prima facie unjustified.
The spectre of any contemporaneous performance or conduct issues will create a reasonable inference of improper purpose. Therefore, if the reasons for the disestablishment/redundancy are lacking in paucity and detail that inference will be easily drawn.
Another stage in the restructure process organisations overlook is the requirement to consider alternatives such as redeployment to other comparable/suitable roles either pre-existing within the organisation or because of the restructure.
The right to redeployment is automatic unless there are two candidates on equal qualifying positions and not subject to contest from competing applications externally or internally.
If the role is contestable then it is important that the selection process for the role is fair and reasonable. That it is not engineered to eliminate unwanted persons under the guise of a restructure.
If Meta was governed by New Zealand law its intentions would be a public statement condemning in its own words its actions from the outset as non-complainant and highly challengeable.
Meta in our view would need to rethink its approach and put some effort into constructive and good faith engagement with its employees to lift performance in lieu of restructure. Under NZ employment law restructures and performance ought to be two separate and distinct processes and there should not be an intersection between the two.
