3 Reasons for a Restructure/Redundancy
1. Must be a genuine business reason.
There must be a valid, well-documented, and pressing business reasons for the restructure/redundancy. Hard evidence must support these reasons and be the primary justification for redundancy.
2. Position must be superfluous & not personal.
The position must be superfluous. The restructure cannot be personal. It is the need for the continuance of the role, not the person that must be the focus.
3. Significant changes to role.
Significant changes to the role are required. Minor changes to the role do not count. They must be significant. Roles that are sufficiently similar will be considered still existing. Rule of thumb guideline is that a change to be significant requires more than 20% change.
Not for improper purpose
Too many times restructure/redundancies are used for improper purpose to exit employees out of the employment. When the real problem is poor performance or misconduct. An improper use of restructure/redundancy if uncovered, can be costly to a business.
Good faith & Fair process
Good faith requires consultation and a fair process. Fair process means providing all relevant information relied upon to come to the decision to terminate for redundancy. Failure to provide all relevant information may potentially make a justified redundancy unjustified and give rise to a personal grievance for an unjustified disadvantage.
The process is a two step process.
The first is the disestablishment of the role.
The second the exploration of redeployment options.
Too often, employers get caught by the failure to understand the two-step approach. Truncating the process potentially will render an otherwise justified redundancy unjust. Genuine redundancy means the role is superfluous to the needs of the business.
It is important to read and follow the employment contract or any relevant policy.
A redundancy may be genuine, but contractually and procedurally so flawed that a justifiable redundancy may be deemed unjustifiable. This situation recently cost an employer $15K for hurt and humiliation. What is genuine will be objectively scrutinised by the court/authority.
Read BuckettLaw's free redundancy checklist.
Redundancy FAQ
Can I rehire roles that previously were deemed redundant?
The answer is, you can, but proceed with caution.
Section 4 of the Employment Relations Act 2000 requires employers to act in good faith when making employees redundant. And the vast majority of employers will have done this and will have enacted restructuring strategies to enable the likelihood of survival. Therefore, it is absolutely key that businesses have performed reasonable due diligence ahead of any restructure and subsequent strategy, and that they keep all of this as record of fair and reasonable process.
Can I rehire former employees whose position has been made redundant?
There is nothing under the Employment Relations Act 2000 which specifically prohibits the re-employment of a former employee whose position had become redundant, provided the termination was a genuine redundancy. However as previously stated, the employee who was dismissed may claim this is evidence the position was not actually redundant and the termination was therefore not a case of genuine redundancy.