The world around us is continually changing, as the current COVID-19 global pandemic has highlighted. As society adapts and changes, employers have a right to make changes to the structure of the business to better align it with their business strategy or simply to make it more financially viable.
Three things that should be taken into account to avoid such claims:
Restructures should be made for legitimate reasons, and employers should communicate these reasons clearly with employees. Employers should do this by offering a detailed proposal that includes evidence in support of the proposed changes or the benefits that these changes may provide.
Redundancies can not be made on the basis of ulterior motives, such as performance or conduct concerns. If an employer decides to make an employee redundant to get rid of an employment problem, the employee may bring a claim of unjust dismissal. The employer then bears the burden of showing that the redundancy was genuine and was the predominant motive for ending the employment.
Genuine reasons could include:
When embarking on a restructure that might affect peoples’ jobs, it is essential to consult with potentially affected employees. In Simpsons Farms v Aberhart, the Employment Court provided some helpful guidance on the requirements of consultation:
Simpsons Farms Ltd v Aberhart illustrates how seriously the Courts will treat a lack of consultation. In that case, the Employment Court found that Simpsons Farms’ managerial restructuring, in which Mr Aberhart’s job was disestablished, and a new position was created, was fair and reasonable in that there were genuine reasons for the decision that was made. However, the Court held that Simpson Farms had breached its consultation obligations by not considering Mr Aberhart’s proposal (even though it was not required to accept it) that he try out the new role. It further breached its consultation obligations by not responding to Mr Aberhart’s reasonable requests for information. Mr Aberhart was awarded $15,000 compensation for Simpsons Farms’ breaches of its obligations to consult and provide information.
A common mistake is a lack of proper consultation through leaving inadequate time for employees to consider the proposal and give their feedback and failure to hear employee’s feedback. An employment lawyer can help ensure that consultation is legal and effective, saving the hassle of having to resolve personal grievances.
Specific processes apply regarding reducing numbers and redeployment.
If the restructure will involve redundancies, the employer should be careful to adopt a fair and transparent method of selecting who is to be made redundant. During the consultation stage, there should be clear communication about the criteria used to make these decisions. When deciding which roles are up for redundancy, it is crucial that employers use the proposed criteria and not base their decisions on any other reasons.
Employees who are affected by restructuring can be placed in any new roles that are created if the new role is within their abilities. Fair processes for considering redeployment to a new role need to be followed.
Issues of redundancy and restructuring are technical and fact-specific. Obtaining legal advice in these areas before and throughout the process can be a valuable resource in ensuring employers know their obligations in order to avoid costly mistakes.
To get our free detailed guide to restructuring, download it here.
For customized help with the restructuring process, contact Bell and Co at (04) 499 4014 or firstname.lastname@example.org.
 Forest Park (New Zealand) Ltd v Adams  ERNZ 310.
 (2006) 4 NZELR 170 at .