In business change is constant and often necessary. Redundancy happens to most of us at some stage in our work lives.
Redundancy need not be a tragedy. Handled well it can create a financial opportunity to take a long-planned step in your career or facilitate the move to a better job.
There should be a genuine reason.
Sometimes employers use ‘Redundancy’ to dismiss staff when they don’t have grounds for dismissal. If your employer says the business is struggling, but there is no evidence of that, or if you are the only person who is facing the redundancy process then it may not be genuine. Your employer can’t employ a new person to do the same job as you, but they may be able to combine two jobs. They can’t make you redundant and then advertise for someone to fill your role.
It is a genuine redundancy if a person’s employment has been ended because their employer has decided, for ‘genuine reasons’ that the employee’s job is no longer needed. A ‘genuine reason’ could, for example, be that the employer is making changes to enable the business to operate more efficiently and cost effectively; or closing down or selling the business.
Minor alterations to a job’s role and responsibilities should not be a reason for redundancy.
When can a person be made redundant?
Two circumstances need to be present in order for a redundancy to occur:
- The position must be superfluous to the employer’s needs.
For example, where a larger number of employees are employed than necessary to operate the business efficiently, certain positions may be disestablished.
- The position must actually disappear. The employer cannot claim redundancy by changing a job description slightly or employing new employees to undertake the same or a similar position.
- The employee must not be at fault
The decision must be about the position and must not be about an individual employee personally. The employer cannot use redundancy as a means of getting rid of under-performing employees or disciplining employees for misconduct.
What is the process for making a person redundant?
Your employer must follow the proper process when they need to make you redudundant.
Restructuring or redundancy must be carried out in good faith and your employer must not mislead or deceive you.
Your employer must;
- Give you written notice of a discussion/meeting. The letter should say that the meeting is to discuss redundancy or restructuring ;
- tell you the reasons for the proposed changes, and how they will affect your job;
- consult with you and anyone else who may be made redundant;
- give you a chance to get independent advice, and to have a representative or support person with you when you attend the meeting to discuss your possible redundancy or restructure;
- consider your suggestions before they make any decision about their proposed changes; and
- consider alternatives to making you redundant e.g. giving you a job elsewhere in the company or reducing the hours you work.
Check your Employment Agreement
What does it say about redundancy in your Employment Contract ? You should always make sure you are familiar with the terms of the employment agreement. This will usually have specific provisions dealing with redundancy process and any entitlements.
Under New Zealand law it is not compulsory for an Employer to pay redundancy compensation. Check Your Employment Agreement:
If your employment agreement mentions redundancy compensation, it will probably also show what the amount of comensation will be. If there is no mention of the amount it could be up for negotiation.
Notice of redundancy
If there is no specific clause in an employment agreement giving a period of notice in a redundancy situation, ‘reasonable notice’ must be given. The length of ‘reasonable notice’ depends on a variety of factors, such as:
- the reason for the redundancy
- the employee’s length of service
- the employee’s seniority and/or remuneration package
- custom, practice and industry norms
- the employee’s ability to find alternative employment
- the amount of compensation being paid (if any).
A ‘reasonable’ notice period is usually two weeks to a month.