When the only option is Redundancy

When the only option is Redundancy

With the recent downturn in dairy prices many farm owners are looking to reduce costs by reorganising the way they run their business. As a result, staffing levels may need to be reconsidered. If you find yourself in this position it’s important you follow the correct procedure when approaching redundancies, as a failure to do so may give the employee grounds to raise a personal grievance.

The Employment Relations Act 2000 governs how you deal with redundancy so you need to comply with this legislation, as well as with the terms of the employees Employment Agreement. When making an employee redundant the redundancy must be genuine. That means the job has become surplus to your requirements because of a change in the business. Examples could be contracting out the employees work or removing an unprofitable part of the business.

Employers also have a duty to act fairly, reasonably and in good faith throughout the process. Generally this requires employers to comply with the terms of the employee’s Employment Agreement and genuinely consult with the employee before making them redundant. You must also provide the employee with all relevant information about the proposed re-organisation of the business so that they can form a view and give feedback. Relevant information can include, for example, the criteria for being made redundant, alternative jobs in the business and whether independent contractors will be engaged. Remember to keep an open mind about alternatives to redundancy and any suggestions made by the employee as the employer must make a genuine effort to accommodate the views of the employee and allow them to contribute to the decision. Further to that, you should not make any decision on redundancy until consultation with the employee is complete. And finally, you should provide additional assistance to an employee who is made redundant.

What is required to meet the standard of good faith will vary to some degree depending on the circumstances. If you are considering changes to your staffing levels we suggest you seek legal advice before taking any steps. Tailored employment advice from the outset is likely to prevent errors in the procedure you adopt, saving you time and money so that you can focus on running a successful business.

Talk to us

Contact our Employment Law Team today to discuss how we can assist you.

Disclaimer: This article should not be used as a substitute for legal advice tailored for your specific circumstances.

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Heather Collins

Position: Solicitor
Email: heather.collins@pittandmoore.co.nz
DDI: +64 3 545 6702