Redundancy basics and considerations for migrant workers
Hannah McCarthy and Robert Brinkworth
16 May 2025
Employers sometimes need to make hard decisions to steer their business through difficult times or to operate more efficiently. An employer may consider restructuring its business and making cuts by redundancies. A redundancy occurs when an employee’s position is disestablished as it is no longer required. In a redundancy situation, the focus is on the employment role, not the competency of the employee who fills it. If any of the affected roles are filled by migrant workers, additional considerations arise that any employer should be mindful of.
Redundancy generally
The overarching consideration in determining whether a decision to make a role redundant is justified is whether there was a genuine business for the decision. If there are mixed motives in making a role redundant, for example in making an underperforming employee’s role redundant, then an employer runs the risk that their decision could be successfully challenged.
Before making a decision to restructure an employer is obliged to engage fairly and consult with all potentially affected employees about the potential decision. The degree that an employee is affected by any proposed restructure may differ – i.e. restructuring may involve a small change in reporting lines for some employees or redundancy for others.
In the event of a potential sale of an employer’s business, the obligation to engage fairly with potentially affected employees can be complicated. There is a tension to not disclose commercially sensitive information whilst the Employment Relations Act creates a statutory obligation of good faith that cannot be overridden. Advice may be needed to help guide a business owner through this process.
In any case, when a business starts to think that there is need to restructure it should carefully review the employment agreements of the potentially affected employees and consider its contractual obligations and the contractual implications of the restructure (such as redundancy compensation payments).
Engagement with potentially affected employees starts off with a robust consultation process during which employees are presented with all relevant information to enable them to make informed comments regarding the proposal. Generally, this involves the employer putting together a written business plan or proposal document which shows all the factors they have considered. This includes alternatives to redundancies which have been considered but discarded and the reasons why. The complexity of the business case, and the amount of commercial information provided can vary in each case and it is prudent to take proper advice when putting a business case together.
Employees must then be provided with a reasonable opportunity to provide feedback on the proposal. Employees ought to be offered the opportunity to meet with their employer to discuss the proposal and should be advised of their right to bring a support person or legal representative. When an employer is considering reducing the number of roles which perform the same or substantially similar purpose then it can be difficult for an employer to get the redundancy process right. Employers can be tempted to pick out the employees they want to keep rather than engaging with all the potentially affected employees and risking the disruption of a selection process. An employer should consult with all the potentially affected employees and seek to establish a selection process that is transparent, objective, and relevant to the genuine needs of the business. Ignoring this can give rise to challenges by an affected employee and advice should be taken.
Provided there is a genuine business reason for disestablishing a position, and the employer has undertaken a genuine and open-minded consultation process, an employer is entitled to end a person’s employment by reason of redundancy. As there is no statutory entitlement to redundancy compensation, the notice and compensation available to an employee will be dictated by his or her employment agreement.
Serious consequences can arise if a proper consultation process is not followed, even where there is a genuine reason for the redundancy. If a process is flawed, it taints the entire termination which can lead to significant claims by the employee. When in any doubt, it is prudent to take advice.
Migrant Workers
The laws surrounding employment and immigration move quickly and are designed to protect both employees and employers. It is important for employers to be aware of their obligations under both employment and immigration laws as the consequences can be severe and costly to the business.
New Zealand employment law applies equally to migrants. Additionally, employers of migrant workers must comply with their obligations under the Immigration Act 2009.
To hire migrants under the Accredited Employer Work Visa Scheme (or other work visa holders with specific conditions) employers must be Accredited. Breaches of employment obligations and minimum employment standards, such as a finding of unjustified dismissal in a flawed redundancy process, can result in an Accredited Employer being subject to a stand-down period or be ineligible to renew their Accreditation. This would stop an employer from hiring migrants in their business and prevent their current employees from applying for Skilled Migrant Resident Visas.
In cases where a holder’s visa is due to expire, a fair and proper process is still required in redundancy, restructure, and termination processes. Our colleague, Heather Collins has previously explored the tightrope act of complying with immigration and employment Law obligations.
After employment ends
It is common for employers to be worried about the future prospects of visa holders, particularly where their immigration status is tied to their employment. A visa holder who holds an Accredited Employer Work Visa (“AEWV”) will have conditions that allow them to work for the specific employer. When this employment comes to an end, an AEWV holder may have options available to them, including:
- Obtaining new employment with a new Accredited Employer, in which case they must vary the conditions of their visa, or obtain a new AEWV; or
- Obtain an alternative suitable visa; or
- Leave New Zealand, so as not to be in breach of their conditions
Employers are not allowed to ‘provide immigration advice’ to migrant workers – for example, by advising migrants which would be the best visa for them to apply for, or what documents they may need for the application. Best practice is for the migrant to seek their own immigration advice from a legal advisor.
In addition to following a fair and proper process, an Accredited employer must notify Immigration New Zealand that a visa holder’s employment has come to an end.
Talk to us
It is always best to seek tailored advice in the event that a migrant worker’s visa is about to expire or has already expired. Our team of expert immigration and employment lawyers are here to help and provide advice for your specific situation. You can contact us on 03 548 8349 or by email to employment@pittandmoore.co.nz or immigration@pittandmoore.co.nz.
Disclaimer: The information contained in this publication is of a general nature and is not intended as legal advice. It is important that you seek legal advice that is specific to your circumstances.
