Case Law: Restructuring and Redundancy

With unemployment still on the rise in challenging economic times, a number of recent cases are highlighting the importance of following a fair and reasonable practice ‘Good Faith’ process and maintain Good Faith obligations to potentially affected employees when disestablishing a position and making employees redundant. This is particularly applicable where a business is being sold to another company. While commercial sensitivity in these situations is a legitimate concern for employers, employees are entitled to be kept informed on developments in a confidential way that protects the integrity of the party’s commercial position. Non-disclosure agreements can be used in these situations. 

The following are key points to be considered when a business is considering carrying out a restructure:

• Have genuine commercial reasons for initiating a restructure and provide details such as figures, dates, sales trends
• Employees must be provided with information that potentially may have an adverse impact on the continuation of an employee's employment
• Employers are obligated to consider redeployment options before declaring a position redundant
• Employee feedback on a restructuring proposal must be formally acknowledged and fully responded to before making a decision disestablishing positions
• Advise the parties of the right to independent legal advice and bring a support person to meetings

Our Restructuring and Redundancy toolkit is available at a special price of $400 for members if purchased during the next month. Click here

Members can access advice and guides from Business Canterbury in these areas to reduce risk in this area. Contact us for specialist advice at hradvice@cecc.org.nz.

For further information or queries around this, please contact Michael Prisk at michaelp@businesscanterbury.co..nz if you need advice in this area.