Restructuring and redundancy advice post-COVID-19

This is a general guide on how and where to get advice around restructuring your business and handling the complicated challenges surrounding redundancy. This article is an update to a previous Icehouse blog. 

While the move to Level 1 is undoubtedly a cause for celebration for the five million-strong ‘Kiwi army’, the harsh facts are that an estimated 40,000 New Zealanders lost their jobs during lockdown from March to April and approximately 80,000 jobs could be lost from June to August, according to Infometrics/Newshub. 

With the effects of COVID-19 still to be fully felt, thousands of Kiwi businesses and employees are looking to get the best possible legal advice around redundancy and restructuring the business. 

There are plenty of free resources for employers and employees alike. However, as with all human resource issues and matters around employment law, please make sure you get professional and trusted legal advice from the outset.  

Redundancy is a result of an employer’s decision that an employee’s position is surplus to that employer’s commercial needs. Employers need to justify redundancies substantively (show that they are genuine) and procedurally (that a fair procedure was followed).

| Transparency benefits all parties

A clear and transparent period of consultation which is fair and legal for both parties must be applied at all times. Further, any employer who fails to carry out a proper restructuring process will be potentially liable for remedies such as compensation, penalties, lost remuneration and reinstatement.

For many small businesses, there is a highly personal element involved here as the employee will be known to everyone to redundancy. Many owners and employees struggle with this kind of decision-making. One of the key things to remember is that your employer will not have come to this decision lightly, and redundancy and restructuring will have been based on sound business strategy.  

| The basics 

• Make sure the redundancy proposal is centred on sound business reasons and those reasons are clearly articulated to those affected
• Ensure redundancy selection criteria are rational and clearly explained, and are consulted on
• Ensure that the process and decision-making is compliant with the procedures and criteria set out in any employment agreement or employer policy
• Ensure all relevant information is disclosed to affected employees
• Give every affected employee enough time and a proper opportunity to give feedback on the proposal before any decision is made
• Consider carefully employee feedback. How will you and indeed will you accept that feedback?  

Business.Govt.NZ  
Outlines a five-step process for making an employee redundant. The site has a helpful ‘exit checklist’ of PDFs and word docs which includes timeframes, task lists and next steps. It also features legal information, ideas around managing the redundancy transition, ‘last payday’ information, and analyses the pros, cons and necessities around restructuring a business. 

Employment New Zealand
Features legal and practical advice on all issues around ending employment, including constructive dismissal, abandonment of employment and, of course, redundancy. Employment New Zealand also outlines how employers can help affected employees with outplacement support which may include counselling, CV services and interview training. 

Work and Income
Work and Income has a wide range of information and advice on the type of services that will help support you if you are affected by redundancy. The agency offers 1-2-1 support, vacancy information, further training opportunities, CV advice and income support entitlement information.

Visit our dedicated resource for businesses impacted by COVID-19. It’s full of useful information and resources, support and offerings, funding opportunities and partnership and coaching details.

For more business ownership and leadership advice and the latest discussion around COVID-19, check out more of our blogs.