Redundancy is an emotive subject for many but is quite simply another method of termination of an employee’s employment. Therefore, there are processes that must be strictly adhered to as required by section 4 of the Employment Relations Act and the good faith requirements.
The employer’s good faith obligations contained in section 4(1A)(c) of the Employment Relations Act require “…an employer who is proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of employment of his…employee…to provide the employee…(i) access to information, relevant to the continuation of the employee’s employment, about the decision; and (ii) an opportunity to comment on the information to their employer before the decision is made.”
This means that an employer considering redundancy action needs to ensure that he has given the employee a copy of all information that he is relying on in making the decision.
The employee must be given a genuine opportunity to comment on the possibility of redundancy, and any feedback that the employee may give regarding how the redundancy may be avoided should be carefully considered by the employer. Finally, a decision can be made.
It is vital that an employer be able to justify the redundancy with a genuine business reason. All information relied on by the employer must be verifiable and factual.
We are pleased to provide our clients with a step-by-step guide to redundancy processes, along with draft letters that can be adapted to suit their individual situations.
Frequently Asked Questions
Normally an employee will have an individual employment agreement. Collective employment agreements tend to be the domain of union-based workers.
Individual employment agreements need to be in writing and signed by you and your employee. It should include:
- employer and the employee names
- job description
- hours and location of job
- the wages or salary that you will pay to the employee, as well as incentives such as bonuses
- redundancy clause
- jargon-free explanation of the services available for employment relationship problems
- any trial period
It is sometimes tempting to use an agreement you have had for many years, a generic 'template' agreement, or one taken from a mate of a mate. It is vital the agreement correctly records the specific terms of the employment relationship, as mistakes can be costly. A bespoke employment agreement will contain clauses to give you more power and confidence.
It is best to get these drafted by a professional to tailor to the needs of your workplace and taking into account any special policies in place (such as staff discounts, use of company vehicles, or bonus provisions), or requirements specific to your workplace, such as health and safety policies and restraints of trade.
Caution must also be exercised with fixed term and casual agreements as both have specific contractual requirements. If these requirements are not fulfilled then the employer faces the possibility of having its powers under those agreements eroded.
Provided that an offer of employment has been made, and accepted, your employee is "a person intending to work" whether or not they have signed an employment agreement.
Be aware that an employee who does not have an agreement prior to beginning work may then bargain on each and every point in the agreement, when it is presented after commencement of employment. The employer and employee may then negotiate over the terms until they come to agreement.
From 1 July 2011, it was mandatory a signed employment agreement is held on file by you for every employee. This will include casual, part-time, fixed term and permanent employees.
There are many reasons you may need a lawyer in employment matters. It is an unfortunate reality that things don't always work out in the workplace.
In recessionary times it is unfortunate that sometimes work may dry up and you end up overstaffed. Or, you may decide to take your business in new directions and plan to reduce your workforce. Either way, you will probably be looking to make various positions redundant.
If you are in this position, you need to consider a few aspects:
- Your staff's position must genuinely be surplus to requirements
- There needs to be a genuine business reason to end a position. So you can't get rid of a position and then re-advertise the role when it is virtually identical to the previous position.
- The position redundancy can not be related in any way to performance of your staff
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