Redundancy: The biggest mistake employees make when job's on the line

Mark Donovan says the biggest mistake people make when redundancy is proposed is not to engage in the process at all. Photo / Getty Images

Being made redundant is one of the toughest things a worker can go through but there are ways to smooth the path and even change the outcome.

Mark Donovan, a barrister specialising in employment law, says employers going through the process have to have a good reason for making a role redundant.

"At the moment the obvious reason is Covid-19."

Donovan says employees are generally understanding of that situation but he urges people to still question it as some employers may use Covid-19 as an excuse to get rid of staff.

"Some may be abusing the situation," he warns.

Donovan says those facing a redundancy proposal should start by asking three questions.

"Have I got all the information? Why me? Why not someone else?"

Donovan says if redundancies are being proposed decisions will have been made on which roles should go.

But that didn't mean people shouldn't question if their role should be the one to go.

"If there are five people being asked to reapply for three roles - how are you selecting those people?"

"These are the things I say people should push back on."

An employer has to listen to what affected workers say but they don't have to change anything.

"The employer is entitled to have a firm view," Donovan says.

"But they do have to keep an open mind."

If an employee comes up with a good way to reduce costs it may be the employer changes their plans.

"From time to time I have seen that happen."

Mark Donovan, a barrister specialising in employment law. Photo/ Supplied.

Biggest mistake

Donovan says the biggest mistake people make is not to engage in the process at all.

"I don't think employees should lose hope. The worst thing is not to engage and feel like it is a fait accompli.

"Then they just really do have no chance."

Donovan says if you are upset about your employer's decision the worst thing is to stay quiet.

"Engaging is the key."

How much?

Redundancy payments are not mandatory in New Zealand employment contracts so for some workers there will be no lump sum coming their way.

But Donovan says often employers will pay out the notice period and allow the employee to finish up straight away freeing them up to apply for another job.

For those that are entitled to a payout, the terms will be specified in their employment contract.

It is usually a certain number of weeks of pay per year a person has been employed.

Donovan says sometimes there can be difficulty around working out what is a week's worth of pay if a person works variable hours or gets commission.

But it is usually a week of your normal salary.

When the figure is calculated it also pays to check the amount is correct and includes the correct amount of holiday pay.

If you do find out later the pay is not right you have a six-year period to go back to the employer or 90 days to take a personal grievance claim.

"Of course the longer you wait the longer you are out of money."

Worried about redundancy?

If you are worried about being made redundant Donovan recommends people make sure their CV and LinkedIn profile is up to date as well as making the most of networking opportunities.

He says redundancies are an awkward situation where employers don't want to talk about it until they have to because of concerns they will frighten staff away, but employees also want to know as soon as possible.

"It is tricky that timing."

Those worried should also check their contract and see what their notice period is and what the redundancy clause says.

"That allows people to plan how much money they will have until they run out of their usual cashflow.

"That is definitely something worth thinking about."

New job

Donovan says workers starting a new job should also look to negotiate their redundancy contract terms.

He says it may be better to agree on a fixed amount to be paid out rather than a week per year given the current environment.

"Bearing in mind I imagine most employers are going to be tight-fisted. It might be hard to get unless you have skills the business really needs."