Redundancy: What are your rights as a worker when it comes to being laid off?

What is redundancy and why does it occur? Photo / Getty Images

Mass redundancies have rocked the employment landscape this year as businesses scale back amid ongoing economic difficulties, with the public sector and media at the forefront of such changes.

The Herald spoke with barrister/solicitor and director of Watermark Employment Law Simon Greening about the redundancy process and what rights workers have.

What is redundancy and why does it occur?

The big thing about redundancy is that it’s about positions, not people. Although your position might need to be made redundant, it doesn’t mean that it should follow that you should actually lose your job as a result. And that’s probably the mistake most people make. They often say “my employment came to an end due to redundancy”, but the second step an employer should always consider is redeployment.

Redundancy is just about the position, the question is “what do we do with this person?” That’s a really big issue because there’s a lot more litigation now in the courts. Courts are looking a lot more at redeployment – is there another position for this person?

Redundancy in terms of its legal definition is “is this position superfluous to our needs” and explaining the reasoning.

What does an employer have to demonstrate when making a position redundant?

It comes down to genuine commercial justification or a business case that really sets it out. Redundancy can’t be used as a pretext for dismissal. It can’t be used to move people on they don’t like.

There must be a genuine business case. The law is very much in favour of disclosure and transparency as to “okay, we don’t need this position any more, is it because of costs?

Is it because of changes in the marketplace? Or maybe efficiency?

Most of the redundancies you’re seeing currently in the market are primarily tied to the economy and financially. But a lot of employers do talk sometimes quite vaguely, for example, they might say “due to the economy” or “due to global market conditions”.

It’s kind of pinpointing and explaining “well, we need to save $200,000 and therefore we need to make two positions redundant, and these are the two positions we think we could do without” – then that’s fine.

The law has always recognised the right of an employer to make a position redundant if there is a genuine commercial justification. There needs to be some kind of business case.

Are redundancy and disestablishment different?

They are the same. It’s different language for the same point. And that’s why often people think redundancy means employment being terminated, but actually redundancy just means disestablishing of the position.

Am I entitled to redundancy pay?

No, not in New Zealand. It’s completely dependent on [the] contract.

So, what are my rights?

The main employee rights around redundancy is provision of information, consultation and selection criteria. Those are issues that employees should be alert to.

Provision of information: Provision of information is really important. You get a letter but where’s the information? You say the business is really struggling recently? The law kind of requires a little proof around that rather than just a carte blanche letter which says ‘we’re struggling financially and we need to make your position redundant’.

Consultation: There needs to be a focus on provision of relevant information so that ultimately an employee can engage in a consultation process and there needs to be provision of information so an employee can, for example, provide another solution. The law favours transparency and provision of information so that an employee can go ‘well I can see the issue. Could we work collaboratively to find the solution?’ The employer must 100 per cent genuinely consider these ideas.

Selection criteria: The employee has the right to be notified of the proposed selection criteria. Why are you going to choose Harry over Sally?

What can I do if I have an issue with how my redundancy has been handled?

People can feel quite disadvantaged by the process. People raise what’s called a personal grievance, saying they’ve been disadvantaged, which means they haven’t provided me all relevant information. People don’t necessarily realise that you can be disadvantaged and raise concerns or a claim because you haven’t been provided, for example, relevant information. Or you can be ultimately dismissed because you take the view that the employers have been unfair by not engaging in your feedback.

Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics including retail, small business, the workplace and macroeconomics.