Your employer is considering a restructure or redundancy. What are your rights as an employee?
Employers are required to follow a fair and reasonable process when considering restructures and redundancies. However, the legislation is largely silent on the process, which has primarily developed through case law which can be difficult for employees to locate and interpret. The lack of clear information, combined with a challenging economic climate, creates a scary and stressful environment for employees and their families.
Let us clarify a few things for you.
Restructure v Redundancy
Restructuring generally refers to changes in the workplace, which are designed to help make it run more effectively and efficiently. It is an employer's prerogative to restructure their operations, but they must have genuine business reasons for doing so.
Redundancies can occur during restructuring and arise when a role becomes surplus to requirements. Redundancies should be a last resort, and employers must follow a fair process when considering making a role redundant.
What is the process for this?
As with all employment considerations, the duty of good faith in section 4 of the Employment Relations Act 2000 provides the underling foundation for how restructures and redundancies should be conducted.
For employees, this means engaging with the process responsively and communicatively.
For employers, this means (among other things) in providing information and an opportunity for employees to engage in the process.
Is there an example of the duty of good faith?
The duty of good faith was considered in the recent case of Keighran v Kensington Tavern Ltd [2024] NZEmpC 28.
Mr Keighran worked as a restaurant manager at the Kensington Tavern. Following an incident where Mr Keighran was found guilty of indecent assault against a colleague, Mr Keighran was asked to work from home for a period of time. Mr Keighran took a further two weeks off on annual leave.
In a team meeting a few days after his return, Mr Keighran was told that during his absence, senior staff had lost respect for him and management had lost confidence in his ability to manage the floor; thus, his position as manager was made redundant. Mr Keighran was directed to manage bar rather than the restaurant going forward.
The Court observed that Mr Keighran was informed that his position had been made redundant without any prior discussion. The notification was made in front of other staff. The Court held that Mr Keighran had been constructively dismissed - which is an unjustifiable termination.
Further, the Court determined that the team meeting, in which Mr Keighran was informed of his ‘demotion,’ was a breach of the duty of good faith which the employer owed to him.
The Court accepted that the employer was not acting maliciously or in bad faith; but noted that “an absence of bad faith is not, however, a prerequisite for a finding of breach of good faith”.
How can Young Hunter help me?
If you are undergoing a restructure or redundancy, or think your employer has unjustifiably dismissed you, please contact one of our employment experts on (03) 379-3880.
