Redundancies are an unfortunate but sometimes necessary part of business. However, as an employee, it’s crucial to understand whether a redundancy is genuine or if it’s being used as a cover for other motives, such as unfair dismissal. In New Zealand, redundancies must meet strict legal criteria to be considered lawful, and there are key signs that can help you determine if the redundancy you’re facing is legitimate.
Redundancy occurs when an employer terminates an employee’s position because their role is no longer needed. This could be due to restructuring, financial challenges, or a change in business direction. Redundancy should never be used as a way to dismiss someone for poor performance or personal reasons.
To ensure a redundancy is lawful, the employer must have a genuine business reason, follow a fair process, and consult with the employee. Let’s explore how you can tell if the redundancy you’re facing is genuine.
Is there a genuine business reason?
For a redundancy to be lawful, there must be a real business reason behind it. Employers cannot make someone redundant simply because they don’t want them in the business anymore. Common legitimate reasons include:
The company is undergoing financial difficulties.
The business is restructuring to improve efficiency.
Certain roles or departments are no longer necessary due to changes in the market.
Technology or automation has replaced the need for a specific role.
Ask your employer to explain the reasoning behind the redundancy. If the reason seems vague or doesn’t align with the overall state of the business, it could be a red flag.
Have they followed a fair and transparent process?
A key aspect of a legitimate redundancy is the process that’s followed. New Zealand law requires employers to consult with employees before making them redundant. This includes:
Providing written information about the proposed redundancy.
Giving the employee a chance to provide feedback or suggest alternatives.
Considering any feedback given by the employee before making a final decision.
If your employer has skipped consultation or suddenly announces the redundancy without any discussion, it could indicate the redundancy isn’t genuine. You have the right to ask for a full explanation of the process and challenge any procedural failings.
Is your role really being made redundant?
Redundancy means the role itself is no longer required, not just that you, personally, are being let go. A common sign of an inauthentic redundancy is if your role is advertised or given to someone else shortly after your dismissal. If this happens, it’s likely that your redundancy was used as a cover for dismissal, and you could have grounds for a personal grievance.
Have you been offered redeployment?
In cases of redundancy, employers must consider whether there are other roles available within the business that you could be redeployed into. Before making you redundant, they should actively look for any suitable positions you could be moved to, based on your skills and experience.
If your employer has not explored redeployment options or refuses to consider them, this could suggest that the redundancy isn’t genuine, as they are legally required to consider all alternatives to redundancy.
Are you the only one being made redundant?
While it’s possible for redundancy to affect just one employee, it’s worth considering whether others in similar positions are also facing redundancy. If your role is the only one being targeted, but there is no clear business reason why, it might raise questions about whether the redundancy is legitimate.
It’s important to ask if any other employees are affected and why your specific role is being targeted. A genuine redundancy should be based on the role, not on personal factors.
Have they provided redundancy compensation?
Although there is no legal obligation in New Zealand for employers to provide redundancy compensation, many employment agreements include it as a term. Check your employment contract to see if you are entitled to redundancy compensation and ensure that the employer is following through with the agreed terms.
Have they given adequate notice?
Your employer is legally required to give you notice before making you redundant, as specified in your employment contract. The length of notice can vary, but if your employer is attempting to make you redundant without proper notice or abruptly ends your employment, this could be a sign that the redundancy is not being handled lawfully.
What can you do if you suspect the redundancy is not genuine?
If you suspect that your redundancy is not genuine, you have the right to challenge the decision. Here are a few steps you can take:
Request a Meeting: Ask for a meeting with your employer to discuss the redundancy in more detail. Seek clarification on the business reason, the process they followed, and what alternatives were considered.
Get Advice: Consult with an employment advocate, such as Mathews Walker, to review your case and the redundancy process. We can help determine if the redundancy is lawful and whether you have grounds to challenge it.
File a Personal Grievance: If you believe the redundancy is unfair or unlawful, you can file a personal grievance with your employer within 90 days of the redundancy decision.
Redundancies can be a stressful experience, but knowing your rights and understanding the process can provide some peace of mind. If you’re facing redundancy and aren’t sure if it’s genuine give Mathews Walker a call for a confidential discussion on whether it is fair and what actions you can take if it is not.
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