As awful as it sounds, the closer we get to Christmas the more and more we hear about organisations needing to make the tough calls about the structures and resourcing that they require to see them be successful in the coming year.
There’s never a good time to have to make people redundant, but when it’s done right (sensitively, for genuine reasons, fairly and transparently), it does make a difference on how exiting employees view (and talks about) their organisation in the future.
In New Zealand over recent years, there have been ebbs and flows in terms of the level of interference the government has had in decisions made by organisations when it comes to redundancy processes and the results of those processes.
However, recent decisions in both the Court of Appeal and the Employment Court suggest that there is much closer scrutiny of organisational restructures with the following key elements being identified as critical to an organisation’s success in running a good process and staying on the right side of the law:
1. Substantive justification.
This means that the employer must be able to establish that a position is genuinely surplus to its requirements (based on clear evidence and ideally presented to the employee at the time of the proposal), and that it is not a change being implemented for any other reason (i.e. to exit a problem employee).
2. Procedural fairness.
This means that the employer must follow a fair process in implementing the redundancy (and this is covered in s 4 of the Employment Relations Act and implied obligations of good faith) which includes:
- Consultation the employer must consult with all employees impacted by a proposed change. This consultation needs to be genuine and all feedback received as a result of the consultation needs to be given real consideration prior to the organisation making a decision on how to proceed;
- Consideration of alternatives – these include redeployment and transfer, and should be genuinely considered prior to making an employee redundant.
- Fair selection processes – where an organisation is proposing to have more employees than roles available, it must undertake a fair selection process. This includes the use of objective selection criteria (based on the requirements of the remaining roles) and should (ideally) be given to the candidates of the roles prior to being finalised to ensure they understand which criteria they are being assessed against.
- Informing the employee of the outcome – ideally this occurs in a face to face meeting, and should occur ahead of anyone else in the organisation becoming aware of your employee’s situation.
- Notice and redundancy compensation – making sure that any payments made to your employee are in line with the requirements as outlined in their employment agreement.
I’ve detailed above what an organisation needs to do in order to run a great restructure process – but my post wasn’t called “how to run a great restructure”!
I asked the question “when is a redundancy not a redundancy?”
I suspect for many organisations, it’s where they have a challenge with an employee and they think that perhaps a restructure might be easier than managing performance.
Or the organisation thinks it might be easier to do a restructure, especially where there are no substantive disciplinary issues that would form the basis for a termination.
For small organisations without an HR function, a restructure might seem like something to cure all ills.
Let me stop you there!
Organisations will get into just as much trouble from a poorly conceived restructure as a badly run / unsubstantiated disciplinary process.
The result will be exactly the same – an employee claiming an unjustified dismissal.
I understand that getting restructures and redundancies right can seem like a herculean task and the likelihood (and cost) of getting it wrong, is very scary indeed!
Sometimes, the best thing you can do for your organisation, is admit that it’s not your skill set and ask for help!
We can help you design and execute a seamless, end to end restructure process that ticks all the boxes and mitigates the risks for your business.
A good process, executed fairly, can make the difference between losing the trust and confidence of your team or ensuring that your business is set up for future success.
Genuine restructures, while difficult, if communicated appropriately and sensitively, will more often than not trigger understanding from those most impacted.