Redundancy: Mistakes to avoid during a consultation process

Published 21 February 2025 | 2 min read

Redundancy decisions are never easy. For New Zealand businesses, navigating the redundancy consultation process without slipping up can be a legal minefield.

Employers face the challenge of balancing financial pressures with fair treatment of staff. One wrong step can prove costly, damaging both finances and reputation.

Getting redundancy right

Recent cases highlight how easily employers can get it wrong. In one instance, a recruitment firm gave an employee just three days to respond to a redundancy proposal.

Days later, the company filled a similar position at another branch, raising questions about the legitimacy of the process. The worker challenged the decision with the Employment Relations Authority (ERA), which ordered the employer to pay nearly $20,000 in penalties.

These situations underscore the importance of a thorough, well-documented process.

How things get complicated

Employers often run into trouble by rushing decisions or overlooking key steps. Short consultation periods, unclear financial justifications, and failure to consider redeployment can lead to personal grievance claims.

Promoting another employee into a supposedly redundant role or providing inconsistent information only complicates matters.

Employers must ensure their decisions are genuine, transparent, and well-supported by evidence.

ERA's decision

The ERA’s findings offer valuable insights for businesses:

• Consultation time was too short: Three days did not allow enough time for proper feedback.
• Financial reasons were unclear: Conflicting figures weakened the employer’s justification.
• Alternative solutions were overlooked: Employee suggestions for cost-saving measures weren’t fully considered.
• Redeployment options weren’t explored: The quick promotion of another employee raised concerns.
• Documentation was lacking: The employer failed to provide essential records of decision-making.
• Notice period wasn’t fair: Immediate redundancy without adequate notice was unjustified.

How we can avoid these mistakes

Redundancies should only be used as a last resort after exploring all other options. Employers should communicate openly, give staff reasonable time to respond, and thoroughly assess alternative solutions.

Clear documentation of decisions and a genuine search for redeployment opportunities are crucial. By following these steps, New Zealand businesses can meet legal obligations, maintain employee trust, and reduce the risk of costly disputes.

Note: This information is based on official details from Employment New Zealand and is subject to change. Always refer to the latest guidelines for the most accurate information. Visit Employment New Zealand here.