Comment: Managing restructuring and redundancy

By: David Boyce, CEO, NZ Trucking Association


NZTA's David Boyce takes a closer look at how a business can manage their workplace after COVID-19

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The COVID-19 crisis has certainly put significant pressure on the ability of many businesses to financially survive. Despite everyone’s best intentions, many are going to be faced with having to restructure their business to match the trading conditions of the ‘new normal’, whatever that may be.

Or worse still, they have reached the point of no return and will need to cease trading.
Economists are predicting that the New Zealand economy is going to go into an economic recession that could be worse than anyone has seen for decades. Predictions are that there will tens of thousands of people facing unemployment.

During the COVID-19 crisis, the government introduced a range of support packages for businesses, including a 12-week wage subsidy for employees where the business can demonstrate at least a 30% reduction in turnover, a small business cash flow loan scheme, and a range of taxation assistance packages. 

For some, this will have provided them with the lifeline they needed, giving them the time they need to get their business back up and running sustainably. For others, this has just helped to delay the inevitable closure of their business.

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Despite the challenging times facing businesses at present, for those considering restructuring, you cannot just go ahead and make changes without considering the effects of any workplace changes on your employees.

Legislation requires employers to inform employees when they are considering changes that will affect their jobs. Employees must have an opportunity to contribute to any decisions before they are made.

Employers should firstly refer to the employment agreement for the correct procedures for changing any terms of employment. The more significant any proposed change is, the less likely that it can be imposed without the employee’s agreement.

Any potential changes should be discussed early in the process with affected employees. Once agreement has been reached on any change, the employment agreement must be updated and signed by both parties.

For employers considering redundancy as an option, you should consider all options and have genuine reasons for redundancy. You cannot use redundancy as a means of dismissing an employee for a different reason, such as poor performance.

In most cases, there’s no liability for a redundancy payment unless both parties have agreed to it. Agreement to redundancy compensation can be made before or after the planned redundancy.

Most employment agreements will have a provision that details the process. Employees can raise a personal grievance if they believe their employer has acted unjustifiably and can seek remedies through both the Employment Relations Authority and the Employment Court.

Employers have specific legal obligations when a business is sold or transferred or work is contracted out. You must follow the steps outlined in the employment agreement to protect employees in such situations.

For businesses looking at downsizing or closing their operations, the Ministry of Social Development can provide support and advice for you and your staff if you need to consider redundancies or reducing people’s hours.

They can be contacted on a dedicated Employer Line 0800 778 008 or you can find useful information at workandincome.govt.nz/employers/redundancy-support

They can offer:

  • To meet with you to discuss your situation
  • Discuss ways to help retain your staff
  • Coordinate with other agencies, including Inland Revenue
  • Meet with your employees to talk about what support is available
  • Help your employees with finding another job, re-training, skills assessment, and financial support

Ending employment is difficult, especially during such times, as many people will be suffering from a huge range of pressures, including, anxiety, stress, mental health, financial pressure, and family issues.

It’s critically important that before you head down this road, you need to put yourself in your employee’s shoes. At all times, you need to show compassion and empathy and treat people with the utmost dignity.

If you find yourself in the position of having to end an employment relationship, regardless of the reason, it’s highly recommended that you seek professional advice to ensure that you follow the correct process. Getting it wrong can be an expensive exercise.

If you would like the recommendation for an experienced employment advisor, please contact NZ Trucking Association on 0800 338 338 or info@nztruckingassn.co.nz.  

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