Critical to managing redundancies in any workplace, is to remember the process is about roles and not people. However, over the course of making roles redundant, the people impacted may raise redundancy complaints or have objections as to how the process has been handled. Any downsizing, or business re-structure, involving redundancies must be based on a genuine business reason and must follow a fair process.
Redundancy process
If after following a fair consultation process and based on a genuine business reason, it is still necessary to disestablish a role and there are not opportunities for redeployment, there are still some steps an employer must take.
The employer must either allow the employee to work out the remainder of their notice period, or if permitted in terms of their employment agreement, place the employee on garden leave or pay them in lieu of notice.
Following this, final wages and holiday pay, as well as any redundancy compensation (if applicable as per the employee’s employment agreement), should be paid to the employee.
After the final payment has been made, the only action required by employers is what has been committed to in agreements or contracts. Examples can include any transition programmes, or assistance in searching for a job. These are not required unless agreed between the employee and employer, either in the employment agreement or as part of the redundancy process.
For information on the redundancy process, read the process and the role of employers here.
What happens when a redundancy goes wrong?
Employers following a fair process, with open communication at all times, should have no concerns as to how lawful and compliant their process has been. However, if an employee should feel they have been treated poorly, there are a number of ways they can raise a complaint around the redundancy process.
Who hears redundancy complaints?
If an employee who has been made redundant feels they have been disadvantaged or that their termination was unfair, they may raise a personal grievance which may end up in the Employment Relations Authority. If a party is dissatisfied with the determination of the Authority, they can challenge the Authority’s decision in the Employment Court.
The Employment Relations Authority
With an employment dispute, an employee and employer must first try to resolve the matter between themselves. If this is unsuccessful, the dispute may proceed to mediation.
Mediation is a free, but voluntary, service offered by the Ministry of Business, Innovation & Employment which allows employment disputes to be heard and negotiated in a neutral environment, with the assistance of a Mediator who is trained in aiding parties to resolve issues such as this.
If the employee and employer still cannot come to an agreement regarding the matter, the parties have the option of proceeding to the Employment Relations Authority (ERA) where an ERA member will review the matter and make a determination based on evidence provided by both parties. If either the employee or employer disagrees with the ERA member’s decision, they may challenge this through the Employment Court.
Redundancy and the Employment Court
For a redundancy dispute to escalate to the Employment Court the party making the challenge, must do so within 28 days of the Authority’s determination. The costs associated with the Employment Court are much higher than other avenues, and the time it can take to resolve a court case will often be lengthy.. Nonetheless, employers may find themselves having to defend a redundancy process, which is where documenting the process from the beginning and acting in good faith will be hugely advantageous.
Redundancy processes are hugely complex and can be challenging for employers, but the process becomes even more damaging if the employee makes redundancy complaints at any stage along the way. For advice, employers should contact Peninsula.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.
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