LawWorks News

Recession Bites for Employers and Employees - December 2008

Many businesses have been faced with hard decisions about cutting employee numbers recently. 


You can make employees redundant if you have genuine business reasons for it.  But it is easy to make mistakes in a restructuring and important to get advice before you act.  You must follow a fair consultation process before you make any decisions.  Check and follow any processes for redundancies in your employment agreements or policies.  There are also overriding legal requirements, such as to consult by giving potentially affected employees details of what you are planning and the chance to comment. 


An employee should have the chance to go to at least one formal meeting on notice with representation to talk about what is planned before a decision is made.  Listen to any suggestions, consider them and then let the employee know if and why you think they won’t work.  If a proposal involves a head count reduction rather than removing a particular role that is not needed, it is important that you consult widely and let employees know how you are planning to decide who is redundant.  If you just meet with the employee you intend to go, you risk missing information that could change your plans, such as that someone else is planning to go already.  Your selection criteria need to be objective and fair.


You must also consider whether an affected employee can be moved to another similar role or considered for a different role.  If you decide to terminate employment, you must always give the employee notice from when you make the decision, but you only have to pay compensation if it is in the employment agreement.


For advice on restructuring, talk to Michelle Dean, Associate 09 303 9913 or Anna Fitzgibbon, Consultant 09 303 9918 in the LawWorks employment team.
Michelle Dean
December 2008

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