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Redundancy Q&A

We are in a time of economic flux. Some organisations are struggling to find staff.  Others are considering redundancies as disposable incomes are squeezed tightly, reducing demand for non-essential goods and services.

For businesses facing the possibility of redundancies, it is a heartbreaking but necessary step to ensure the long term viability of your organistion. In this Q & A we cover some of the essentials necessary to follow a sound redundancy process.

If you have any specific questions please give us a call.


In short, no. There is a process that must be followed before reaching a decision to terminate someone’s employment due to redundancy. In the briefest of summaries you must consult with your employee before making any final decisions. They need to be provided with the reasons for the proposal, all the information you are using to reach your decisions, a timeline to consider the information, and be allowed to seek independent advice before responding. You must consider any feedback and look at alternatives to redundancy before dismissing the employee.

A position is disestablished and a person is redundant. You might disestablish a position and the person who held that position could be redeployed to a new role, and therefore no redundancy occurs.

All the information you are using to reach your decision. This includes financial information such as profit and loss accounts, projected sales figures and the like. Some businesses struggle with having to release this kind of commercially sensitive and private information, however, unless covered by a confidentiality agreement with a third party (for example a supply contract or the salary of an individual), the information needs to be included.

Legislation does not specify how much time. We recommend a minimum of a week and being prepared to extend the period if requested to two weeks. There needs to be sufficient time for the employee to consider the information and seek advice if they wish to.

Yes you can change the restructuring proposal. It is good evidence that you did not pre-determine the outcome and are actively considering feedback. However, you will need to re-consult on the revised proposal and this will delay the process.

This will be specified in the Employment Agreement.

Once you have been through the consultation process and reached your decision, you need to tell the employee of the outcome. Subject to having a clause in the Employment Agreement which enables you to pay in lieu of notice, you can get them to leave straight away. We recommend you phrase this as an opportunity for the employee to spend their time looking for new employment. You may also consider inviting them back for a farewell lunch or morning tea.

No, not without significant risk. Do remember that if the employee raises a person grievance the primary remedy is re-instatement. So if you lose the personal grievance you could end up re-employing them and paying them compensation.

Let us know any other questions you have that we might include in future Q&A articles by emailing them to [email protected]

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