Redundancy Q & A

Unfortunately, there are many, many SME owners at this point. Ardern has never spoken truer words that reflect the thoughts of many. It has been an incredibly hard few years. While ultimately the decision is yours as to whether to close your business, before doing so you are obliged to consult with your employees. Consultation does not mean agreement. However, it does require you to provide your employees with all the information (reasons) you have which is influencing your proposed decision so they can give their feedback before you make the final decision.

Any information you are relying on to make a decision that may adversely affect your employees, you are obliged to provide to them as part of the consultation. This enables them to give relevant feedback based on all of the information.

There is no legislative obligation to pay redundancy compensation, however an Employment Agreement may provide for it. If the Employment Agreement is silent on the matter the Employment Relations Authority can impose compensation. To prevent this possibility it is important to have a clause in the Employment Agreement which specifically states redundancy compensation is not payable.

Possibly. Legislation does not specify the selection criteria an employer must use when selecting who is to be made redundant. An Employment Agreement however may specify this, so make sure to check this first. An employee cannot be made redundant because they are a non performer – the reason for the redundancy has to be based on the fact the position is not required. It may be that the criteria used to select which employee, who holds a position which is to be disestablished, is based on performance. However, if you don’t have objective evidence of the poor performance along with a record of previously addressing it with the employee, it would be risky to select on this basis. It is also important to remember that before applying a selection criteria, employees need to be consulted about the proposed criteria and be provided with the opportunity to comment on how it has been applied.

Yes. Subject to the retraining requirements being reasonable, an employer is obliged to offer any redeployment opportunities before making an employee redundant. An employee is not obliged to accept a redeployment offer.