A redundant process?

When people get made redundant, they often doubt the genuineness of the dismissal, saying that the redundancy was just a sham to get rid of them. The truth is, that’s usually not the case. And yet, so many Applicants win their claims for unjustifiable dismissal in the Employment Relations Authority because their employer did not follow a fair process.

A fair process entails a genuine consultation process. That’s more than just convening a 20 minute meeting, telling someone they are going to be made redundant and asking them what they think about it.

Yet another case has been reported of an employer, this time in Christchurch, losing the claim against them because of an inadequate consultation process even though the redundancy was genuine. (Dowds –v- Martin Hydraulics Limited - CA 236/10 5289465). Mr Dowds was awarded one month’s salary, together with $8,000 for hurt and humiliation. That’s quite a tidy sum, and one that could have been avoided with just a little more preparation and patience.

Here’s what should be done to make a redundancy consultation fair:


1 Consult with the employee about the business decision to reduce costs and make redundancies, not just about who should be made redundant. Consider alternatives to redundancy. This is a mandatory requirement under s 4 (1A)(c) of the Employment Relations Act 2000.

2 Follow any redundancy process set out in the Employment Agreement or other company documentation.

3 Give sufficiently precise information to allow the employee a reasonable opportunity to respond.

4 Give a reasonable time for the employee in which to respond

5 Keep an open mind and listen to suggestions made by the employee, consider them properly, and then (and only then) decide what is to be done.

6 If the employer is using performance as a selection criterion, put the concerns about performance to the employee and give him or her have an opportunity to answer them.

7 If the employee raises something that you cannot answer, adjourn and investigate, so you can give a complete answer.

8 Consider whether there is suitable alternative employment available for the employee and offer it if so.

9 When you make your final decision have another meeting to discus it; don’t just hand the employee a letter. Do address each and every point the employee made. Confirm this all in writing.

10 Offer the employee support in finding a new job.

All this may seem like a long drawn out process. It may be, but the alternative is to pay through the nose. Time is money, sure, but so is an unfavourable determination in the ERA!