K3 Insights

Employers should not use the coronavirus pandemic as an excuse to "get rid of dead wood", says Edwin Morrison, Director at K3 Legal.

Businesses wanting to make redundancies need to follow the correct process, meaning they - the employer - can't just turn up tomorrow and say you are redundant.

A position can only be made a redundant based on genuine economic reasons. It can't be for past performance of the employee.

There has to be a consultation process where the staff member is told their position could be made redundant and then given a chance to provide feedback on it. Employees can counter the proposal with their own feedback and can make suggestions such as taking a pay cut, leave without pay or changing the role to include other work.

In situations where multiple positions may be made redundant and a new position created, that new position or positions needs to be at least 30 per cent different.

There is no set timeframe for the consultation process and it could be very short in some circumstances where it’s clear that the businesses revenue has disappeared overnight.

However, employers should not take short-cuts or to be guided by previous redundancies. The employer needs to tread more carefully because of the potential downside to get it wrong and in the current environment, there is an implied duty of care.

With the Government's $12 billion package and its work with banks to ensure they support businesses, there is more pressure on businesses to keep going and support staff. In ordinary times an employee could expect to get a job elsewhere but that could be much more difficult at the moment.

If employers are reckless then we would expect to see a surge in claims being taken to the Employment Relations Authority, who would not take kindly to any employers who use this as an opportunity to make people redundant. Any employer found to be doing so could find you are liable for wages.

Furthermore, any redundancy not done properly would potentially attract higher damages than in normal times, simply because there are no replacement jobs.

Any businesses worried about having to make staff redundant should be talking to employees now. Many employers will also be worried about talking to their staff and stressing them out but staff will already be mindful of the issues. Staff might prefer the certainty and it will give them time to come up with ideas.

For those employees worried about losing their job they should also front foot the situation. They should ask your employer if they are thinking about it and whether they should be concerned.

Worried workers should also try to get their house in order and have savings in place.

Originally published in the NZ Herald.