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employment

Redeployment: An employer's obligation during restructuring

Key Takeaway

During restructuring, New Zealand employers must act in good faith by genuinely considering redeploying employees whose roles are at risk of redundancy. This involves active consultation, providing relevant information, and exploring suitable alternative positions. Failure to follow a fair process and consider alternatives can lead to an unjustified dismissal claim under the Employment Relations Act 2000.

Redeployment During Restructuring in New Zealand Employment Law

When a New Zealand employer undergoes a restructuring process, they have specific obligations, particularly regarding the consideration of redeployment for employees whose positions may be disestablished. These obligations are rooted in the duty of good faith and the requirement for a fair and reasonable process under the Employment Relations Act 2000.

What is Restructuring and Redeployment?

Restructuring refers to significant changes within an organisation that may affect its structure, operations, or the roles within it, potentially leading to roles being disestablished (removed) and new roles being created. Redundancy is a form of dismissal that occurs when an employee's role is disestablished due to legitimate business reasons, rather than performance or conduct issues.

Redeployment is the process where an employer seeks to place an employee whose role is at risk of redundancy into an alternative, suitable role within the same organisation, thereby avoiding redundancy.

The Duty of Good Faith in Restructuring

Central to any employment relationship and particularly during restructuring is the duty of good faith. Both employers and employees must deal with each other in good faith [Source: Employment Relations Act 2000, s 4(1)]. This duty is broad and requires parties to be active, constructive, and responsive [Source: Employment Relations Act 2000, s 4(1A)].

In the context of restructuring, the duty of good faith means an employer must:

  • Provide information: The employer must provide the employee with access to all relevant information known to the employer, including information about the reasons for the proposed changes and potential alternatives [Source: Employment Relations Act 2000, s 4(1A)(c)].
  • Consider and respond to representations: The employer must give the employee a reasonable opportunity to make representations (provide their views or proposals) about the proposed changes and genuinely consider those representations before making a final decision [Source: Employment Relations Act 2000, s 4(1A)(c)].

Employer's Obligation to Consider Redeployment

While there is no specific section of the Employment Relations Act 2000 that explicitly mandates redeployment, the obligation to genuinely consider redeployment arises from the duty of good faith and the legal requirement for any dismissal (including redundancy) to be justified [Source: Employment Relations Act 2000, s 103A].

For a dismissal to be justified, an employer must demonstrate that their actions, and how they acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred [Source: Employment Relations Act 2000, s 103A(2)]. This includes following a fair process and genuinely considering alternatives to redundancy.

Key aspects of considering redeployment as part of a fair process include:

  • Exploring alternatives to redundancy: The employer must actively investigate whether suitable alternative roles exist within the organisation. This is not merely a formality but requires genuine effort [Source: Employment Relations Act 2000, s 4 (duty of good faith) and s 103A (justification test)].
  • Matching skills and experience: The employer should consider the employee's skills, qualifications, and experience against available roles. The alternative role does not necessarily have to be identical to the previous role but should be suitable [Source: Derived from the general duty of good faith under Employment Relations Act 2000, s 4, and the justification test under s 103A].
  • Considering newly created or vacant roles: If new roles are being created as part of the restructuring, or if existing roles are vacant, the employer should consider whether the at-risk employee could be redeployed into one of these [Source: Derived from the general duty of good faith under Employment Relations Act 2000, s 4, and the justification test under s 103A].
  • Consultation about redeployment options: Employees must be consulted about any potential redeployment options, including the terms and conditions of proposed new roles, and given time to consider them [Source: Employment Relations Act 2000, s 4(1A)(c)].

Employee's Rights During Redeployment

Employees have rights during the redeployment process, including:

  • Right to information: Access to relevant information about the proposed alternative roles, including job descriptions and terms of employment [Source: Employment Relations Act 2000, s 4(1A)(c)].
  • Right to make representations: The opportunity to provide feedback on proposed redeployment options, express interest, or raise concerns [Source: Employment Relations Act 2000, s 4(1A)(c)].
  • Right to decline unsuitable roles: An employee is generally not obliged to accept a redeployment role that is substantially different, significantly less senior, or involves unreasonable changes to their terms of employment. Declining an unsuitable role, where the employer has genuinely considered redeployment and the role is offered in good faith, may still lead to redundancy, but it won't necessarily be considered an unreasonable refusal if the role is indeed unsuitable [Source: Derived from the general duty of good faith under Employment Relations Act 2000, s 4, and the justification test under s 103A].

Consequences of Failing to Adequately Consider Redeployment

If an employer fails to genuinely consider redeployment as part of a fair and reasonable restructuring process, an affected employee may have grounds for a personal grievance claim. A personal grievance is a complaint an employee can raise against their employer for certain actions, including unjustified dismissal or unjustified disadvantage [Source: Employment Relations Act 2000, s 103].

An employee could claim that their redundancy was an unjustified dismissal if the employer failed to meet their good faith obligations or failed to follow a fair process, which includes a genuine consideration of redeployment opportunities. If a personal grievance is successful, remedies can include reimbursement for lost wages, compensation for humiliation, loss of dignity, and injury to feelings, or even reinstatement to their former position [Source: Employment Relations Act 2000, s 123].

When to Seek Independent Legal Advice

Individuals facing restructuring or redeployment, or employers planning such changes, should seek independent legal advice. Information can be obtained from official government bodies such as Employment New Zealand, or individuals can contact Community Law Centres for free legal assistance related to employment matters. These organisations can provide information on specific rights and obligations relevant to an individual's unique situation.

Key Resources