The difference and your rights as a company
There is a process that must be followed before someone can be let go under an employment contract.
With the economic effects of a global pandemic, many companies have been forced to let staff go, or at the very least, employees have needed to accept a reduction in pay and/or their hours. If you are considering implementing redundancy or terminating an employee’s contract, you need to ensure the pathway protects your business. The common thread of both actions is a well-documented process.
Terminating a contract
Getting fired is typically a disciplinary process which could be due to ongoing incompetence, misconduct, or making a mistake typically causing sufficient concern that an employee is no longer suitable for the role. However, it can be quite a difficult process to fire an employee as it is governed by an employment contract. Firing an employee typically involves undertaking an investigation, and ensuring that the employee is advised of the potential outcomes – which could include a written warning or a more serious action, such as termination of their employment.
Business redundancies
Redundancy (also known as restructuring) is the process of evaluating your company and determining what jobs/titles are unnecessary. When following a redundancy process you need to be sure that you have a business argument for this action. You might be experiencing:
- A financial downturn
- The company has losses you can no longer afford to carry
- The company needs to change form with different positions to cope with change, such as growth
- A project manager is no longer required for the specific tasks that they were originally hired for
- Needs have changed and one person can now handle the work that previously three people did.
Whatever the case, you need to ask yourself two key questions:
- Is there a genuine need for this?
- What is our process for this?
Essentially, you need to have legitimate and justifiable actions that will withstand objective scrutiny.
If you are uncertain about the best approach when you want or need to reduce staff numbers, first speak to the employment experts at Carlile Dowling about checking and/or formalising your process. Having a properly planned redundancy/restructuring process is incredibly important. As long as it is transparent and honest, you can withstand most criticism.
You need the right process to structure staff
When entering into a redundancy/restructuring process, you need to provide sufficient information to the potentially affected employees. Make it clear to them that there is no predetermined outcome, unless there is, in which case you need to be upfront about it from the outset.
Once you follow your process and you’ve determined what jobs/titles are no longer required, you need to consult with affected people and provide clarity and certainty around timeframes. Tell affected employees when you expect to have a response back to them at each stage so that they always know where they stand.
People, costs and Covid-19
Having the right redundancy process is more important than ever thanks to the giant catalyst, Covid-19, which is having devastating effects on businesses. Most businesses sent their invoices out in March, therefore, April isn’t showing the full force of things to come. That’s why staffing and budget issues caused by this pandemic are not just happening to businesses now. Over the next 3-4 months we’ll see more redundancies in businesses and more going to the wall.
If you are taking the redundancy route because of Covid-19, say it. If not, don’t use this as an excuse. You must face your business’ truth. If you’re in financial trouble and need to make financial cuts, start the process immediately.
Redundancy can be an incredibly difficult area to navigate, especially under the circumstances of a global pandemic. To cut out the uncertainty and anxiety that comes with cutting staff, it’s best to cover your bases and discuss your options with an expert employment lawyer. For help from employment law specialists you can trust, contact Carlile Dowling at 06 835 7394 or mailbox@cardow.co.nz
No Comments