Restructuring or "Sham"
- maryline627
- 5 days ago
- 3 min read
Redundancy? How to Spot Predetermined Outcomes in NZ Workplaces
Receiving a "Proposal for Workplace Change" letter is one of the most stressful moments in any working life. Terms like disestablishment, genuine commercial rationale, and consultation period start getting thrown around.
If you’ve just been handed a restructuring proposal, or if you’re an employer wanting to ensure you get the process right, take a breath. Under New Zealand employment law, a restructure is never a done deal at the start, no matter how official the paperwork looks.
The Golden Rule: Restructuring Is About Roles, Not Performance
Under the Employment Relations Act 2000, employers have a legitimate right to restructure to adapt to commercial realities, economic downturns, or operational shifts. However, a restructure cannot be used as a shortcut to bypass proper performance management or dismiss an employee.
If an employer disestablishes a role simply because they want to exit a specific worker, that isn't a restructure, t's a sham redundancy that opens the door to a Personal Grievance (PG) for unjustified dismissal.
Real NZ Case Study: Callen v Alaron Products Limited
A clear illustration of this principle played out in the Employment Relations Authority (ERA) case Peter Callen v Alaron Products Limited [[2025] NZERA 165].
In this case, represented by me Maryline Suchley, the employee raised concerns about workplace bullying by his immediate manager and pointed out serious safety issues. Rather than thoroughly investigating the complaints, the employer attempted to restructure the role.
The Authority ultimately held that:
The selection of Mr. Callen for redundancy was compromised by an ulterior motive.
The employer failed to properly or thoroughly investigate the workplace bullying complaints raised by the employee.
The dismissal was unjustified, and the Authority ordered $20,000 in compensation alongside $14,820 in lost wages.
Key Precedent: Employers cannot strategically use a "workplace restructuring" exercise as a shield to sweep unresolved internal grievances or bullying complaints under the rug.
What a Lawful NZ Restructuring Process MUST Look Like
Both parties are bound by the statutory duty of good faith. In practice, this means the outcome cannot be predetermined.
1.1. The Written Proposal & Commercial Rationale:Step 1: Disclosure.
The employer must provide a written proposal detailing the genuine business reason for the change (e.g., financial losses, technical automation, or shifting market demands). Employees must receive all relevant background information so they can meaningfully digest it.
2.2. Genuine Consultation & Feedback Window:Step 2: Good Faith Dialogue.
Consultation is a two way statutory requirement. Employees must be given reasonable time (typically 1–2 weeks depending on scope) to review the proposal, seek legal or advocacy advice, and submit alternative suggestions.
3.3. Genuine Consideration of Feedback:Step 3: Open-Minded Review.
The employer is legally obligated to keep an open mind and genuinely evaluate any employee feedback, counter-proposals, or cost-saving alternatives before making a final decision.
4.4. Final Decision & Duty to Redeploy:Step 4: Outcome & Action.
Only after feedback has been considered can a final decision be issued. If a role is disestablished, the employer must actively explore all reasonable redeployment options across the business before declaring a redundancy.
3 Red Flags That Signal a "Predetermined" Outcome
If you spot any of these warning signs during a workplace change process, the employer may be on dangerous legal ground:
Rushing the Timeline: Giving an employee less than 48 hours to review complex financial documentation or respond to a multi page proposal.
Advertising Replacement Roles Early: Listing a "new" role online during the consultation phase that is functionally identical to the role being disestablished.
Ignoring Prior Grievances: Initiating a sudden restructure right after an employee raises complaints about bullying, safety, or management issues.
Facing a Restructure or Unsure About Your Rights?
Whether you're an employee navigating a stressful consultation period or an employer looking to run a fair, legally compliant change process, getting independent advice early makes all the difference.
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