Restructuring and Redundancy Situations on the Farm

The decision to restructure a business is never easy, and it’s important to get the law right.
Restructuring and Redundancy Situations on the Farm

Mike owns a dairy farm and in recent years has employed Dan as farm manager and Jack as a farmworker. However, Mike has been impacted by the recent drought and has sold his run-off block and some of the herd, and now no longer needs both Dan and Jack on the farm. With the financial impact of the drought Mike wants to manage the farm himself again and employ only one worker who will be the farmworker but from time to time may be required to carry out a few extra tasks that a farm manager would normally do. Mike recently gave me a call for advice on how to go about restructuring his current labour units in order to avoid a personal grievance claim being raised by either Dan or Jack.

The decision to restructure a business is never easy, and it’s important to get the law right. Here are our top five tips for dealing with a redundancy or restructuring situation like this one:

Do your homework

If you are thinking about restructuring your business or saving costs, you need to do your homework.  Even if the decision is motivated by financial considerations, the Courts have recently held that there is an increased onus on an employer to justify the restructure. The relevant legislations sets out that employees have a right to request information as to the reasons for the decision to restructure. Therefore, if it was a financial reason it is important to make sure that you are willing to provide and rely on such information if the employee raised a personal grievance. In this case, Dan and Jack are entitled to request copies of all relevant information relating to Mike’s restructuring process. 

Consider all options

Often employers start the restructuring process with a clear outcome in mind. Rather than thinking about the staff that are affected, think about the particular roles. In particular consider which roles may be surplus to requirements. It is often a good idea to consider other options such as reducing individual’s respective hours instead of restructuring a position. In this case, Mike is disestablishing both the farm manager position and the farm worker position and creating a new one, being the combined manager/worker position. 

Consult

This is probably the most important step in the process. Employers have a legal obligation to consult with staff throughout the process. Sometimes, employees can come up with creative solutions that hadn’t previously been considered by the employer.  This means Mike must give Dan and Jack information about the proposal and the reasons for it, and meet with them to get their feedback before he makes any final decision. During this process it is important to give the employees enough time to seek advice, and fully consider their options and feedback. 

Consider redeployment.

The law requires an employer to consider whether any new positions being created are suitable for existing employees. This needs to be explicitly considered and discussed with their employees. Even if Mike doesn’t consider that either Dan or Jack are suitable for the new position being created, he has an obligation to tell them this, and explain the reasons for his view.  

Get advice

Restructuring and redundancy situations can be a minefield. Every situation is different and it is important to get good advice from the outset. Good advice can help develop and create a robust process to avoid a number of potential pitfalls. To discuss redundancy or restructuring processes in more detail, contact georgia@gallie.co.nz.


By
Georgia Watts
Solicitor

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