The Restructuring and Redundancy Process: A Guide for NZ Employers
Across New Zealand, higher levels of business restructuring have become a reality as organisations adjust to shifting economic pressures. And while change is often necessary to ensure business sustainability, it is rarely easy for the people involved - especially for those whose roles and livelihoods may be affected.
There’s also a lot for employers to get right. New Zealand employment law requires a genuine business reason for workplace change, along with a fair process carried out in good faith.
If you’re considering a restructure, here are the key steps to work through before, during and after the process.
What to do before starting a restructure
Before you communicate anything to your team, there’s some important groundwork to do. This is where you get clear on the case for change, work through what the proposal could mean in practice and plan how you’ll manage the process from there.
Understand the business rationale
Being clear on why change is needed is the starting point for any restructure. There are many legitimate reasons a business may need to restructure, from financial pressures and changing customer or market needs to new technology, outsourcing, changes to products or services, or simply finding more efficient ways of working.
The key distinction is that the reason should relate to the needs of the business, not concerns about an individual employee. A restructure should never be used as a shortcut to manage performance issues or exit an employee. The focus should be on the roles, functions and structure the business needs moving forward.
Before making any big decision, ask:
What business problem or change are we responding to?
Is this genuinely about the needs of the business, rather than concerns about a particular employee?
Have we considered whether there are other ways to address the business or employee need?
If cost pressure is driving the need for change, PeopleEX’s HR Runway explores some of the options businesses can consider before moving to restructuring and redundancy.
Develop and plan the proposed change
Once you’re clear on the reason for change, you can start working through what the proposed structure could look like and how it may affect your existing roles and people.
Compare where the business is now with where you’re proposing it needs to be.
At this stage, you’re still developing a proposal, not deciding who may be made redundant.
Your proposal should clearly explain what’s changing, why the change is being proposed and which roles could be affected.
This is also the time to check relevant employment agreements and workplace policies, identify who needs to be consulted and prepare the information employees will need to understand and respond to the proposal. If affected employees are union members, their union may also need to be included in the consultation process.
Plan the consultation process
There are a few more details to map out before beginning consultation. Think through how the process will work in practice to avoid any mishaps.
Consider:
How and when you'll present the proposal
What information and documentation you'll provide
Who needs to be consulted
How employees can ask questions and provide feedback
How much time they'll have to consider the proposal and respond
Who will lead meetings and difficult conversations
How you'll consider and respond to the feedback you receive
What happens once consultation starts?
1. Present the proposed change
When you're ready to start consultation, the goal is to open up an honest dialogue. This usually starts by inviting affected employees to a dedicated meeting where you can walk them through what you’re proposing, why the change is being considered, and how it might impact their specific roles.
During the meeting, it’s really important to give employees enough information to properly understand and respond to the proposal. Most importantly, you should be clear that this is a proposal, not a final decision.
2. Give affected employees a genuine opportunity to provide feedback
Once the proposal is out there, you must give your team reasonable time to digest the information, ask questions, and pull their thoughts together. What counts as "reasonable time" will depend on the complexity of the change and the circumstances of the people affected.
Feedback might be provided in writing or discussed in a meeting, and employees should be able to raise concerns, ask questions and suggest alternatives to what you've proposed. You also should be clear about when feedback is due, how they can provide it and who they can speak to if they have questions.
3. Genuinely consider the feedback
The next step is reviewing and evaluating everything staff have shared. This should not be treated as a box-ticking exercise. Employers are required to maintain an open mind and allow employee input to genuinely shape the final outcome. That includes considering any alternatives employees have suggested.
The important point is that consultation can still influence the outcome. If feedback leads you to make meaningful changes to the proposal, you may need to give employees another opportunity to comment on the revised proposal. And if those changes mean different employees could now be affected, they also need to be consulted.
4. Decide and communicate the final structure
Once you’ve considered employee feedback and any alternatives they might have proposed, you can decide whether to proceed with the proposed new structure, modify it or take a different approach. That decision should be clearly communicated to affected employees, including what the final structure will look like and what happens next.
If you need advice on how to get this right, our guide to delivering a change message covers some of the common mistakes to avoid.
5. Manage any selection process fairly, if required
Confirming the new structure doesn’t always determine what happens to each individual employee. If there are fewer roles than employees who could fill them, or newly created roles that need to be filled, you may need a selection process to decide who will be appointed.
Be clear about how that decision will be made. Affected employees and their unions should have an opportunity to comment on the proposed process and criteria. If selection goes ahead, use clear, objectively measurable criteria and give employees reasonable time to prepare and participate.
Once the process is complete, let each employee know the outcome and give them an opportunity to respond.
6. Consider redeployment and alternatives to redundancy
Before an employee is made redundant, consider whether there are other ways they could remain employed.
That might mean moving into another available role, even if it looks quite different from the one they’re currently doing.
Other options can come out of consultation too, from changing hours or duties to different shifts or job-sharing. If that means changing someone’s employment terms, those changes need to be agreed with them.
Redundancy should be the last option, once other possibilities for keeping the employee in work have been explored.
If redundancy is the final outcome
If you’ve explored the alternatives and there’s no suitable way for an employee to remain with the business, redundancy may be the final outcome.
This is often one of the hardest parts of a restructure. Be clear and compassionate when communicating the decision, give people the space to ask questions and make sure they understand what happens next.
You’ll also need to work through the practical details, including notice periods, final pay and any redundancy entitlements set out in their employment agreement. And where possible, think about what support you can offer people as they prepare to leave the business.
Need support managing a restructure?
Even with a clear process, managing workplace change in practice is rarely straightforward. There are real people to support, tough conversations to navigate, and critical decisions to balance at every stage.
At PeopleEX, we work alongside business leaders and HR teams to bring clarity and calm during periods of significant workplace change.
Whether you need end-to-end guidance from the start or senior input at a specific phase, we're here to help you move forward with confidence.
