Business Restructuring – Getting It Right First Time

Restructuring a business in New Zealand is never a quick fix. It’s a process that requires careful planning and execution, especially when it comes to compliance with employment laws. Failing to follow these rules could lead to costly personal grievance claims that can damage your business’s reputation and bottom line.

When you’re faced with tough decisions to save your business, it might feel like the legal requirements are overwhelming, but with the right advice and planning, you can achieve the outcomes you need in a timely and efficient way.

Here are six key aspects to focus on when restructuring your business:

1. Understand and Work with the Law

New Zealand’s employment laws are designed to protect employees from unfair dismissal. Under the Employment Relations Act 2000, any redundancy process must be genuine, fair, and procedurally correct. As an employer, you must:

• Have a legitimate business reason for the restructure.

• Follow a transparent and fair consultation process before making any decisions.

A significant number of employment cases arise due to mistakes in the redundancy process, and unfortunately, the outcomes tend to favour employees. It’s crucial to get it right from the outset.

2. Engage with Your Employees Early and Fully

To avoid grievances, involve your employees from the very start. This means:

• Clearly outlining the financial or operational reasons behind the restructure.

• Explaining any potential changes to roles or the disestablishment of positions.

• Asking for feedback and considering alternative ideas or suggestions before making any decisions.

Don’t just go through the motions here – do it once and do it properly.

3. Adopt a Fair Interview and Appointment Process

If your restructuring involves reducing roles, ensure that you apply objective, measurable selection criteria. Be mindful of discrimination or pre-determined decisions. It’s important to document the decision-making process, ensuring transparency and justification.

This step should be communicated clearly to your staff, and the process should be executed with care to avoid misunderstandings.

4. Consider Alternatives Where Possible

Before making final redundancy decisions, think about alternatives. These might include:

• Redeploying employees to other roles within the company.

• Offering reduced working hours or pay, with employee agreement.

• Proposing voluntary redundancies, with compensation where applicable, especially if it’s not already specified in an employee’s contract.

Offering alternatives not only provides options for affected employees but also shows your commitment to finding solutions before resorting to redundancy.

5. Provide Support and Consideration

Managing redundancies with empathy is crucial. It reduces stress and helps maintain goodwill, which is important for both you and your employees during a tough time.

Offering professional career support or providing references can help departing employees transition smoothly, showing that you care about their future, even after they leave your business.

6. Seek Professional Advice

Restructuring is a complex process, so it’s wise to engage with an experienced consultant or lawyer to review your plan before moving forward. They can help ensure you follow the correct process, mitigating the risks of grievances and ensuring fairness throughout.

Moving Forward

By following these key steps, you can restructure your business in a way that’s legally sound, professional, and fair, while maintaining a positive reputation with both current and former employees and your customers.

If you’re dealing with financial challenges and considering a restructure to stabilise your business, feel free to reach out to me at SAS Business. With my experience as a business owner and having worked alongside many businesses through similar challenges, I can help guide you to the outcomes you need.