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The Human Resources Institute of New Zealand

Human Resources Institute of New Zealand (HRINZ) is the professional body for those involved in Human Resource Management and the development of people.

HRINZ represents the interests of 3,000+ individual members who make up around 45% of the known New Zealand HR market. Read More

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Date of Submission: APRIL 2008

1. Introduction

This submission to the Public Advisory Group to the Minister of Labour on Restructuring and Redundancy issues is made on behalf of members of the Human Resources Institute of New Zealand (HRINZ). HRINZ is the professional organisation for people who are interested or involved in the management and development of human resources in the workplace. HRINZ represents the interests of individual members only. No Corporate memberships are available. Over 3500 members belong to HRINZ which represents approximately 48% of all human resource practitioners (according to the data obtained from the New Zealand Census of 2007). They work in small/medium and large sectors of the voluntary, public and private sectors of New Zealand enterprise with a small percentage working in academia.

HRINZ provides its members with education and information services, conferences and seminars, publications, representation at government and official levels, and networking opportunities. HRINZ helps members to develop their professional skills and knowledge as human resources practitioners and key decision-makers in their organisations.

HRINZ may be distinguished from other groups in that it represents professional human resource management in contrast to other groups who may be more focussed on economic interests.

In the terms of reference provided by the Department of Labour, the main focus of submissions was to provide recommendations on the following points:

a. statutorily prescribed consultation requirements

b. the amount of notice employers must provide employees in the event of a redundancy

c. consultation requirements to avoid mass redundancies, and

d. a statutory requirement for redundancy compensation or other entitlements;

Additionally interested groups were to provide feedback on the current laws/state of the provisions regarding redundancies in New Zealand from an HR perspective – as to whether the current redundancy laws are adequate, and if not how they should be improved.

As with all such advisory issues HRINZ invited its membership to participate in this submission and received a good level of response. The general responses are as follow

a. statutorily prescribed consultation requirements

On the issue of the statutorily prescribed consultation requirements, the consensus is that the current laws are working well and whilst we support the concept of prescribed consultation the situations of different enterprises are so markedly different that it would be very difficult to prescribe a “one size fits all”. Differences between the size of enterprise, the commercial environment in which they operate, the social environment in which they operate, economic circumstances at the time of restructuring or redundancy mean that while consultation should be mandatory, the form it takes must be that which is appropriate, at the time and to the circumstances.

Any changes to impose a mandatory consultation period would create more difficulties for businesses in general. Our members felt that trying to define a fixed period of prescribed consultation could disadvantage both parties depending on the circumstances.

It was considered that further legislation would not afford enough flexibility to reflect each case or each employer or group of employees, For example a restructuring of a successful industry of highly skilled employees is going to have far less impact than one in which the enterprise is involved in an over-supplied sector employing workers of low skill levels whose future employability is precarious.

Furthermore a prescribed period of consultation over too long a period may cause further stress and uncertainties for the employees affected and potentially cause further difficulties on SME’s. It should be remembered too that restructuring and redundancy have as big an impact (if not bigger in some situations) on those employees who remain, as on those who depart.

SME’s particularly stressed to us that they already struggle with the current consultation requirements and any further legislative requirements would make the process even harder for them in the current market place.

We urge the Advisory Group to consider the human resource implications for these employees and the consequent impact any restructuring consultation has on their morale and productivity.

RECOMMENDATION:  That good-faith consultation is a requirement in all redundancy and restructuring situations, but that its length and form be determined within the enterprise affected.

b. the amount of notice employers must provide employees in theevent of a redundancy

On the issue of the amount of notice employers must provide in the event of a redundancy, the consensus of opinion by our members was that this area was generally contained in most employees’ employment agreements as was already mandated.

Whilst employees should be protected by adequate notice periods the validity of suggesting mandatory compensation is questionable given the low rates of unemployment and increased employee mobility of the current environment.

Any further legislation could well unnecessarily complicate these arrangements by creating yet another round of negotiations and changes that could add further costs, both of time and money, to both employer and employees who might well ill-afford them.

An alternative to creating yet more law on this issue could well be a generic Code of Good Practice on Restructuring and Redundancy. Such a Code has worked well in defining good-faith wage negotiations and a similar Code could provide clear information and guidance on the process. We believe all parties should be informed and consulted on the “whys” “whats” and “possible alternatives” to determine the appropriate models to be used in the circumstances. Issues of fairness and equity can be challenged through the employment courts.

RECOMMENDATION: That a bi-partisan Code of Good Practice in relation to Restructuring and Redundancy be developed. HRINZ would willingly be involved in the development of such a Code.

c. consultation requirements to avoid mass redundancies, and

On the issue of the consultation requirements to avoid mass redundancies, the consensus of opinion by our members was that the current laws were working well; employers do not take the decision to make any of their employees redundant lightly. There are costs in employee morale, productivity, market-place perceptions and community regard. Most would look to creating other alternatives for the redundant, such as redeployment, retraining and relocation to avoid such costs before they chose mass restructure or redundancy.

However, if any changes to the legislation were to be made regarding this issue, a plain-English definition of what constitutes mass redundancy would have to be clearly specified. An engineering enterprise shutting down causing redundancies for all five of its employees is a very different proposition from the decision of a Fisher and Paykell to relocate offshore. Furthermore the period of consultation may very well not have any impact on the outcome. The Air New Zealand decision on its engineering operation may have been delayed but, even after protracted consultation their arguments were still compelling.

RECOMMENDATION: Consultation over workplace changes is already required and operational. No further legislation is required.

d. statutory requirement for redundancy compensation or other entitlements;

Our membership supports the need for redundancy compensation to be offered to employees in the event of a redundancy; the consensus of opinion was that this area too was covered in most employees’ employment agreements through mutual consent between the employer and employee.

Any changes to impose mandatory redundancy compensation entitlement would cause business more harm than good, moving against a mobile economy where businesses are free to agree terms appropriate to their business, business size and industry. Trying to impose a statute with a one size to fit all approach could lead to results which don't reflect the industry or business reality. Should the horticultural industry be required to pay redundancy to seasonal workers? Holiday pay is mandated as is payment for public holidays which fall within a three week period of casual employment and that is fair and reasonable. The imposition of redundancy payments on top of these entitlements would be unreasonable.

To impose a statutory requirement for a redundancy compensation entitlement would have to take into account an employer’s ability to pay at the time– especially in those situations where the reasons for redundancy relate to survival and the retention of other jobs, especially in small businesses. Any proposed legislation that attempted to put in place tests would be extremely challenging to administer and could compromise existing principles that employers already support. Any other compensation should be negotiated as part of wage agreements.

RECOMMENDATION: That no further legislation be imposed in this area.


HRINZ members believe that the current laws are sufficient in terms of redundancy; as employers are required to consult with staff under their obligation to negotiate all workplace changes in good faith. To put further legislative requirements around this area would be another compliance issue, which could influence both the decision to hire and the growth of the economy.

Most employers have clauses currently in their collective and individual agreements that relate to employers’ obligations in terms of surplus staffing. To add more requirements would make what can be a very difficult process for all staff and management even more difficult.

It is important to remember that the majority of businesses in NZ are small to medium enterprises and they are the backbone of the economy but their compliance obligations are already very high.

For them, all terminations are already a real minefield through which they must negotiate very carefully. To put extra compliance in terms of redundancy is an additional consideration which we believe is not in the interests of either the economy or the Government. HRINZ requests the right to be heard regarding this submission.

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