Restructuring Without Risk: How to Keep Good Faith Front and Centre
With unemployment on the rise and economic uncertainty continuing, recent cases are reminding employers of the importance of maintaining good faith and fair processes when making positions redundant or disestablishing roles. This is particularly important during business sales or mergers, where commercial sensitivity must be balanced with employees’ rights.
Even in these situations, employees are entitled to be kept informed about developments in a confidential manner that protects commercial interests. Non-disclosure agreements can be used to maintain confidentiality while meeting legal obligations. Failing to follow proper procedures can expose an employer to claims of unjustified dismissal or breaches of good faith obligations.
Key considerations for employers
When carrying out a restructure, businesses should follow a clear, fair process:
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Have genuine commercial reasons for the restructure, backed with supporting details such as figures, dates, and sales trends.
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Keep employees informed of anything that may affect the continuation of their employment, while protecting commercially sensitive information.
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Consider redeployment before declaring a position redundant. Explore whether alternative roles are available within the business.
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Engage employees in the process: formally acknowledge feedback on the proposed changes and provide full responses before making decisions.
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Advise on rights: employees should know they can seek independent legal advice and bring a support person to meetings.
Following these steps not only reduces legal risk but also supports employee trust and morale during uncertain times.
Support and resources
Business Canterbury members have access to tools and expert advice to navigate restructuring and redundancy with confidence:
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Our Restructuring and Redundancy Toolkit is available for a special member price of $400 if purchased by the end of November. (Offer applied at check-out)
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For tailored guidance or further queries, contact our team at: hradvice@cecc.org.nz
💡Tip: Even where commercial sensitivity is high, a transparent and fair approach can prevent disputes and demonstrate good faith to employees, a critical factor in retaining trust and protecting your business.
