There was a time when restructuring and redundancies weren’t a regular concern for employers and employees, but in our quick-changing, competitive global economy, they have become commonplace.

That’s because reorganising or rearranging a company’s structure to make it more efficient, more profitable, or better organised often needs to happen, whether that’s because of financial pressures or the business wants to expand and capitalise on new opportunities.

There are various forms of restructuring within a business, such as debt restructuring or asset restructuring, but we’re focusing on the restructure of roles or teams. This is known as organisational restructuring.

In New Zealand, the process of restructuring isn’t prescribed to the letter in employment legislation; instead, best practice has been established by case law (rulings by judges).

This means there is some flexibility in terms of the scale and detail of each restructure, but there are some crucial steps and principles that can’t be legally ignored.

Failing to get the restructuring or redundancy processes right could lead to complications, delays, and, at worst, personal grievance claims and financial penalties.

It’s much easier to avoid problems and make the necessary changes smoothly if you fully understand the process, and everyone’s part in it, before you embark on it.

In this white paper, we take a broad look at restructuring and redundancies, how to make sure you handle them correctly, how to avoid common errors, and highlight some real examples.

Restructuring vs. Redundancy

The terms restructure and redundancy often get confused for the same thing, but there is a definite difference.

Restructuring is a process that aims to get the right roles set up in the right way so the business runs more efficiently, or delivers its products or services more effectively.

Restructures-stat-1

In the course of a restructure, roles or positions can be identified as surplus to the company’s ongoing commercial needs. These roles become redundant, or are disestablished.