Redundancy (Including Sham Redundancy)

What It Is

Redundancy occurs when your role is genuinely no longer required due to restructuring, financial pressure, or technological change.
However, a sham redundancy arises when the employer claims redundancy as a pretext for dismissal — for example, where your duties are merely reassigned or the role is re-advertised soon after you leave.

To be lawful, redundancy must be:

1. Genuine (real business reason, not personal).
2. Consulted (you’re informed and can respond).
3. Fairly processed (objective criteria and alternatives considered).

Failure on any of these may make the redundancy an unjustified dismissal under ERA 2000 s 103(1)(a).

Your Rights and the Law

• ERA 2000, s 103(1)(a) – Employees can raise a personal grievance if dismissed unjustifiably (including by redundancy).
• ERA 2000, s 103A – Sets the justification test: whether a fair and reasonable employer could have acted the same way.
• ERA 2000, s 4 – Requires good faith and genuine consultation before decisions affecting employment.
• The Employment Court in Vice-Chancellor of Massey University v Wrigley & Kelly [2011] NZEmpC 37 held that meaningful consultation requires disclosure of all information “in the minds of decision-makers,” not just documents.
• A Ltd v H [2016] NZCA 419 confirmed that procedural fairness is judged on whether the employer’s process was fair overall, not technically perfect.

Process (How a Case Generally Proceeds)

1. Employer Proposal – Employer outlines intended restructure or redundancy.
2. Consultation Period – You’re invited to give feedback; the employer must genuinely consider your response.
3. Disclosure – All relevant financial, structural, or strategic information must be shared.
4. Selection Criteria – Must be objective and applied consistently.
5. Redeployment Options – Employer must explore reasonable alternatives (transfer, reduced hours, retraining).
6. Final Decision & Notice – Employer must communicate the outcome in writing with required notice.
7. Raise Personal Grievance – If the redundancy is not genuine or the process unfair, raise within 90 days.
8. Mediation – The Ministry of Business, Innovation & Employment (MBIE) provides free mediation to seek early resolution. The process is voluntary and both parties must agree to attend. Most cases reach resolution at Mediation.
9. Employment Relations Authority Investigation – If unresolved, a Statement of Problem is filed; the Authority investigates and issues a written determination.
10. Employment Court Appeal – Possible for errors of law or procedure.

Potential Outcomes / Remedies

• Reinstatement to your role or an equivalent position (s 125 ERA 2000).
• Lost wages (s 128 ERA 2000) for up to 3 months or more if appropriate.
• Compensation for humiliation or distress (s 123(1)(c)(i)).
• Penalties for bad-faith conduct (s 4A ERA 2000).
• Interest and costs if financial loss established.

Take Action Today

If you’ve been made redundant or suspect your redundancy wasn’t genuine, you have legal rights under the ERA 2000. Get in touch with us to arrange a no-obligation consultation about your situation. We’ll assess your case, request your employment file, and help you pursue the justice and compensation you deserve. We will review your redundancy letter, assess whether it was a genuine redundancy, and pursue reinstatement or compensation where appropriate.