• Tax Professionals

Considering a Business Restructure/Employee Redundancy

COVID-19 will undoubtedly have a significant impact on businesses in New Zealand and will naturally result in many employers/businesses needing to look at restructuring and redundancies. However, the process is not so simple!     First, consider all other alternatives in a discussion with your employees, including:

  • Work reduced hours;

  • Take one or more days a week as annual leave; or

  • Take leave without pay.

Even after exhausting all other options, you must first go through a restructuring process, and only proceed to a redundancy process if you decide that redundancies will be necessary.

A genuine reason?

A significant downturn in sales/revenue, a loss of customers/suppliers, and/or a shift in market requirements, could amount to a genuine reason for restructuring or redundancies. However, it’s important to ensure that an employer’s business case and reasons are documented, with supporting evidence. 

A fair and reasonable process?

In all their dealings, employers and employees must deal with each other in good faith.


Key considerations:

  • If your business has utilised the wage subsidy package, you cannot make employees redundant/layoff within 12 week period of wage subsidy cover.

  • However, you can consider consulting with employees withing the 12 week period.

  • Good faith consultation requirements - Must scrutinise your factual basis and justification; financial analysis must also be undertaken to justify any decisions.

Please contact us today if you need any further advice Business Restructuring and or Redundancy. We can assist you by preparing the necessary documentation to protect your businesses.

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