What you need to know about restructuring your business

As Kiwi businesses continue to face rising costs, high interest rates, and cautious consumer spending, many are reviewing their operating models. For some, that means restructuring.

If you’re considering changes to roles or staffing levels, it’s important to understand your obligations as an employer. Here’s what you need to know about restructuring your business legally, fairly and in good faith.

1. You need a genuine reason to restructure

A restructure should be driven by the needs of the business, not the performance of a particular employee. In other words, there must be a valid reason for the proposed changes, and you should be able to explain why the new structure better supports your organisation.

Real reasons for restructuring a business include:

• Financial pressures or rising operating costs

• Changes to products or services

• Outsourcing certain business functions

• A shift in business strategy or priorities.

2. Consultation comes first

Under New Zealand employment law, employees who may be affected by a restructure must be consulted before any decisions are made. You must give them relevant information about the proposed changes as well as an opportunity to respond and truly consider their feedback before making a final decision.

Any affected employee (with the exception of employees on $200k or more) left out of this process may have grounds for a personal grievance claim.

3. Other important considerations

Redeployment. Before making an employee redundant, think about whether that person could shift into another suitable role within the business.

Vulnerable workers. Some employees, including certain cleaners, caterers and caretakers, have additional protections during a restructure.

Employment agreements. Redundancy compensation is only required if it is included in the employee’s contract.

If you’re considering restructuring your business, talk to us first. We can help you better understand your financial position, assess your options, and make informed decisions before taking the next step.