Legal issues to avoid during major change

When job losses are expected as a result of major change, organisations open themselves up to a multitude of legal risks – here, one industry lawyer explains the issues HR professionals should pay particular attention to.

“I think the key things are making sure that there is a sound business rational for the change and that it is supported with good data and reliable information,” says Hamish Kynaston, partner at Buddle Findlay.

“The courts have made it very clear that they will look at that information to ensure that the employer is making a good or reasonable business decision before it terminates,” he adds.

Wellington-based Kynaston says it’s also critical that employers think carefully about redeployment.

“If it’s creating new positions, the organisation should give quite a lot of consideration to how people are going to be considered for those positions and whether in fact they should be offered out right,” he tells HRM.

“They should think about the amount of process that should be put in place to test for the position and whether they go exclusively internal first or if they open it up externally at the same time – they’re all things that need to be thought about quite carefully.”

Rigid timelines can also raise legal problems, warns Kynaston, as there are multiple issues likely to arise which easily delay the process.

“Often people build quite fixed timelines for these processes and don’t allow for change but, in my experience, there is almost always change,” he says.

“The original proposal might change part way through in response to the consultation or even just in response to new thinking the employer does – in which case, it’s really important to consider whether there’s an obligation to consult again on those changes.

“Sometimes the employees and unions just ask for more time and particularly in large, complex restructurings that’s often deserved – particularly if the information that’s been provided upfront has been a bit light.”

When considering the timeline, Kynaston also urges employers to build in enough opportunity to receive feedback from staff and also offer meaningful responses.

“Build time in so your process isn’t issuing a proposal, feedback comes back and the employer goes; ‘Well thanks for that, we’re going to proceed as proposed,’” he advises.

“There should actually be time built in to have more of a feedback loop where the employer says; ‘Well we’ve considered that but we’ve rejected those things for these reasons.’”

Finally, Kynaston says getting the information right from the outset is critical.

“An employer needs to think quite carefully about the information that it supplies to employees because the obligations now are really clear that you have to provide access to all relevant information,” he says.

“That doesn’t mean necessarily providing hundreds of pages of thinking and history that go with it but it’s providing a really clear summary of what you’re basing your decision on and where you’ve been while giving employees and unions the opportunity to ask for more if they think they need that.”