KiwiRail is offering voluntary redundancy to all staff. What does that mean? Photo: Supplied/ KiwiRail
From Monday, KiwiRail is offering voluntary redundancy to all staff.
But what does this mean, what are the rules for a voluntary redundancy offer, and what do staff need to know?
RNZ asked two employment law experts to explain.
There are rules for employers
Alison Maelzer, a partner at law firm Hesketh Henry, said offers of voluntary redundancy for all staff were relatively uncommon.
But she said when voluntary redundancy was offered, it would usually be covered by an individual or collective employment agreement or an employer's redundancy policy.
"Essentially, once an employer has consulted with employees about a proposal to disestablish a number of roles, and decided to disestablish a number of positions, they may elect to call for 'voluntary redundancies' - that is, employees to put their hands up and volunteer to have their employment terminated for redundancy.
"This is usually in the circumstance where an employer is reducing a number of the same or similar positions - we have 100 process workers, and we only need 50 - and before a selection process is carried out."
KiwiRail has been proposing job cuts for some time to lower costs and previously offered some teams the opportunity to apply for redundancy. But the wider offer was designed, in part, to help reshape the business.
Maelzer said a voluntary redundancy process would not remove the requirement for a thorough consultation process about whether redundancies were needed at all, how many and in what parts of the business.
"If there is a union involved, the employer should be careful to communicate with the union about its proposal."
Jeremy Ansell, senior associate at Duncan Cotterill, said business reasons for voluntary redundancy could be things like financial pressure, a downturn in work or even a direction from the government if it was a public service entity employer.
"They will still have to explain all of that and follow a fair process."
But employers can add conditions
Maelzer said an employer could add their own conditions to the process.
"For example, who can volunteer, who can't, whether the employer reserves the right to refuse a volunteer, what happens if there are too many volunteers, or not enough. Employers will often reserve the right to refuse an application for voluntary redundancy if that person's skills/experience is needed for the ongoing business."
She said her experience was that the employees most likely to volunteer for redundancy were those with the most experience or seniority and most likely to find a job elsewhere.
"This could result in the employer losing their senior, experienced staff, which may hamper their operations in the future."
Staff need to understand how their offer might work. Photo: 123RF
What do staff need to know?
Maelzer said employees would need to be clear about the conditions on the voluntary redundancy offer and understand whether they were actually being offered redundancy or just the chance to express interest.
"Employees should also be clear on their entitlements if they are accepted for redundancy - are they entitled to compensation? What would the notice period be? Will they work it out? Is there any outplacement support available?"
Who gets picked?
Sometimes, there's a sense in some businesses that the people who are selected for voluntary redundancy are those who are "cheaper" to let go - who don't have generous clauses in their contracts, for example, or a lot of leave owing.
Maelzer said employers' duty of good faith would require them to be transparent and explain the factors that would be taken into account when it was decided whose application for voluntary redundancy would be accepted.
"Ideally, the employer would propose that before reaching any decisions."
"At the end of the day, any termination for redundancy will need to meet the statutory test for justification, which includes both substantive justification and procedural fairness.
"An employer that makes arbitrary, discriminatory, or unfair/unreasonable decisions about who to select for redundancy, or is misleading, may find themselves in hot water. "
Ansell said employers could run into problems if they were selecting people to make redundant based on the size of the potential payout involved.
What's in it for staff?
Ansell said there would have to be some sort of incentive to encourage people to take voluntary redundancy.
"Employees are going to want to know they are getting more than just their contractual notice period and any final holiday period - that's a statutory entitlement they have to get regardless. They will want to know there is a more generous form of redundancy being offered and how much that is."
Redundancy clauses are rarer in the private sector than in the public workforce.
Maelzer said it was more common in industries where there was a heavy union presence and for very senior employees with more bargaining power in their employment agreements.
