The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

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Ross Henderson
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From the employment coal face

Since returning to work post-COVID-19 lockdown, the news had not been great for employers needing to reduce staff numbers.

employees-421It is therefore timely to advise business owners of seven key points if you are contemplating similar:

1. Use a redundancy selection criteria matrix for transparent decision-making

An employer that has identified a pool of employees at risk of redundancy must follow a fair procedure when deciding who to select from that pool. A redundancy selection criteria matrix can help employers reach that decision, but how can they ensure it is fair? A redundancy selection criteria matrix sets out the criteria that will be applied in making the selection decision. It is also good to have some written policy on selection issues for redundancy.

Common criteria selected by employers include skills, performance and disciplinary records. Each employee in the redundancy pool is scored against each of the criteria and the employees with the lowest scores are selected for redundancy. The benefit of doing it this way is that it’s absolutely clear what’s being taken into account and how the decision has been made. If any employees challenge the decision, it’s going to be much easier to defend.

2. Choose objective redundancy selection criteria

Employers have discretion over which criteria to choose, with the aim of retaining staff who are most valuable to the organisation. You need to be able to assess everybody against the criteria in an objective way. So you need to choose criteria that are measurable and not just based on opinion.

3. Be careful when employees have been absent from work on maternity leave or for a disability-related reason

Absence on maternity leave, pregnancy-related absence and disability-related absence should all be discounted if absence is included as a criterion for selection. Employers should think carefully about how to score employees on other criteria, such as performance, if they have been absent during the period being assessed. The employer must balance the need not to discriminate against an employee on maternity leave or disability-related absence with the need not to disadvantage other employees.

4. Consider the weighting given to long-term and short-term absences

Attendance records can be included in the selection criteria matrix (discounting pregnancy-related or disability-related absence), but employers should consider how to score employees fairly. One option is to give multiple short-term absences less weight than single periods of longer-term absence. This would reduce the disadvantage to, for example, an employee who has been absent recovering from surgery.

5. If scoring employees on their performance, measure this objectively

Marks from performance reviews or appraisals can be used in the selection process if these have been carried out consistently across all employees in the redundancy pool and assessment is based on objective measures. It’s important to come up with a fair time frame over which performance will be assessed: a longer time frame is likely to give a more accurate picture.

6. Take disciplinary records into account only if rules have been applied consistently

Disciplinary records are often included in the redundancy selection criteria matrix. Employers should ensure that they act fairly if employees are marked down for having a disciplinary record. It is important that disciplinary rules have been applied consistently and employers should be cautious about taking expired disciplinary warnings into account.

7. Consult employee representatives on the redundancy selection criteria matrix

Before finalising the matrix, employers should consult with employee representatives about the criteria on which the selection decisions will be based. If the matrix is approved by the union or other representatives, the employer will be in a stronger position to defend its decisions if challenged by individual employees. It is possible to give different weighting to different criteria, so not everything is judged to be as important, and that could be something to negotiate with employee representatives.

The challenges of what lies ahead are numerous. With patience and perseverance and a little luck, we will get through.

These are thorny issues and Ross Henderson, Managing Director and Founder of HR Contracting has the experience and precedent material to guide you through any of these situations. For any questions or further discussion, please contact Ross on 09 630 3451.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

Topics: employees employers employment human resources management resourcing staffing