The basics of workplace change

Employers making workplace changes that could affect employees’ jobs must have genuine business reasons, consult with their employees, and follow a fair and reasonable process.

What is workplace change?

Workplace change, also informally known as ‘restructuring’, means making changes that could affect employees’ jobs, for example:

  • changing an employee’s duties
  • disestablishing roles
  • creating new roles
  • decreasing the number of employees
  • merging roles
  • a combination of these.

It’s important that employers look at their workplace policies and the employment agreements they have in place before they start a restructuring process because these might set out their obligations during the change process.

Employers who follow a careful change process will reduce the risk of claims of:

  • breaches of good faith
  • unjustifiable disadvantage
  • unjustifiable dismissal.

Good faith

Business selling or transferring assets

If a change is happening because a business is selling or transferring its assets, see:

Restructuring when a business is sold or transferred

Business sold or going into receivership

If a change is happening because a business is being sold or going into receivership or liquidation, see:

Restructuring when a business is sold or transferred

Insolvency and employment

Employer must have genuine business reasons

Employers must show that a proposed workplace change is for genuine business reasons. 

Examples of genuine business reasons include:

  • improved technology
  • more productive business processes
  • product changes
  • loss of suppliers or markets
  • shifts in customer or market requirements
  • financial reasons. 

Employers should document their reasons for proposing change that could affect an employee’s job. They should share these reasons with potentially affected employees so that those employees can comment on the proposed change before any decision is made. 

Employer must consult with employees

Employers must consult with the affected employees about the proposed changes. This means:

  • giving employees who are likely to be affected information about the reason for the change
  • giving employees a reasonable time to respond and comment, including suggesting other options
  • taking employees’ feedback into account before making a final decision about the workplace changes. 

For more information about consultation, see:

Workplace change process

Who are affected employees?

Affected employees are employees whose jobs could be affected or impacted by the proposed changes. An employee might be impacted if, for example, the changes could:

  • change their duties or their place of employment
  • disestablish their role
  • create new roles that could impact on their current role
  • decrease the number of employees doing the same role as the employee
  • merge their role with another role.

Fixed-term employees

Fixed-term employees are not usually included as affected employees in a workplace change. 

If the change means that their fixed-term employment agreement will end early (before the agreed end date), then they’re entitled to the notice period stated in the agreement. This is paid or worked in line with the employment agreement. 

Casual employees

Casual employees are not usually included as affected employees in a workplace change. This is because a casual employee can accept or decline the work they’re offered, and their employer is not obliged to offer work on an ongoing basis.

Independent contractors

Independent contractors are not included as affected people in a workplace change. 

If the change means that their contract will end early (before the date it was due to end), any terms in the contract about early termination must be complied with. 

Employer must follow a fair and reasonable selection process

Employers must make sure employees are selected for roles in a fair and reasonable way during workplace change. 

For more information about selection, see:

Workplace change process

Protection and disclosure of information

Employers must comply with the Privacy Act 2000 and Privacy Principles, and the Employment Relations Act 2000 during workplace change. This means:

  • providing employees with the information they need to participate in the process, and
  • protecting employees’ personal information.

If the change proposal might affect an employee’s job, that employee is entitled to all the information their employer holds about them. 

An employer does not have to give an affected employee confidential information about another person if that would unnecessarily disclose the other person’s affairs. 

Employers do not have to disclose confidential information if there is good reason to maintain the confidentiality of that information. Good reasons include:

  • complying with legal requirements to maintain confidentiality
  • protecting the privacy of individuals
  • protecting the commercial position of an organisation.

Employee Privacy

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