Employers considering a restructuring exercise in Australia or New Zealand where there may be a workforce reduction (i.e. a redundancy exercise, often used interchangeably with restructuring) need to navigate a range of legal and practical requirements. Although both jurisdictions require employers to engage with employees and assess alternatives to redundancy, the rules differ in important ways. These distinctions can have important implications for timing, process and legal risk. This is particularly true where organisations are managing restructuring programmes across both countries. Understanding the key obligations at the outset can help employers plan effectively, minimise disruption and reduce the risk of disputes.

The FAQs below draw on insights from the first webinar in the Ius Laboris ‘Restructuring in Asia-Pacific’ series and address the questions employers most commonly face.

New Zealand

In New Zealand, employers must comply with two fundamental duties when carrying out a redundancy exercise. The redundancy must be based on a genuine business reason, and the employer must follow a fair consultation process before any adverse decision is made.

What might constitute a ‘genuine business reason’? This may include a wish to run the business more efficiently or profitably, to reprioritise different operations or markets, or simply to cut costs. It does not need to mean that the survival of the business is at stake. However, it must be coherent, genuine and substantive. A redundancy is not genuine if it is being used to disguise a dismissal for some other reason, such as poor performance, misconduct, poor attitude or discriminatory factors, such as age. This would constitute a sham redundancy. It is also not enough simply to say that head office or the board has instructed the change. The employer must be able to explain the business reason and how it affects the role (or roles) in question.

These requirements are largely set out under New Zealand legislation and case law. Employers must also check any relevant individual and collective employment agreements, as they may contain additional contractual obligations.

Practical tip: Define the business rationale early and check employment agreements before starting consultation.

Australia

In Australia, a redundancy will generally be lawful if the employer has a genuine operational reason for the change, complies with any consultation obligations and considers whether suitable redeployment opportunities are available.

Employers also need to consider Australia’s more layered framework. The starting point is the National Employment Standards in the Fair Work Act which apply to all private sector employees. Employers must then also consider industry-specific modern awards, enterprise agreements, employment contracts and workplace policies. In practice, this means that redundancy questions cannot be answered by looking only at the statute. Employers must check whether a modern award or enterprise agreement applies. This is because those instruments may impose compulsory consultation terms and other obligations.

Practical tip: Employers should map out all applicable instruments at the outset and identify any additional consultation or payment obligations.

In New Zealand, there is no concept of redundancy thresholds. The fundamental requirements set out under question one, including the need to conduct a fair consultation process, apply regardless of the size of the employer or the number of employees affected.

In Australia, legal obligations to consult apply if the employer proposes to make 15 or more employees redundant for reasons of an economic, technological, structural or similar nature. In that case, the employer must consult with the workforce, notify any relevant union where it is reasonably practicable to know that the union should be consulted, and provide written notification to Centrelink.

Even where fewer than 15 redundancies are proposed, consultation obligations may still arise under a modern award or enterprise agreement (see question one). While it might therefore seem beneficial to stagger redundancies to avoid having a group of 15 at any one time, or offer voluntary redundancies to try and avoid the threshold, a consultation may still end up being necessary.

Special practical issues may also arise in Australia for employees on parental leave and, in some cases depending on the state or territory, employees receiving workers’ compensation payments.

Practical tip: Employers should check thresholds and notification requirements early and confirm whether union or regulator engagement is required.

The approach in New Zealand 

In New Zealand, the consultation process sits within the legal duty of good faith under the Employment Relations Act. A fair process means that the employer must present the redundancy proposal, disclose information relevant to that proposal, invite feedback and take that feedback into account before a decision is made. Consultation does not mean agreement, but it does require an open mind. It is also seen as best practice to explain in the outcome letter what feedback was received and what the employer thought about it, including where it agreed or disagreed and why. Any suggestion that the decision has been predetermined risks defeating the object of the legal duty of good faith.

The approach in Australia

In Australia, the obligation to consult is generally triggered once an employer has made a definite decision to introduce a major workplace change that is likely to have a significant effect on employees. At that point, affected employees and, where relevant, their representatives, must be notified and provided with information about the changes and their likely effects. Affected employees must still be given a genuine opportunity to influence the implementation of the change and any measures to avert or mitigate adverse impacts on employees. Consultation is not a right of veto, similar to in New Zealand.

Key difference: consultation timing

The above highlights a key difference between the countries. In New Zealand, consultation must happen before any decision is made. The employer must present a restructure proposal and all relevant information, then give affected employees an opportunity to ask questions and provide feedback before deciding whether to proceed.

In Australia, the employer will typically have made a definite decision to introduce an organisational, operational or technological change. Consultation is then about the impact of that change on employees, including whether adverse impacts (such as proposed redundancies) might be avoided, minimised or managed, rather than about whether the employer should revisit the underlying decision to implement a change at all. For that reason, consultation must happen before the redundancies are implemented.

That said, consultation obligations can differ, depending on their source. For example, some unions have successfully negotiated a term in an enterprise agreement that requires an employer to consult earlier than when a definite decision has been made. Again, this reinforces the point that employers must check the layers discussed in question one above when considering a redundancy process.

Practical tip: Employers should keep consultation communications consistent and clearly demonstrate that feedback has been considered before final decisions are confirmed.

In New Zealand, the relevant information will depend on the business reason for the proposal. It might include past or forecast revenue or sales data, proposed new position descriptions and strategy documents. Being upfront with this information is best practice. It aligns with the good faith duty and can save time in the consultation process by reducing the need for back and forth later.

In Australia, the focus is on giving employees information about the proposed changes and their likely effects. Matters that are often discussed during redundancy consultations include: the jobs or pool of jobs affected; the process and timing; redeployment opportunities; job referrals; outplacement services; and retraining assistance.

Practical tip: Providing key documents at the start of consultation can avoid delays later. Employers should also maintain a clear record of what information has been shared and when.

In New Zealand, if the restructure involves reducing the number of identical roles or disestablishing some roles (that is, removing them from the organisational structure) while creating new ones, the employer will likely need selection criteria to decide who is retained, appointed or dismissed. Those criteria must be tailored to the circumstances, consulted on before they are finalised, and applied fairly and reasonably. They must not discriminate directly or indirectly on a prohibited ground of discrimination. Employers sometimes use familiar criteria such as ‘last on, first off’, but that does not mean those criteria will be appropriate in every restructure. The criteria should match the rationale for the proposal.

In Australia, there is no statutory selection order. However, employers still need to be careful because selection criteria can create discrimination risks. For example, failing to recognise possible indirect discrimination is a common issue. Selection criteria based on work experience, attendance or time in the office may appear neutral, but may directly or indirectly disadvantage younger workers, workers with caring responsibilities or workers with disabilities. Similar risks can also arise under the general protections regime in the Fair Work Act.

Practical tip: Employers should document the objective rationale for each element of the selection criteria. They should also test whether those criteria could disproportionately affect any protected groups, before proceeding.

In New Zealand, if a role is to be disestablished, the employer must consider reasonable opportunities for redeployment before moving to terminate employment. The obligation is to redeploy the employee to an available role that the employee is reasonably capable of doing and is willing to do, even if the role is more senior and requires some reasonable training, or is less senior and offers lower pay.

This is a developing area of law in New Zealand, and there has been increasing attention paid to cross-border redeployment opportunities. For example, if an international business is disestablishing roles in its New Zealand entity but has roles available in its Australian entity, the strict legal answer at present is that it does not have to offer the roles in the separate Australian entity as redeployment opportunities. However, best practice would be to consider doing so where appropriate because it demonstrates good faith and reinforces that the restructure is genuine.

In Australia, redeployment is critical to defending an unfair dismissal claim. To rely on a genuine redundancy defence, the employer must show that it was not reasonable in the circumstances to redeploy the dismissed employee into another job in the employer’s enterprise or an associated entity. The importance of considering redeployment was reinforced by the High Court of Australia’s decision in Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29. This confirmed that, when assessing whether redeployment was reasonable, it may be necessary to consider whether work being performed by contractors could instead be undertaken by affected employees.

Practical tip: Create a structured redeployment assessment, including roles considered, reasons for suitability and any training required.

In New Zealand, there is no statutory entitlement to redundancy compensation. Any such payment depends entirely on the employee’s employment agreement. Some employment agreements state that no redundancy compensation is payable for any reason, while others set a specific formula based on length of service or another measure.

Unlike in New Zealand, there are statutory minimum redundancy payments in Australia under the National Employment Standards, although they do not apply to small business employers with fewer than 15 employees. Those statutory entitlements can be enhanced, but not reduced, by an enterprise agreement, a contract or a modern award. Redundancy pay is in addition to usual termination payments such as notice or payment in lieu, and accrued entitlements such as annual leave or long service leave.

In very limited circumstances, an employer may apply to the Fair Work Commission to reduce or eliminate redundancy pay if it has found suitable alternative employment or if it cannot afford the full redundancy amount. The affordability threshold is very high and used sparingly.

Practical tip: Employers should calculate all potential costs early, including contractual entitlements, statutory payments and accrued leave.

Failure to comply with redundancy requirements can lead to legal claims in both countries.

In New Zealand, employees may bring a personal grievance claim for unjustified dismissal or unjustified disadvantage. Potential remedies include reinstatement, lost remuneration, compensation and penalties. In Australia, employees may challenge a redundancy through unfair dismissal, discrimination or other statutory claims. Depending on the circumstances, contractual claims may also arise.

Practical tip: Employers should keep clear records of the business reasons for the restructure, the consultation process and any decisions made. Documentation can be critical if a redundancy is later challenged.

Several trends are emerging across both jurisdictions.

Greater scrutiny

There is greater scrutiny of whether redundancies are genuinely required. Challenges are increasing where employers restructure and then recruit into similar roles shortly afterwards.

Redeployment

Redeployment is receiving increased attention. In New Zealand, there is a growing expectation that employers demonstrate real efforts to find alternative roles, including, in some cases, roles in overseas group entities as a matter of good practice. In Australia, recent case law has broadened the scope of what may be considered reasonable redeployment.

Union involvement

Unions are taking a more active role. There are more challenges to restructuring processes, including scrutiny of the business rationale and the way consultation is carried out.

Automation and technology

Technological change, particularly the use of AI, is driving restructuring. This is attracting the increased union attention highlighted above and public scrutiny, as well as pressure for potential legislative reform. Employers should expect heightened sensitivity and reputational risk where job losses are linked to automation.

Health and safety concerns

In Australia, regulators and unions are increasingly raising work health and safety concerns, particularly around psychosocial risks during restructures. Poorly managed processes may lead to regulatory action. We have written about this in more detail here.

Restructuring laws in Australia and New Zealand share common themes, but the differences are important. Employers should identify all applicable legal obligations at an early stage, develop a clear business rationale and plan the process carefully. Consultation must occur at the right point in the process. Employers should also assess redeployment opportunities, use fair selection criteria and keep detailed records throughout. Early planning, transparent communication and strong documentation will help to reduce legal and reputational risk, particularly in cross-border restructures.

*You can watch the full webinar recording on our YouTube channel, together with the other sessions in our three-part series.