Melissa Vining is an HR consultant with Invercargill-based Progressive Consulting and says they are fielding enquiries from farmers wanting to save money and in particular from farmers looking to make staff redundant.
“Before deciding whether to make a position redundant we recommend farmers do an organisational review of their business to identify what work needs to be done on a daily basis and how many staff are required to complete the work,” Melissa says
“You need to think outside the square, and often getting someone else to look at your business and challenge you on certain aspects is very beneficial.”
An organisational review could show training and development is needed to improve staff capability, installing automation such as cup removers is viable, or the staff roster could be modified to reduce the need for casual labour.
“We are seeing more farms that require staff who are rostered on over a weekend or public holiday to work the full day rather than just milking and having time off in between,” Melissa says.
She also encourages farmers to find ways of improving farm efficiencies, and to attend the Milksmart workshops and sign up for the Waste Hunt Challenge – both Dairy NZ initiatives.
“We have clients who have drastically cut milking times after sending their staff to the DairyNZ Milksmart course. If you save 20 minutes per milking through improved systems, over the course of one week you can save more than four hours per employee present at milking and provide significant savings over the course of a season.”
The review could identify a surplus of labour and therefore restructuring options should be considered.
“Some farmers are reducing herd size to winter cows at home or reduce bought-in feed and others are installing automation in the dairy – both of which may mean fewer staff are required,” Melissa says
“In some cases farm owners or their partners are going to take a more hands-on role and in other cases with a few changes to the system they can achieve the minimum work required with fewer employees.”
Before making significant changes farmers need to carefully consider the pros and cons of different options. For example, when deciding whether to make a permanent employee redundant and replace some of their workload with casual staff, the employer should do a realistic financial analysis of the cost savings and weigh this up against the costs or benefits that are less easily quantifiable.
“The loss of experience in the team because of a redundancy can result in increased costs in other parts of the business, such as increased deaths, breakages and loss of production,” Melissa says.
“If there is only a small saving between employing a casual employee compared to a permanent employee then employers will sometimes opt for the permanent employee because it is the lower-risk option.”
Business restructuring is the umbrella term that encompasses adding new roles, merging roles, losing roles that are surplus to requirements, or a combination of these.
Janet Copeland from Copeland Ashcroft Law in Invercargill cautions farmers who are considering making these sorts of changes to get expert advice to make sure they meet their legal obligations.
“The law is complex and the cost of a restructure going wrong could be significant,” she says.
“It is one of the fastest growing areas of personal grievance law at the moment – in favour of employees.
“The starting point is to check what the employment agreement says and ensure its provisions are complied with.
“Employment relationships are underpinned by the principle of good faith, and in the context of a restructure process good faith means that employees should be involved in the process and have the opportunity to consider and provide feedback and the employer must genuinely consider any feedback from employees.”
There must be a genuine commercial reason for restructuring a business. Financial issues resulting in the need to downsize or realign constitutes a genuine reason but must be supported by an accurate financial assessment and the employer must be fair and reasonable in this analysis.
“You must be able to prove it – you must be able to show your books, what you’re going to save, and why you need to save it,” Janet says.
The restructure process takes a minimum of 10 days to work through, but ideally two to three weeks is required. A lawyer will draw up a restructuring proposal consultation document that outlines reasons for the restructure, the proposed new structure, the process to be followed, and timeframes. Employees are then advised that a restructure is being proposed and invited to a meeting to discuss it.
All employees whose roles might be affected should attend the meeting but it’s often advisable to have the whole team present. Employees whose roles are affected can bring a support person to the consultation meeting. At the meeting the consultation document is discussed in detail and questions from employees are answered.
Employees should be invited to give feedback on the restructure proposal once they have had time to consider it and usually a week is sufficient. They can provide written feedback or have a private meeting.
Employers must be open-minded and genuinely consider the feedback before making a final decision. After consideration, the employer might amend the proposal, in which case the consultation document will be revised.
If the employer decides to proceed with the original proposal the lawyer will write a final decision document that outlines the feedback that was considered and the employer’s decision regarding that feedback and confirms that the proposed structure will be implemented.
“It is important to be aware that employers have a positive duty to re-deploy,” Janet says.
This means if there is another position available within the business then the employer must consider offering the alternative position to an employee who would otherwise be made redundant.
“Unless the alternative position is vastly different and you can’t with training and development move that person into that role, you have a duty to put them in that role,” Janet says.
If an employee will be made redundant this should be confirmed in writing along with details of the notice period, end date of employment, and whether they are entitled to any compensation. The employer should also offer to meet with them to discuss the restructure and redundancy. As a gesture of goodwill many employers allow the employee to take time off during work hours to look for a new job.
Failure to follow the correct procedures in the restructure process could give the employee grounds to raise a personal grievance. This must be done within 90 days of the grievance occurring. Employers who are found to be in breach of the Employment Relations Act (2000) as a result of not following proper process may be liable to compensate the employee for: loss of dignity, injury to feelings and humiliation (generally $5000-$7000); lost wages (typically minimum three months) and legal costs. There is also a risk of the courts imposing a ruling that the employee must be re-instated.
Restructuring do’s and don’ts
Don’t
- Take shortcuts
- Use redundancy as a way of dismissing an employee for other reasons
- Treat the proposal as a done deal before you’ve considered feedback
- Give one person’s job to another person
Do
- Seek professional advice early
- Consider all the available options and think outside the square
- Keep staff informed and provide all relevant information
- Remember the obligation of good faith
