Contents
- NZ employment claims are rising.
- Many employers don’t realise consultation is required
- The biggest mistake often happens before consultation even starts
- AI is creating a new risk for employers
- We often get the call after the dispute starts
- Good documents aren’t the same thing as good processes
- Making someone redundant may be easy. Doing it properly is the challenge.
- Need help navigating a restructure or redundancy?
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NZ employment claims are rising.
According to the Employment Relations Authority’s Annual Report 2025, the Authority received 3,070 applications in 2025, up from 2,117 in 2023, an increase of approximately 45% in just two years!
For employers, those figures should be a reminder that personal grievances are not rare events. Many arise not because the employer lacked a genuine business reason for change, but because something went wrong in the process surrounding that decision.
Artificial Intelligence is changing the employment landscape on both sides. We are increasingly seeing employers use AI to draft restructure letters, only for employees to use AI to analyse the process and generate detailed personal grievance claims.
The documents often look impressive.
The issue is that a professionally written letter does not necessarily mean the process behind it is legally defensible.
Most employers do not get themselves into trouble because they lack a genuine business reason for change, but because they miss something they didn’t realise they needed to do.
And nowhere is that more common than restructures and redundancies.
“Business is slow. We need to make this employee redundant.”
We hear versions of this all the time.
The business owner has identified a genuine problem: Revenue is down, or work has reduced, or costs need to be lowered, or the structure no longer works.
Or:
“This employee is constantly late.”
“Their performance isn’t where it needs to be.”
“They’re causing problems in the team.”
“I’ll just make them redundant…”
We often tell employers that New Zealand employment law has different levers for different situations.
If the role is genuinely no longer required, that’s a redundancy process.
If the issue is misconduct, that’s a disciplinary process.
If the issue is capability, that’s a performance management process.
The risk is pulling the wrong lever and trying to solve one problem with a process intended for another.
The challenge is that many employers assume identifying the commercial reason is most of the job.
It isn’t.
We regularly support employers throughout New Zealand who have a genuine reason for restructuring but are unaware of some of the legal and procedural requirements that sit around the decision.
The issue is rarely the business rationale. The issue is often the process.
In many cases, the business reason itself is not seriously disputed.
The dispute arises because consultation was inadequate, selection criteria were not properly addressed, redeployment was not considered, or the outcome appeared predetermined.
If you’re considering a restructure or redundancy, getting HR advice early can help you understand the process and identify potential risks before you move forward.
Many employers don’t realise consultation is required
One of the most common conversations we have starts with an employer explaining why a role is no longer needed.
When we ask what consultation has occurred, we are often met with silence.
Many employers are genuinely surprised to learn that redundancy should start with a proposal, not a decision.
Employees should generally be given an opportunity to understand the proposal, seek advice, provide feedback, bring a support person and suggest alternatives before a final decision is reached.
Yet we still regularly encounter employers who intend to meet with the employee, explain the situation and move directly to an outcome.
These are not mistakes limited to small businesses.
We regularly see Employment Relations Authority cases involving large employers getting the process wrong.
If you’re considering a restructure and aren’t sure what needs to happen before a decision is made, our HR consultants can help you work through the process.
The biggest mistake often happens before consultation even starts
Another issue we regularly see is employers deciding who they want to lose before they work through the process.
Sometimes there are several employees performing the same or substantially similar work, and the employer already knows which employee it would prefer to retain.
The restructure then becomes about achieving a preferred outcome rather than determining what outcome a fair process produces.
Recently, we spoke with an employer who believed they had run a strong consultation process: The letters were professional, meetings had been held, feedback had been invited.
The problem was that several employees performed the same role, but the employer singled out the employee they wanted to make redundant.
The paperwork looked excellent. The process didn’t look quite so good when the personal grievance arrived.
AI is creating a new risk for employers
We use AI ourselves and it is an incredibly useful tool.
The problem is not the technology, but the false confidence it can create.
We’ve all seen AI present an answer that sounds completely convincing but is wrong. The difference is that HR experts know enough to challenge it. Many employers don’t.
If you don’t know a critical step has been missed, you are unlikely to ask the question that exposes the problem.
We are increasingly seeing employers use AI to generate restructure proposals, consultation letters and outcome documents.
The result often looks impressive.
A scenario we can easily see unfolding goes something like this:
A business has four employees performing the same role.
The business only needs three.
The employer asks AI to draft a restructuring letter.
AI produces a polished document explaining the business rationale and inviting feedback.
The employer follows the process.
Feedback is received.
The employer asks AI to draft the outcome letter.
AI prepares a professional document stating:
“Following consultation and consideration of feedback, employees were assessed against the selection criteria and you have been selected for redundancy.”
Everything appears to be in order.
Then somebody asks: “Hang on. When did we consult on the selection criteria?”
AI responds:
“Ah, you’re quite right. Good catch!”
The problem at this stage is that the redundancy process may already be over.
The employer consulted with the employee they intended to make redundant; the proposed selection criteria were never shared; no feedback was sought on how employees would be assessed.
The redundancy letter looks excellent, but the process sitting behind it may not.
We see this all the time.
The business rationale may be completely legitimate, but the issue is that the employer did not know what questions they needed to ask in the first place.
AI is very good at answering the question it is asked. It is also very good at correcting itself when challenged. The real risk with using AI in a redundancy scenario is that employers often don’t know what questions they should have been asking in the first place.
We often get the call after the dispute starts
A theme appears repeatedly in our work.
Employers often contact us after the employee has raised a personal grievance.
Or after mediation has been requested, or after the Privacy Act request has arrived.
By then, the meetings have already happened, the letters have been issued, the records have been created, and the process is largely complete.
Rather than facilitating a smooth process, our role becomes helping the employer understand the position they are in and the options available to them.
The conversation is often very different from the one we could have had before the proposal was issued.
The earlier we become involved, the more options there are.
Already started the process? We can review where things stand and help you work through your next steps.
Good documents aren’t the same thing as good processes
One misconception we regularly encounter is the belief that a professionally written document means the process must also be sound.
In reality, some of the highest-risk redundancy processes we see are supported by very well-written paperwork.
The issue is usually something behind the document: The wrong people were consulted; a wider affected group wasn’t considered; selection criteria weren’t consulted on; redeployment opportunities weren’t properly explored; the outcome appears to have been decided too early; or internal communications tell a different story from the formal documentation.
These are not always obvious issues to a business owner.
They are also not necessarily issues an AI tool will identify unless someone knows to ask about them.
Making someone redundant may be easy. Doing it properly is the challenge.
Most employers don’t get themselves into trouble because they lacked a commercial reason for restructuring, but because they miss something they didn’t realise they needed to do.
Consultation.
Selection criteria.
Redeployment.
Maintaining an open mind.
Documenting decisions appropriately.
Understanding how the process may appear if it is later challenged.
These are rarely the issues sitting on the first draft of a redundancy letter.
They sit behind the letter.
And they are often the difference between a defensible process and a personal grievance.
Need help navigating a restructure or redundancy?
Our People & Culture team supports employers throughout New Zealand with restructures, redundancies, consultation processes, selection criteria, redeployment assessments and employee communications.
Whether you’re still testing the idea, preparing a proposal or responding to an issue that has already arisen, we can help identify risks before they become expensive mistakes.
The earlier we become involved, the more options are usually available.