Good Faith Consultation in NZ Restructures: What HR Managers Must Get Right

Good faith consultation is the single most litigated obligation in New Zealand restructure and redundancy law. The Employment Relations Authority (ERA) has repeatedly found that employers who ran genuine restructures — with real commercial reasons and correctly selected roles — still lost personal grievance claims because they got the consultation process wrong.

This is not about paperwork. It is about a specific legal obligation under section 4 of the Employment Relations Act 2000 (ERA 2000) that requires a particular sequence of events to occur before a restructure decision is finalised. Getting that sequence wrong — even by a few days — can transform a legally defensible redundancy into an unjustified dismissal.

What the ERA 2000 Requires

Section 4(1A) of the ERA 2000 sets out the employer's good faith obligation in the context of decision-making. Before making a decision that may adversely affect an employee's employment, the employer must:

Provide information about the proposed decision to the employee

Give the employee a reasonable opportunity to comment on that information

Consider those comments before making the decision

These three steps must occur in this order. The requirement is not:

Tell the employee what you have decided and invite them to ask questions

Tell the employee what you plan to decide and let them vent

Tell the employee what you have decided and then pretend to reconsider

The consultation must occur before the decision is made. That is the central requirement, and it is the most commonly violated one.

What "Genuine" Means

The word "genuine" is used repeatedly by the ERA and Employment Court. Consultation is genuine when:

The employer approaches it with an open mind about the outcome

The employee's feedback could actually change the decision

The employer demonstrates that they have actually read and considered what the employee said

The final decision addresses — or at least acknowledges — the main points raised in consultation

Consultation is not genuine when:

The decision is announced first and the consultation is used to explain it

The employer's responses to employee feedback are boilerplate or clearly not tailored

The consultation period is so short that meaningful engagement is impossible

The employee is not given enough information to make a meaningful response

The Employment Court's language in *Air New Zealand Ltd v McAlister* [2009] NZSC 78 is instructive: "Good faith is not mere compliance with a checklist. It requires genuine engagement."

The Information Obligation

The obligation to "provide information" means the employee must receive a written proposal containing enough information to enable a meaningful response. This typically includes:

The specific reason for the proposed change (commercial, operational, or financial)

Which positions are proposed to be disestablished, modified, or created

The selection process, if a pool of employees is affected

A timeline for the consultation process

The name of the person the employee can direct their response to

What you do NOT need to include

You are not required to:

Share commercially sensitive financial information beyond what is necessary to explain the reason

Disclose details that would breach confidentiality obligations to other employees

Guarantee a particular outcome

The threshold is: would a reasonable employee be able to understand what is proposed and why, and formulate a meaningful response? If yes, the information obligation is met.

What Is a Reasonable Consultation Period?

There is no fixed minimum. The ERA considers what is reasonable in the circumstances. As a practical guide:

| Situation | Minimum realistic timeframe |

|---|---|

| Single role, simple restructure | 3–5 working days |

| Role in a complex or senior position | 5–10 working days |

| Multiple affected employees, significant restructure | 2–4 weeks |

| Collective agreement in play | Check the agreement for specific requirements |

Sending a proposal on a Friday with a response due Monday is not reasonable. Giving an employee one week when they are on annual leave and have not been told to cut it short is not reasonable. The consultation period must be genuinely adequate for the specific circumstances.

Notice to seek advice

The ERA 2000 requires that employees be given a reasonable opportunity to seek advice during the consultation period. In practice, this means:

The proposal letter should explicitly state they may seek advice from a union, lawyer, or other advisor

The consultation timeframe must allow enough time for this to happen

If an employee asks for more time to seek advice, that request should be granted unless there are compelling reasons not to

Refusing to extend a consultation period when an employee says they haven't had time to get legal advice is a significant risk. Several successful personal grievance claims have hinged on exactly this point.

How to Document the Consultation

Documentation of consultation is your evidence that it was genuine. At minimum, you need:

For each affected employee:

Proposal letter (dated, signed, ideally countersigned as received)

Meeting notes (from each consultation meeting: date, attendees, topics discussed, questions raised, employer's responses)

Employee response (in writing, or a written record of their verbal response from the meeting)

Consideration record (a brief document showing what the employee said and how the employer considered it before making the final decision)

Final decision letter (clearly referencing the consultation process and why the employer proceeded with the proposal)

The consideration record is the one most frequently missing. Without it, the employer's claim that they "considered the feedback" is just an assertion. The ERA will look for documentary evidence that the feedback was actually read and processed before the decision was made.

The Most Common Mistakes

1. Announcing the decision, then consulting

This is the most frequent — and fatal — error. Telling an employee their role is redundant, then holding a "consultation meeting," is not consultation. It is notification followed by a cosmetic process. The ERA has no patience for it.

The safest practice: no manager, no HR professional, and no written communication should use the word "decision" about the restructure outcome until after the consultation period has closed and the responses have been considered.

2. A template-only response

If every employee in a group restructure receives the same proposal letter, the same meeting notes, and the same final decision letter — word for word — the ERA will view this as a strong indicator that genuine consideration did not occur. Each employee's consultation must be tailored to their individual circumstances.

3. Truncated timeframes under commercial pressure

The pressure to move quickly is real. Commercial circumstances sometimes feel urgent. But a consultation process that is cut short because "the board wants this done by month-end" is not a defence. The consultation period must be adequate for the circumstances.

4. Not considering alternatives

The employer's obligation to maintain an active and constructive employment relationship includes an obligation to consider alternatives to redundancy during consultation. These include:

Redeployment to other roles

Reduced hours

Modified role structure

Temporary arrangements

The employer does not have to accept alternatives proposed by the employee, but they do have to genuinely consider them. If an employee proposes a way to avoid their redundancy and the employer doesn't engage with it, that is a consultation failure.

5. Union notification failures

If the affected employee is a union member and the union has coverage for their role, the union must be notified of the proposed restructure before it begins. Failing to notify the union — or notifying them after the proposal has already gone to employees — is an independent breach of good faith, on top of any individual consultation failures.

What Happens If You Get It Wrong

If an employee succeeds in a personal grievance for unjustified dismissal following a procedurally flawed consultation:

Remedies: reinstatement (rare but possible), compensation for lost wages (up to 3 months or more depending on circumstances), compensation for hurt and humiliation (often $5,000–$25,000 or more for serious failures)

Costs: employer often pays a contribution to the employee's legal costs in ERA proceedings

Reputational risk: ERA decisions are public

Critically, the fact that the restructure itself was genuine does not save you. A genuine redundancy executed through a flawed consultation process can still result in a finding of unjustified dismissal.

Practical Checklist for Consultation

Before starting consultation:

[ ] Written proposal prepared for each affected employee — includes reasons, changes, and timeline

[ ] Proposal reviewed by an employment lawyer or HR specialist

[ ] Union notified (if applicable)

[ ] Consultation period set with enough time for advice-seeking

During consultation:

[ ] Meeting held with each affected employee individually

[ ] Meeting notes taken — detailed, attributed, and signed off

[ ] Employee given opportunity to respond in writing

[ ] Employer has explicitly asked about and considered alternatives

After consultation:

[ ] Each employee's feedback considered individually and in writing

[ ] Final decision letter references the consultation process

[ ] Final decision letter addresses the main points raised in feedback

The Role of Software in Managing Consultation

Managing a good faith consultation process manually — tracking where each employee is in the process, ensuring letters are properly dated, maintaining the evidence of consideration — is high-risk. The most common documentation failures (missing consideration records, inconsistent meeting notes, truncated timelines) occur because the process is being tracked in a spreadsheet or email thread.

Restructured is built for exactly this process. It guides HR managers through each stage of the ERA 2000 consultation sequence, generates compliant proposal and decision letters, and maintains a timestamped audit trail for every step. The consultation stage cannot be skipped — the platform enforces the sequence.

The free tier includes the org chart builder. The Professional tier adds the full consultation workflow, document generation, and the audit trail package needed to defend a personal grievance claim.

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*This guide provides general information about the ERA 2000 good faith consultation obligation and does not constitute legal advice. For specific advice on your situation, consult a New Zealand employment lawyer. Employment New Zealand also provides free guidance.*