Selection Criteria for Redundancy in New Zealand: Setting Fair and Defensible Standards
How to set selection criteria for redundancy in NZ that are fair, lawful, and defensible before the Employment Relations Authority. Covers lawful vs unlawful criteria, the selection pool, scoring matrices, and documentation.
When a restructure affects more than one employee doing similar work, you need a way to decide who stays and who goes. This is the selection process — and it is one of the highest-risk parts of any redundancy. Getting it wrong is one of the most common reasons employers lose personal grievance claims even when the restructure itself is entirely genuine.
This guide explains how to set selection criteria that are fair, lawful, and defensible before the Employment Relations Authority.
Why Selection Criteria Matter Under the ERA 2000
The Employment Relations Act 2000 does not mandate a specific selection methodology. But the good faith obligation under section 4 requires that the process be genuine, transparent, and consistent. The Employment Relations Authority scrutinises selection processes closely and has found unjustified dismissal where:
A genuine restructure with a flawed selection process can still result in an unjustified dismissal finding — and a significant remedy.
Step 1: Define the Selection Pool
The selection pool is the group of employees whose roles are at risk. It must be defined by the business reason, not by the people you want to keep.
If you are disestablishing a specific role type (for example, "Regional Account Manager" in the South Island), the pool is all employees in that role type within the affected area. It is not every account manager in the business.
Artificially narrowing or expanding the pool to include or exclude specific individuals is an ERA red flag. The pool must follow logically from the operational change you are making.
Pools in partial restructures
If you have, say, five people in similar roles and need to reduce to three, the pool is all five. The selection process determines which two positions are disestablished — not which two people are chosen to go.
This distinction matters: you are disestablishing positions, and the people in those positions become redundant as a result. You are not selecting people. You are identifying which positions are no longer required and then applying objective criteria to determine which positions those are.
Step 2: Develop Criteria Before Running Them Against Names
This is the single most important rule in redundancy selection: write the criteria before you apply them to individuals.
If the criteria are developed after the individuals have been identified — even informally — the process is tainted. The ERA will ask when the criteria were written, who wrote them, and whether any names came up in that meeting. If they did, the selection process is likely to be found to be a pretext.
In practice, this means:
Document when this meeting happened and who attended.
What Selection Criteria Are Lawful?
Lawful selection criteria are those that relate to the genuine future needs of the business. Common examples include:
| Category | Example criteria |
|---|---|
| Skills and competencies | Technical skills required for the new or remaining role |
| Qualifications | Licences, certifications, or educational requirements |
| Performance | Track record against documented KPIs or performance standards |
| Flexibility | Ability to work across locations, hours, or functions required in future |
| Attendance | Documented attendance record (excludes protected leave) |
| Length of service | Seniority-based selection (last in, first out) — only if genuinely relevant |
Note that "length of service" (last in, first out) is lawful but not always appropriate. It does not necessarily identify the best people to retain for the future and can inadvertently discriminate against younger workers. Use it only where it reflects a genuine operational rationale.
What Selection Criteria Are Unlawful?
The following cannot be selection criteria — directly or indirectly:
The risk with indirect discrimination is that a facially neutral criterion can correlate with a protected characteristic. For example, requiring a criterion of "physical ability to lift 20kg unassisted" would exclude many employees with disabilities and may constitute indirect discrimination unless it is a genuine requirement of the future role.
Weighting the Criteria
Each criterion should be assigned a numerical weighting that reflects its relative importance to the business need. A common approach:
| Criterion | Weight |
|---|---|
| Technical skills for the future role | 40% |
| Performance track record | 30% |
| Flexibility and adaptability | 20% |
| Attendance record | 10% |
| Total | 100% |
The weightings should be documented before scoring begins. Do not adjust them after you see how the scores fall — that is the hallmark of a reverse-engineered process.
Scoring example
Suppose two employees (A and B) are in the selection pool for one remaining position:
| Criterion | Weight | Employee A score | Employee A weighted | Employee B score | Employee B weighted |
|---|---|---|---|---|---|
| Technical skills | 40% | 8/10 | 3.2 | 6/10 | 2.4 |
| Performance | 30% | 7/10 | 2.1 | 9/10 | 2.7 |
| Flexibility | 20% | 9/10 | 1.8 | 7/10 | 1.4 |
| Attendance | 10% | 9/10 | 0.9 | 8/10 | 0.8 |
| Total | 100% | | 8.0 | | 7.3 |
Employee A scores higher and is retained. Employee B's position is disestablished.
The scores must be based on documented evidence — not impressions. For each score, you should be able to point to a specific performance review, training record, or documented attendance record.
Sharing the Criteria with Affected Employees
The selection criteria are part of the proposal that must be shared during consultation under section 4(1A) of the ERA 2000. Employees are entitled to:
This does not mean you must accept every proposed criterion. But you must genuinely consider them. If an employee proposes a criterion that is relevant and you refuse to include it without a clear reason, that is a risk.
Do not complete the scoring until the consultation response period has closed and you have genuinely considered all responses.
What the Employment Relations Authority Looks For
The ERA applies a test of reasonableness: was the selection process one that a fair and reasonable employer could have used in the circumstances? The ERA will examine:
If the person selected for redundancy was not the lowest-scoring employee, the employer must be able to explain why. The burden of proving the process was fair sits with the employer.
Common Mistakes to Avoid
Skipping the process for "obvious" cases. Even where there is one affected employee and no selection pool, you must still follow a proper consultation process. The absence of a selection pool does not mean you can skip documentation.
Using criteria that are hard to evidence. "Cultural fit" and "attitude" are common criteria that are almost impossible to defend objectively. If you use them, make sure they are defined and measured against documented behavioural examples — not impressions.
Sharing scores before consultation closes. Do not tell employees their scores or comparative rankings during the consultation period. The scoring should happen after you have received and considered responses.
Failing to consider responses to the criteria. If an employee points out that a criterion is unfair or inapplicable, you need to genuinely consider that feedback and document your response to it. Boilerplate responses are a red flag.
Not having a second reviewer. A single assessor scoring their own direct reports is inherently vulnerable to unconscious bias claims. Have someone independent review the scoring before it is finalised.
Documentation Checklist
Before closing the selection process, confirm you have:
*Restructured includes a built-in selection criteria tool that lets you define criteria, assign weightings, and score employees — with all documentation captured in one place. See how it works or start free.*