Fair Redundancy Selection Criteria In New Zealand

If your business needs to restructure, one of the hardest parts is working out who is affected.

Even where redundancy is genuinely necessary, the way you choose between employees can create real legal risk (and real stress) if it isn’t handled carefully.

That’s where redundancy selection criteria come in. Used properly, they help you make consistent, defensible decisions - and show you’ve acted fairly and in good faith.

In this guide, we’ll walk through how redundancy selection criteria work in New Zealand, what “fair” tends to look like in practice, and how to set up a selection process that protects your business as much as possible.

This article is general information only and doesn’t constitute legal advice. Every redundancy is different, and you should get advice on your specific situation.

What Are Redundancy Selection Criteria (And When Do You Need Them)?

Redundancy selection criteria are the standards you use to decide which employee(s) will be made redundant when not all roles are being removed.

In a simple restructure, you might be:

• Disestablishing one role entirely (you still need to run a fair consultation process, and consider redeployment options - but a “selection” between employees may not be required if only that role is being removed), or
• Reducing several similar roles down to fewer positions (selection criteria are usually needed to decide who stays).

You’ll most commonly need selection criteria where there is a “pool” of employees doing the same or very similar work, and you’re reducing numbers in that pool.

Example: You have three customer service roles, but after a restructure you only need two. The roles are substantially similar, so you typically need a fair way to decide which employee is the one who will be made redundant.

Selection criteria can also be relevant where:

• you’re merging two roles into one new role and deciding who is the best fit for the new position;
• you’re changing the required skills for the role (for example, moving to a new system and needing different capability); or
• you’re consolidating work across sites or locations.

Redundancy can feel like a “business decision” (and it is), but in New Zealand you’re still expected to follow a fair process and to act in good faith. If you’d like a practical overview of the redundancy process as a whole, redundancy is a helpful starting point.

What Makes Redundancy Selection Criteria “Fair” Under NZ Employment Law?

New Zealand employment relationships are heavily shaped by the duty of good faith under the Employment Relations Act 2000. In a redundancy context, that generally means you should approach selection in a way that is:

• Genuine (the business reasons are real, and not a cover for performance management or a personality clash);
• Transparent (employees can understand what you’re doing and why);
• Objective where possible (based on evidence and job-related factors);
• Consistently applied (the same criteria and method across the selection pool); and
• Consultative (you consult on the proposal, including how selection will work, before final decisions are made).

In practice, fair redundancy selection criteria tend to be:

• clearly connected to the work (what the business needs going forward);
• capable of being assessed (you can explain how you measured it); and
• supported by records (so you aren’t relying on vague impressions).

Remember: Consultation Comes Before Final Selection

A common trap for small businesses is deciding the “winner” and “loser” early, then running a process afterwards. That’s risky.

Generally, you should consult with employees about the restructure proposal (including the proposed selection criteria and how they will be applied) before you make final decisions. Employees should have a meaningful chance to provide feedback and propose alternatives.

If you’re weighing up other cost-saving approaches alongside redundancy (for example, changing rosters or reducing hours), it’s worth pressure-testing those options early too. In some situations, you may consider reducing staff hours - but that comes with its own legal requirements and should be handled carefully.

Common Redundancy Selection Criteria Businesses Use (And Criteria To Avoid)

There isn’t a single “approved list” of redundancy selection criteria in New Zealand. What’s appropriate depends on the role, your industry, and what your business needs after the restructure.

That said, there are some criteria that are commonly used because they tend to be job-relevant and easier to justify.

Examples Of Common, Defensible Criteria

• Skills and capability (for the current and future needs of the business - not just what the role used to be)
• Qualifications and certifications (where genuinely required for compliance or service delivery)
• Experience (relevant experience for the role you’ll need going forward)
• Performance record (based on documented reviews, KPIs, or measurable outcomes - not hearsay)
• Disciplinary record (again, based on documented processes and outcomes)
• Flexibility (for example, ability to cover required shifts or tasks, if that’s genuinely part of the new structure)
• Client/customer requirements (where lawful and genuinely necessary - be cautious and get advice if you’re relying on this)

If you’re using performance as part of your criteria, it’s important that your performance management history is real and documented. Redundancy shouldn’t be used as a shortcut for performance management.

Criteria To Avoid (Or Treat With Extreme Caution)

Some criteria create legal risk because they can be discriminatory, overly subjective, or hard to evidence.

Examples that are often problematic include:

• Age (directly or indirectly)
• Gender, marital status, family situation, pregnancy
• Health, disability, or mental health history
• Ethnicity, religion, or other protected personal characteristics
• Union involvement
• “Attitude” or “culture fit” (these can be used, but they’re often too vague unless anchored to clear, role-based behaviours and evidence)
• “Last in, first out” as a default (length of service can be considered in some cases, but relying on it as the main factor can be risky and may not match business needs)

From a legal standpoint, you want to avoid selection criteria that appear to penalise an employee for a protected ground under the Human Rights Act 1993, or for exercising workplace rights. Even if discrimination isn’t your intention, poorly chosen criteria can create that impression.

How To Build A Simple, Defensible Selection Process (Step By Step)

Selection criteria matter, but so does the method you use to apply them. A fair process is usually structured, repeatable, and documented.

Here’s a practical approach many small businesses use.

1) Define The “Selection Pool” Properly

Start by identifying which roles are genuinely similar enough to be compared. The pool might be:

• everyone in the same job title;
• everyone performing substantially the same core duties; or
• a group of roles that will be combined into fewer positions.

Be careful not to “design” the pool to target one person. The pool should match the reality of your operations.

2) Tie Criteria To Your New Business Needs

Ask: What does the business need after the restructure?

For example, if your future workflow requires more digital capability, you may weight system proficiency more heavily - as long as it’s relevant and applied consistently.

3) Choose Criteria You Can Actually Evidence

Try to rely on information you can point to, such as:

• role descriptions and documented duties;
• performance reviews and KPIs;
• training records;
• documented qualifications; and
• attendance records (used carefully, and not as a proxy for illness/disability).

If your records are patchy, it doesn’t mean you can’t proceed - but it’s a sign you should keep criteria simple and avoid anything overly subjective.

4) Use A Scoring Matrix (And Keep It Consistent)

A scoring matrix can help you apply redundancy selection criteria consistently. You might score each criterion from 1–5, then total the results.

To keep it defensible:

• define what each score means (for example, what does “5” look like in practice?);
• use the same scoring guide for everyone in the pool;
• have more than one reviewer where possible (to reduce bias); and
• document the reason for each score with brief evidence notes.

One word of caution: scoring systems can create a false sense of precision. They’re useful, but they don’t replace good judgment and a fair consultation process.

5) Consult On The Proposal Before Confirming Outcomes

Your proposal should usually outline:

• the business reasons for the restructure;
• what roles are impacted;
• the proposed selection pool (if applicable);
• the proposed redundancy selection criteria and how you plan to apply them; and
• the timeline for feedback and meetings.

This is also where you should be ready to discuss alternatives raised by staff, such as redeployment, reduced hours, or voluntary redundancy options. Some businesses explore voluntary vs forced redundancy as a way to reduce the need for contested selection decisions - but it still needs to be handled fairly.

6) Consider Redeployment And Other Options

Even if you’ve applied selection criteria fairly, you should still consider whether there are reasonable redeployment options within the business (including to other roles the employee could do with reasonable training).

This is very fact-specific, so it’s worth getting advice on what’s reasonable for your size and structure.

Documenting Your Decisions (And Handling Notice, Pay, And Communications)

If the situation ever ends up being challenged, your best friend is usually your paper trail.

As a small business, you don’t need a complicated HR system - but you do need enough documentation to show you acted fairly and followed a reasonable process.

What To Document

At a minimum, keep a clear record of:

• the business reasons and financial/operational drivers behind the restructure;
• the proposed new structure and impacted roles;
• the selection pool and why it was defined that way;
• the redundancy selection criteria and how each criterion was assessed;
• consultation steps (letters/emails, meeting notes, timeframes for feedback);
• any alternatives considered (and why they were or weren’t viable); and
• the final decision and the reasons.

Notice Periods And Payment In Lieu

Once a redundancy decision is finalised, you’ll also need to implement the exit correctly (including notice, final pay, and any contractual redundancy compensation if applicable).

In some cases, you might agree to payment in lieu of notice, but it’s important to check the employment agreement and handle it properly so you don’t accidentally breach contract or create avoidable disputes.

If you’re unsure what your current agreements say about notice, duties, and termination steps, it’s worth reviewing your Employment Contract terms before you start the process (ideally at the planning stage, not the day you’re issuing letters).

Be Careful With Personal Information

Redundancy processes often involve sensitive information: performance notes, health-related absences, or personal circumstances raised during consultation.

Make sure you manage and store that information carefully, and only share it on a genuine need-to-know basis. Your obligations under the Privacy Act 2020 still apply during restructures.

When Should You Get Legal Help With Redundancy Selection Criteria?

If you’re trying to run your business and manage a restructure at the same time, it can be tough to know whether your selection criteria are “reasonable enough” - especially when emotions are running high.

It’s usually worth getting legal advice early (before you consult) if:

• you’re selecting between employees in similar roles (a true selection pool);
• there are performance issues in the background (so redundancy doesn’t look like a workaround);
• your criteria include subjective factors (like flexibility, client feedback, or behavioural expectations);
• there are employees on leave (including parental leave or long-term sick leave);
• you’re making changes across multiple roles and sites; or
• you want to offer a settlement as part of a clean exit (which should be documented correctly, often via a Deed of Settlement).

Even where you’re confident the redundancy is genuine, a quick review of your proposed redundancy selection criteria and consultation plan can save you a lot of time and cost later.

If you’d like tailored support, Redundancy Advice can help you plan your process, documents, and communications in a way that fits your business.

Key Takeaways

• Redundancy selection criteria are what you use to decide who is affected when you’re reducing numbers in similar roles (a “selection pool”).
• Fair criteria are usually role-related, evidence-based, and consistently applied, and the overall process should be run in good faith.
• Common defensible criteria include skills, experience, qualifications, and documented performance - but be cautious with vague factors like “attitude” unless they’re clearly defined and evidenced.
• A practical approach is to define the pool, set job-relevant criteria, apply them using a consistent scoring method, and consult before final decisions.
• Keep good records of your reasons, consultation, scoring, and alternative options considered, because documentation is often crucial if the process is challenged later.
• Before finalising redundancy outcomes, check your employment agreement terms for notice, final pay, and any redundancy entitlements, and get advice if anything is unclear.

If you’d like help setting redundancy selection criteria, preparing consultation documents, or running a fair redundancy process, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.