Assessing Suitable Alternative Employment During Redundancy in New Zealand

Redundancy processes are stressful for everyone involved - and for small business owners, it can feel like you’re trying to keep the business running while also navigating a legal minefield.

One concept that often comes up (and can quickly become a sticking point) is finding and offering suitable alternative employment.

If you’re restructuring, reducing costs, or changing how your business operates, offering suitable alternative employment can be a crucial step in running a fair process and reducing the risk of a personal grievance. But it needs to be handled carefully - because “an alternative role” isn’t automatically “suitable”, and the way you consult matters just as much as the role itself.

In this guide, we’ll break down what suitable alternative employment means in New Zealand, when you should consider it, and how to manage it in a way that’s practical and legally safer for your business.

What Is Suitable Alternative Employment (And When Does It Come Up)?

Suitable alternative employment generally refers to a different role you can offer an employee when their current job is being disestablished (for example, during a restructure or redundancy). The idea is that, rather than ending employment, you look for other realistic options within the employer’s business that could keep the employee employed.

This commonly comes up when:

• you’re proposing a restructure where some roles are removed, merged, or changed;
• your business needs to reduce labour costs (for example, fewer shifts or fewer positions);
• you’re changing operating hours, service lines, or locations;
• you’re introducing new systems or technology and existing roles no longer fit;
• you’re selling the business and roles may change as part of the transition.

Offering suitable alternative employment doesn’t mean you can force someone into any vacant job. It also doesn’t replace the need for a proper consultation process. But it’s often a key part of showing you’ve acted in good faith and explored genuine alternatives to redundancy.

If you’re still at the stage of considering changes to staffing levels, it’s worth getting advice early - the approach for reducing staff hours can be quite different from a redundancy process, and mixing the two without a plan can create risk.

Why Suitable Alternative Employment Matters In NZ Employment Law

In New Zealand, employment relationships are governed by a strong expectation of good faith behaviour. In practical terms, that means you need to be open, communicative, and fair - especially when you’re proposing changes that might impact someone’s job.

When you’re looking at redundancy, it’s not enough to decide “this role isn’t needed” and move straight to termination. A fair redundancy process typically involves:

• having a genuine business reason for the proposed change;
• consulting with affected employees before decisions are final;
• providing relevant information and considering feedback;
• considering alternatives to redundancy (including redeployment); and
• following the employee’s agreement and your internal policies.

Suitable alternative employment fits into that “alternatives to redundancy” part. If there is a realistic role available and you don’t explore it properly, an employee may argue the redundancy was not justified or that the process was unfair.

This isn’t about “ticking a box”. The Employment Relations Authority will usually look at what was reasonable in the circumstances for an employer of your size and resources - but you still need to show you genuinely turned your mind to alternatives.

Having clear, up-to-date employment documentation also helps you avoid grey areas when navigating change. For example, your Employment Contract should set out notice provisions and may address how change processes are handled.

How Do You Assess Whether An Alternative Role Is “Suitable”?

There isn’t one single test for suitability - it depends on the employee, the business, and the role. The key is to assess suitability objectively and consult openly, rather than assuming.

Here are the most common factors employers should consider when deciding whether a role is likely to be suitable alternative employment.

1) Pay And Hours

Is the pay the same or similar? If it’s less, how much less - and is that reduction reasonable in the context of the business change?

Likewise, consider hours of work. A move from full-time to part-time (or vice versa) can be a major change for someone’s personal circumstances, even if the job title sounds similar.

2) Duties, Seniority, And Responsibility

Is it genuinely a similar level role? A common mistake is offering a role that is technically available, but is clearly junior, has fewer responsibilities, or could be seen as a demotion.

Sometimes a role might be “available”, but if it strips away key elements of the employee’s professional level (e.g. leadership, autonomy, specialist work), it may not be suitable.

3) Skills Match And Training Needs

If the employee can do the role with reasonable training, that may still be suitable. But if the gap is too wide - or the role requires qualifications they don’t have - it may not be realistic to call it “suitable”.

For small businesses, the practicality matters too. If extensive training is required and you don’t have the capacity to provide it, that may affect whether redeployment is reasonable. The important part is being transparent about this in consultation.

4) Location And Travel Requirements

A role that requires a much longer commute or relocation may not be suitable for an employee - and for you, forcing a major location change can also create risk.

If your business operates across multiple sites, be careful not to assume a transfer is minor. Talk through the real impact with the employee.

5) Terms And Conditions (Including Status)

Even where the duties look similar, the terms might not be. For example:

• moving someone from permanent to fixed-term;
• moving someone into a casual arrangement;
• changing overtime expectations or availability requirements; or
• changing commission structures or incentives.

These can all affect whether alternative employment is genuinely “suitable”. If the proposed role changes fundamental terms, you’ll want to tread carefully and get advice.

How To Offer Suitable Alternative Employment The Right Way (A Practical Process)

If you’ve identified a potential role (or roles) that could be suitable alternative employment, the way you handle the offer can make a huge difference.

As a general process, you’ll want to manage this in a way that is consistent with good faith and proper consultation.

Step 1: Identify Real Vacancies (Not Hypothetical Roles)

Start by checking what positions actually exist, what’s vacant now, and what is likely to be vacant within a reasonable period. Avoid inventing a role just to avoid a redundancy on paper - that can backfire quickly if the role isn’t viable.

If you operate through more than one entity (for example, a group of companies), be careful about assumptions here. An employee’s employer is the entity named in their employment agreement, and you generally can’t “redeploy” someone to a different legal entity without following a proper process and documenting any changes.

Step 2: Raise Redeployment Early In Consultation

Don’t wait until the end to mention redeployment. If redundancy is being proposed, employees should have a fair opportunity to comment on the proposal - including whether there are alternatives like moving to another role.

This is also where you should be careful with your communications: don’t present decisions as already made, and avoid language that suggests the outcome is fixed before consultation is completed.

Step 3: Provide Role Information In Writing

When you offer an alternative role, give enough detail for the employee to properly assess it. That typically includes:

• job title and reporting line;
• key duties and expectations;
• hours, location, and flexibility requirements;
• pay rate and any additional benefits;
• any trial/training period proposal (if relevant); and
• when you need an answer by (with a reasonable timeframe).

Clarity now can prevent disputes later. If you end up needing a formal variation or a new agreement, it’s usually safer to have it documented properly rather than relying on informal conversations.

Step 4: Invite Feedback (And Actually Consider It)

Employees may raise concerns such as pay reduction, duties mismatch, or personal constraints (like childcare or travel). Your obligation isn’t necessarily to agree with every concern - but you do need to genuinely consider them and respond reasonably.

If you can adjust the role to make it more viable (for example, adjusting hours or agreeing to training), that can support the argument that you acted fairly.

Step 5: Confirm The Outcome And Next Steps

If the employee accepts the alternative role, document it properly (including the start date and any changes to terms).

If the employee declines, confirm that in writing too - and record the reasons they gave. This can be important later if there’s a dispute about whether the alternative employment was genuinely suitable.

And if the employee declines and redundancy proceeds, make sure the final termination process is handled carefully - including correct notice. Some employers consider payment in lieu of notice, but whether that’s available depends on the employment agreement and the situation.

Common Mistakes Employers Make (And How To Avoid Them)

Even well-meaning employers can run into problems with suitable alternative employment. Here are some common pitfalls we see small businesses fall into.

Assuming Any Job Offer Counts

Offering “a job” isn’t enough. If the role is not comparable, not realistic, or clearly unsuitable, it may not help your position - and could even look like you’re trying to force the employee out.

Rushing The Timeline

Redundancy processes often feel urgent (especially if cashflow is tight), but giving an employee a day to decide on a new role is usually risky. Build in enough time for consideration and questions.

Not Checking Contractual Obligations

Your employment agreement may contain specific clauses about consultation, redeployment, or change processes. Make sure your process aligns with the contract - if you’re unsure, this is the sort of issue where tailored advice can save you major headaches.

Changing Multiple Things At Once Without Explaining Why

If the proposed alternative role includes reduced pay, different hours, and a new location, you’ll need to clearly explain the business reasons for those changes and why that role is still a genuine option.

It’s also important to be consistent across employees to avoid perceptions of unfairness (or allegations that one person was targeted).

Forgetting About Wider Employment Obligations

Restructures often involve changes to policies, privacy, and operational controls - particularly if the business is introducing monitoring tools or new systems.

If your restructure involves new ways of handling employee information (or collecting more data), it’s worth reviewing your Privacy Policy and internal privacy practices to make sure they still match what you’re doing in practice.

Key Takeaways

• Suitable alternative employment is often a key part of a fair redundancy process in New Zealand, because it shows you genuinely explored alternatives to termination.
• Whether a role is “suitable” depends on practical factors like pay, hours, seniority, skills match, location, and how much the terms and conditions change.
• You’ll usually be on safer ground if you raise redeployment options early, provide clear written role details, invite feedback, and keep good records of decisions.
• Avoid treating redeployment as a last-minute box-ticking exercise - the consultation process and your good faith approach matter just as much as the role itself.
• Make sure the legal side matches what you’re doing in practice, including correct notice provisions, documented variations, and updated policies where business operations are changing.

This article is general information only and isn’t legal advice. If you need advice about your specific situation, get in touch with a lawyer.

If you’d like help managing a restructure, redundancy process, or suitable alternative employment options, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.