Why restructure resignations risk legal claims

Published 25 April 2025 | 2 min read

When a restructure rolls out, many New Zealand employers are focused on keeping their business afloat—trimming costs, reorganising teams, and trying to retain key talent.

But when an employee resigns during this process and raises a personal grievance for constructive dismissal, it puts everything under a legal microscope.

Was the resignation truly voluntary?

Or did the restructure process leave the employee with no real option but to walk?

Where businesses are getting caught out

Restructures are a necessary reality, especially in uncertain markets.

But too often, businesses rush the process under-communicating changes, skipping proper consultation, or failing to provide clear redeployment options.

One recent case before the Employment Relations Authority (ERA) highlights just how these missteps can snowball.

What started as a standard restructure turned into an unjustified disadvantage claim, a resignation, and a $7,000 compensation payout.

Read more on common restructure mistakes.

The blurry line between change and constructive dismissal

The ERA recently heard a case where an operations coordinator resigned after a restructure process that lacked transparency and clarity.

The company’s initial restructure letter didn’t explain why roles were being disestablished or how workload would be affected.

The employee sought clarity but was met with vague updates, a pay issue, and loss of email access adding stress to an already uncertain situation.

When the company eventually offered him a modified version of his role, it was too late—he resigned, triggering a formal grievance.

What the ERA ruled (and why it matters for employers)

The ERA made a few key findings that every NZ business should take on board:

• The company’s restructure proposal lacked essential detail and transparency.
• Failure to provide adequate information caused the worker unnecessary stress, leading to unjustified disadvantage.
• Cutting the employee’s email access and missing annual leave payments worsened the situation.
• The constructive dismissal claim failed because the worker remained engaged with the company and attended a meeting about continued employment—suggesting resignation wasn’t a foregone conclusion.
• The employer had not agreed to waive the notice period, so no payout was required beyond compensation for hurt and humiliation.

For Restructuring and Workplace Change guidelines, visit Employment New Zealand.

What this means for your business

Restructures are tough, but they don’t excuse poor process.

A half-baked proposal, patchy communication, or rushed decisions can tip an employee into resignation and leave your business exposed to personal grievance claims.

The key takeaway?

A fair and transparent process isn’t just best practice it’s your legal obligation.

Ensure clear communication, provide supporting information early, and genuinely consider feedback before confirming decisions.

That approach won’t just protect you, it will drive better outcomes for everyone involved.

Considering a restructure?

See more information on EQ's Restructuring and Change Management.