Cost-Cutting Initiative: Auckland Transport Spends $6 Million on Redundancies
The Redundancy Roll-out
In response to an economic directive from Auckland Council, Auckland Transport (AT) has implemented a cost-cutting scheme that resulted in the spending of $6 million on staff redundancies. This move was part of a broader plan to make cuts worth $30 million as directed by the Auckland Council. AT’s redundancy scheme affected 147 employees, some of whom had been offered redeployment within the organization.
Redundancy over Redeployment
Interestingly, nine of the staff members who were made redundant had been offered alternative roles within AT. Instead of accepting the redeployment, these individuals chose to take redundancy. The payouts for these redundancies were significant, with the top 10 payouts alone amounting to almost $1.2 million. The highest single payout was $196,188. Despite the seemingly counter-intuitive decision to offer redundancy over cost-saving redeployment, AT’s chief executive, Dean Kimpton, has indicated that this was a deliberate choice.
The Impact on Business Support
Most of the roles affected by AT’s redundancy scheme were in business support, with very few frontline staff being impacted. The Human Resources (HR) team was hit especially hard, with 19 people in the agency’s HR team among those made redundant. This move seems to indicate a strategic decision to minimise the impact on frontline services while streamlining support operations.
Financial Aftermath and Future Plans
AT’s $6 million redundancy bill accounts for half of the total $12 million spent on redundancies across Auckland Council and all its arms-length organisations in the current year. Despite the high cost of these redundancies, AT estimates that it would save $15 million a year from disestablishing 147 roles.
Chief executive Dean Kimpton has affirmed that no further job cuts are planned in the near future. Instead, he is focusing on restructuring the organisation. Although the cost-cutting measure was significant, Kimpton believes it was necessary to achieve the financial goals set by Auckland Council. He is confident that the restructuring will enhance the efficiency and effectiveness of AT in delivering its services to Aucklanders.
Legal Perspective on Redundancies
Employment law experts have noted that it is unusual to offer both a job and a payout during a restructure. Conventionally, when people are offered another job during a restructure, they either accept it or resign. As such, AT’s decision to offer redundancy payouts even to those offered alternate roles within the organisation has raised eyebrows. However, the organisation stands by its decision, citing long-term cost savings as the primary driver behind this approach.
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