Case Employees Redundancy Solution Practicable
Employers who are considering making employees redundant must properly consider any proposals put forward by affected employees. I…
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Redundancy is generally considered to be a situation where an employee’s position is surplus to the employer’s commercial needs. Employers must be able to justify redundancies substantively (show that they are genuine) and procedurally (that a fair procedure was followed). An employer who fails to carry out a proper restructure process will be potentially liable for remedies such as compensation, penalties, lost remuneration and reinstatement.
This Member’s Bill amends the Employment Relations Act 2000, to insert a new Part 6E to provide the following minimum statutory entitlements for employees in the event of dismissal for redundancy:
Background: I own a motel that currently has 28 rooms. I work a few hours myself and I employ a permanent part-time manager. I also have three employees (the cleaners) who are part-time with variable hours who carry out cleaning, servicing rooms and “whatever” turns up on the day. The manager helps with those duties after dealing with administrative matters. I am converting half the rooms to apartments, so will only have a ten-room establishment. I will no longer need a part-time manager. Anticipating what is likely to happen, two of the cleaners have decided to return to study and have advised they will be terminating employment in two months’ time. After the conversion is carried out, I will be able to run the business with only two cleaners. The manager has become overbearing and I will be glad to give him notice of redundancy and work on my own again.
We’ve all heard about the controversial “Massey v Wrigley” case, which has redefined the way we need to conduct our selection processes when restructuring, at least for the time being. We’re hoping this piece of case law will change before too long, and Government has indicated that if it’s not resurrected through the Courts then a law change will be looked at around this in the future.
An important decision has recently been made by the Employment Court in terms of redundancy law. Last month the Employment Court ruled that it can scrutinise an employer’s decision to make an employee redundant to ascertain whether there were sufficient business reasons for the redundancy.
Generally, when a redundancy has been found to be genuine but the procedure undertaken by the employer in effecting the redundancy is procedurally flawed, the employee will not be entitled to be reimbursed for the resulting loss of remuneration. However, as the Employment Relations Authority pointed out in Rose v New Leaf Beauty Therapy Ltd  NZERA Wellington 32, even when a redundancy has been found to be genuine it is still necessary to consider whether, if the employer had acted fairly, a redundancy would have occurred. That consideration is necessary because, if the employee is able to provide plausible evidence of reasonable alternatives or other options that might have prevented the job loss, the employee may be able to prove that he or she lost remuneration as a result of the grievance (not of the redundancy) and therefore be entitled to be reimbursed for the lost remuneration.