Three recent cases from the Employment Court are indicating a change in the way the Court is viewing redundancies. The impact of these cases is such that employers are wise to seek professional advice before undertaking any consultation that may result in redundancies.

Of interest is the emphasis the Court is placing on the provision of applicable information to any potentially affected employee. If an employer is considering making an employee redundant they will be required to supply information to a potentially affected employee to assist the employee to understand the employer’s reasoning for considering a redundancy.

Further, the test the Court is now applying “is whether what the employer did (dismissal for the reason of redundancy) was what a fair and reasonable employer could have done in all the circumstances at the time.”

In the recent case Michael Rittson -Thomas t/a Totara Hills Farm v Davidson the Chief Judge of the Employment Court states that it is insufficient under section 103A of the Employment Relations Act, where an employer is challenged to justify a dismissal or disadvantage in employment, for the employer to simply say that this was a genuine business decision and the Court (or the Authority) is not entitled to inquire into the merits of it. The Court (or the Authority) will need to do so to determine whether the decision, and how it was reached, were what a fair and reasonable employer could have done in all the relevant circumstances.

In another 2013 case (Gilbert v Transfield Services NZ Ltd), from the Employment Court the Chief Judge reinstated the employee, Gilbert,  to his former position and ordered that Gilbert be paid compensation for all remuneration lost by him as a result of his unjustified dismissal, interest on lost wages, and $15,000 for compensation for hurt and humiliation. In this case, Gilbert was dismissed for redundancy by Transfield. However when the Court examined clearly the employer’s actions, and how it went about these, when determining the justification for the dismissal, they deemed the dismissal to be unjustified.

Before embarking on any restructuring, ensure you are aware of these new cases from the Employment Court.

If you have any employment or HR queries that you would like assistance with, please contact us.

This article is intended as a point of reference and should not be relied on as a substitute for professional advice. Specialist advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this article.

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