There is a well developed body of case law for redundancies. The classic case in a contemporary sense is GN Hale & Sones Limited v Wellinton , etc, Caretakers, etc, IUOW. In this case the Court of Appeal stated that it would be difficult to improve on the bedrock definition of redundancy being a situation where the employee's employment is superfluous to the needs of the employer.

This was doubled down on by the Court of Appeal in new Zealand Fastners Stainless Limited v Thwaites where the Court of Appeal provides that:

...redundancy is determined in relation to the position not the incumbent...

That means it is the position, not the person being made redundant. That is an absolute. If you feel you are being made redundant as opposed to the position then you need a representative. now.

Obviously, termination of employment by the employer is the prerequisite for any redundancy. If an employee resigns before the process is completed, then the employee is prempting the process. In Wood v Christchurch Golf Club Incorporated the employee left employment assuming that the process was fait accompli (unreversable and fated). The Employment Court rejected the employee's argument that the situation was a redundancy because the employee was owed compensation (later sought). Subsequently, navigating redundancy should not be done without careful consideration on all sides.

A redundancy must be genuine.

Redundancy must not be used as an excuse for dismissing employees when the real problem may be something else like poor performance, or that the employee has raised matters with the employer.

Too often, this is the case. If you are experience that. Stop reading here and call us now.

In James v La Famia No 2 Limited the employer maintained that there were proper commercial reasons for a restructure, but there was also evidence that the employer had issues with the employee. Subsequently, the employer did not engage in a genuine process.

Mixed motives for redundancy feature throughout the case law establised on the topic. Any decision making body including the Employment Relations Authority and the Employment Court must be satisfied that the dominant and clear motive for the termination of an employee or workers is that the position the worker or employee occupied was indeed, superfluous to the employer, and, that no other motive was dominant in the mind of the employer.

Even as recently as the recent Covid-19 lockdowns, rulings have been made that support the dominant purpose assessment and this continues to provide that a redundancy must be genuine.

In Vile v Marilyn Sanity Limited the employer shutdown its stores during a level four (4) lockdown. When the country returned to alert level three (3), Vile was instructed to attend work, but Vile was over sixty (60) years of age and had a compromised immune system. Vile was able to provide to the employer a medical confirmaiton that the employee should not have been working during a level three (3) lockdown and should stay away from work until level two (2) was decleared by the government. When Vile returned to work the employer provided Vile with a letter proposing to restructure the position Vile occupied in the employ of the employer. Subsequently, it was determined later that the employer had unjustifiably dismissed Vile because the employer had likely made the decision to terminate the employment on the dominant grounds that the employee was not avaliable during level three (3) lockdowns.

Long story short, the purpose of a redundancy must clearly be being superfluous to the needs of the employer. Anything happening around that muddies the waters and will likely be determined as a unjustified dismissal later down the track.

Minor changes to a job's role don't count as redundancy.

Minor changes to a job role and responsibilities do no amount to redundancy. In Grace Tram Accounting Limited v Brake the Court of Appeal held that:

...what is required is that the employee is superfluous to the needs of the business. This could arise where the employer desires to make the business more effcient...

An employer will likely always be adjusting to make a business more efficent. Mostly. If those changes make a position redundant then they better be more than minor changes in order to justify a redundancy termination.

New roles may not be new roles. Watch out for faux redundancies.

In Anderson v The Christchurch Press Limited employees and workers were successful in their claim that they were unjustifiably dismissed. The Employment Relations Authority provided that the Authority was of the view that the restrcture had been carried out for good commercial reasons, but, the new roles created by the employer, which the employer did not offer to the employee's, were not sufficiently different from the roles occupied by the employees in their previous, now disestablished, roles. Where a new proposed position does not break the continunity of employment from a role that is intended to be disestablished, this is the essence of a faux redundancy.

Another classic is LKreider v Vodafone New Zealand where the Employment Realtions Authority provided that the new role of Legal Director was actually the same as the previous role of General Counsel.

There are sm many examples of this occuring in Aotearoa New Zealand that workers and employees should be questioning every redundancy.

Redudancy is an employer's decision.

Unlike a resignation, a redundancy is always an employer decision. New Zealand Courts have taken the view:

whether a position is truly redundant is a matter of business judgement for the employer.

Again, the test the courts will consider is:

The test is whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.

This test will be set against the following criterion:

whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations against the employee before dismissing or taking action against the employee; and

whether the employer raised the concerns that the employer had with the employee before dismissing or taking action against the employee; and

whether the employer gave the employee a reasonable opportunity to respond to the employer’s concerns before dismissing or taking action against the employee; and

whether the employer genuinely considered the employee’s explanation (if any) in relation to the allegations against the employee before dismissing or taking action against the employee.

Provision of information to employees and workers is a must.

There is a good faith obligation in s. 4 of the Employment Relations Act 2000 that requires employers who are proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of an employee's employment to povide the employee with:

access to information, relevant to the continuation of the employees’ employment, about the decision; and

an opportunity to comment on the information to their employer before the decision is made.

This also applies to any process a employer is undertaking.

This reasoning is enshrined in legislation for the protection of workers and employees and for the observance and compliance of employers.

In Vice-Chancellor of Massey University v Wrigley the Employment Court provides:

When a business is restructured, the employer will, in most cases, have almost total power over the outcome. To the extent that affected employees may influence the employer's final decision, they can do so only if they have knowledge and understanding of the relevant issues and a real opportunity to express their thoughts about those issues. In this sense, knowledge is the key to giving employees some measure of power to reduce the otherwise overwhelming inequality of power in favour of the employer.

This, combined with obligations in s. 3 and s. 4 of the Employment Relations Act 2000 should leave all parties with a clear set of obligations when it comes to any decision being made by an employer. However, employers often get this wrong.

This is provided in Stormont v Peddle Thorp Aitken Limited when the the Employment Court provides:

An employee's subjective views on adequacy are not the yard-stick. Nor is an employer under an obligation to continue to respond to requests for information indefinitley. The issue of whether of not sufficent information relating to the proposal was provided requires a review of the facts.

Does my employer have to consult on a redundancy or restructure?

Yes - and they can't go about it half-assed. In addition to providing information, the duty of good faith requires an employer to give employees a real opportunity to comment that is not limited by the extent that information avaliable by the employer. But - information provided by the employee or worker bust be submitted in a way that if the employee wishes to raise an unjustified dismissal as a result of a redundancy process at a later time, the information can be provably relevant and clearly submitted. This is where a good representative comes in handy.

In Gourley v Industrial Site Services Co Limited it was provided that the duty to consult applies to all workers and employees - including casual workers.

In STL Linehaul Limited v Waters it was determined thjat just handing a letter to a employee terminating the employee's employment will not satisfy the requirement to consult, in addition to other fundamental lawful obligations the employer must carry out.

I feel my selection for redundancy was not fair. What makes a fair selection process for redundancy?

There are many factors. A good representative can assist you to understand these.

When more than one (1) position is being made redundant by an employer, the employer must select employees for redundancy by using a fair and reasonable process. The process must be objective and based on sound information. Sometimes, this can be included in the employment agreement.

Subjectivity is the big problem here. In Apiata v Telecom New Zealand Limited, being subjective about the assessment process, including detailing the employee's attributes, was not considered fair and reasonable.

Is last on, first off legitimate?

If selection criterion in the employment agreement are objective, then the employer must abide by these criterion. In Smith v Wellington News Papers Limited, the Employment Court considered first on last off as a principle when selecting workers or employees for redundancy, which was in the employees or workers employment agreements. The Court provided that the employer could not override it to produce even greater efficiencies, or for any other reason. Thus, it is likely only legitimate where it features in a employment agreement.

What are some frowned upon views in redundancies and restructures?

If you hear or read all things being equal when it copmes to the selection criterion for a redundancy. Call us immediately. Despite this phrase being utilised with signifigant frequency in Aotearoa New Zealand with regard to redundancy communications, all things being equal cannot be used to exclude factors such as experience, employment record, competency, skills of individuals, and the need to maintain an efficient, balanced workforce.

In selecting employees for redundancy an employer must be careful to take account of relevant factors and exclude irrelevant factors related to the employee and business.

Does my employer have to consider alternative positions or redeployment?

Yes - Employers must be active and constructive in maintaining an employment relationship. Subsequenly, if an employer fails to consider redeployment may support the finding by the The Employment Relations Authority or the Employment Court that the redundancy, or termination arising from a redundancy process is unjustified.

In Jinkinson v Oceana Gold Limited, the Employment Court provides that where possible, and employer should offer alternative employment to an employee whose position might be made redundant.

Gafia v Propellerhead Limited provides:

The case law illustrates the proactive approach to redeployment required by duty of good faith. A fair and reasonable employer will consult and explore reasonable opportunities for redeployment for the affected employee. Differences in the terms, duties, renumeration and skillsets required may or may not be an encumbrance on redeployment; what is required is for an employer ot identify and consult with the employee on the reasonableness of redeployment in the circumstances. An employer's assessment of suitability for redeployment is not to be conducted unilaterally outside of the restructure consultation.

Put simply, the employer must consider redeployment, and can't begin a redundancy process to force a worker or employee into another role.

In Haddad v New Zealand Steel Limited, the Employment Relations Authority held that the employers reasons for failing to redeploy a worker were flawed because the employer failed to consider the employee's suitability for other rolls without requiring him to be subject to a contestable process.

In Cater Holt Harvey Limited v Wallis, a clear position was established that an employee cannot be deemed unsuitable or unqualified for a position if the requirements of that position are the same or similar to the employee's present role. In fact, it was established that there must be a sufficient, objectively disernible difference between the roles in order to justifiably breake the essential continuity of the employment relationship.

Do I have to accept a worse, or less advantageous position?

No. - Whilst the Employment Court established in Swell v New Zealand Trade and Enterprise that the new position need not be identical to the dis-established position, In Hennessey v Auckland City Council, the Arbitration Court provides that the position must be no less advantageous.