LUO v BAZ [2026] NZERA 549

BAZ had genuine financial reasons to restructure, but its process was seriously deficient. LUO received no proper proposal, relevant financial information, timetable or clear warning that her position was at risk. She was then required to apply for a new role that was substantially the same as her existing position. The Employment Relations Authority found the redundancy dismissal unjustified and awarded $11,000 compensation.

A genuine need to reduce costs

In early 2024 BAZ experienced significant commercial and financial pressure, including a loss of revenue. The Authority accepted there was a genuine and pressing reason to examine labour costs and consider restructuring. LUO did not establish that the restructure itself was created as a sham to remove her.

That substantive justification was only the first part of the test. A redundancy dismissal must also be carried out in a way that meets the justification standard in section 103A and the employer's good-faith consultation duties.

The proposal was never properly explained

BAZ initially told staff that it was considering a restructure and invited general feedback. But the process then became piecemeal, largely verbal and poorly documented. There was no written proposal setting out the proposed structure, no timetable and no clear explanation of which positions might disappear.

BAZ did not provide LUO with the relevant financial information and did not clearly tell her that her own position was at risk. A general statement that roles would change was not enough to communicate that roles might be removed. LUO reasonably understood an individual discussion to be about her development and performance rather than consultation over the possible loss of her job.

There was also no reliable evidence showing what feedback LUO gave or how the directors considered it before reaching their decision. The Authority found that the absence of meeting notes, a defined proposal and a consistent process were matters within BAZ's control and contributed to an unfair result.

Required to apply for substantially the same role

When BAZ confirmed the redundancy, it invited LUO to apply for a newly described position. Comparing the two position descriptions, the Authority found very little material difference between LUO's existing position and the new one.

The employer said the new position added some different responsibilities, but those additions were not substantial. There was no suggestion LUO lacked the skills and experience needed for it. One director accepted it was likely LUO would have obtained the role if she applied.

BAZ could not adequately explain why LUO needed to compete for the position instead of being redeployed into it. Nor had it consulted with her about why an application process was said to be necessary. Requiring her to apply for a substantially similar job reinforced her view that the employer no longer wanted her.

Unjustified dismissal

The Authority concluded that the restructure was substantively genuine but procedurally deficient. The defects were not minor: LUO was unfairly blindsided when BAZ announced that her position had been made redundant. Even allowing for BAZ being a small employer with limited resources, its process was demonstrably unreasonable.

LUO's separate claims of unjustified disadvantage by bullying and sexual harassment were not established. Her successful claim was the unjustified dismissal arising from the redundancy process.

Compensation but no lost wages

The abrupt decision, the lack of communication and the requirement to reapply for a substantially similar role affected LUO's confidence and sense of professional worth. BAZ was ordered to pay $11,000 compensation for humiliation, loss of dignity and injury to feelings. No deduction was made for contribution.

The Authority made no lost-remuneration award. LUO had chosen not to apply for the new position, ended her notice period early and began new employment shortly afterwards.

Why this case matters

LUO v BAZ separates the commercial reason for a restructure from the fairness of the dismissal process. An employer may prove that cost reduction was genuinely necessary and still lose because the affected employee was not given the information and opportunity needed to influence the decision.

The decision is also a reminder that redeployment is not satisfied merely by inviting an employee to apply for a replacement role. Where the new position is substantially the same and the employee is capable of performing it, the employer must have a sound and fairly communicated reason for requiring a competitive process.

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Source: Employment Relations Authority determination hosted on determinations.era.govt.nz.