When a Redundancy is an Unfair Dismissal
The Employment Court upheld a determination of the Employment Relations Authority that an employer pay its former employee substantial compensation for hurt and humiliation in remedy of the redundancy having been found unjustifiable.
Employers must comply with the Employment Relations Act 2000
An employer must act as a fair and reasonable employer could have done in all the circumstances at the time dismissal or action occurred and an employer must act in good faith. This is pursuant to sections 4 and 103A of the Employment Relations Act 2000.
An employer seeking to make an employee redundant must have genuine reasons for doing so. When such a dismissal is before the Court, the Court does not substitute its view of how an employer is to run its business, but it would need to see evidence of a genuine and proper evaluation by the employer of its business situation, and of the options available to the employer, to establish that a dismissal for redundancy is justifiable.
Grace Team Accounting v Brake [2014] NZCA 541, [2014] ERNZ 129 at [85]
An employer considering possible redundancies also must follow a fair process and be constructive and communicative. The employer must let potentially affected employees know what is proposed. It must provide those employees with access to relevant information about the situation and give them a reasonable opportunity to provide their views before any decision is made.
The employer must genuinely consider the employees' views before deciding what steps to take; this means that, while it is entitled to have working plans already in mind, the employer must have an open mind and be ready to change its plans and even start anew.
Simpsons Farms Ltd v Aberhart [2006] ERNZ 825 (EmpC) at [62]
A dismissal or action does not, however, become unjustifiable solely because of defects in the process followed by the employer if the defects were minor and did not result in the employee being treated unfairly. This is prescribed by section 103A(5).
The recent case
The Employment Relations Authority awarded Mr Waters $17,000 for compensation for hurt, humiliation, loss of dignity and injury to feelings WATERS v S.T.L LINEHAUL LIMITED [2021] NZERA 350. The employer, STL Linehaul Limited challenged that ERA determination.
The outcome in Judge Holden's judgment of 28 June 2022 was to order STL Linehaul to pay the full $17,000 compensation and the contribution to Mr Waters costs awarded by the ERA to the amount of $9,071.56. STL LINEHAUL LTD v WATERS [2022] NZEmpC 114
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