A redundancy occurs when job or position is no longer required by the employer due to genuine business reasons e.g., operational changes, technological advancements, or economic downturns.
A recent case in the Employment Relations Authority (“ERA”) illustrates the difference between a genuine redundancy and an unfair dismissal which would give rise to liability for a personal grievance. For the purposes of this article, we will refer to the employee as “Maisie” and the employer as “Farm Services.”
Background
Farm Services was a company providing farm management services. Farm Services was essentially a labour hire company, a company that would employ dairy farm employees and send them to work on client’s farms. Maisie was employed by Farm Services in August 2022 as a dairy farm assistant on a client of Farm Services’ Southland farm.
The Meeting
In January 2023, Farm Services texted Maisie asking for a meeting. Maisie was not told the purpose of the meeting but believed that this was in relation to discussing the potential of farm accommodation.
At the meeting, Farm Services did not discuss farm accommodation but rather told Maisie that their client (the farmer) felt that they did not require Maisie’s services due to work becoming quieter, that Farm Services therefore had no work available for Maisie and that she was to finish up immediately with two weeks’ notice.
Farm Services then provided a letter to Maisie summarising what was discussed at the meeting - the accuracy of which was disputed between the parties – that stated “you have the right to appeal this decision. If you would like to take this course of action, please confirm in writing to the email address above”.
A ‘New’ Job is Advertised
A week after the dismissal, Farm Services advertised on the Southland Dairy Farm Jobs Facebook page seeking a “farm assistant herd manager”.
Maisie engaged an advocate and raised a personal grievance of unjustified dismissal.
The Grievance & Remedies
The ERA found that Maisie’s dismissal was substantively unjustified i.e. the reasons provided were either inaccurate or did not justify dismissal and procedurally unjustified meaning Farm Services did not follow a fair process in terminating Maisie’s employment).
With respect to substantive justification, the ERA said:
“Given the circumstances, including the advertising of a position soon after [Maisie] left [Farm Services], no genuine redundancy situation existed and [Maisie] was misled by the reasons given to her for her employment ending in what was a process that lacked her input”.
With respect to procedural justification, the ERA said:
“…other than having a meeting to communicate a pre-determined decision to end the employment ‘in person,’ there was a total lack of adherence by [Farm Services] to procedural fairness and good faith factors”.
Maisie went without work for three weeks after the dismissal. The ERA awarded Maisie three weeks lost wages and $14,000.00 compensation for the distress that the unfair dismissal caused her.
So What Is a Genuine Redundancy?
A genuine redundancy, as with any termination of employment, must be substantively and procedurally justified. That means that the employer must have genuine business reasons for the redundancy and that the employer must follow a fair process in making the employee redundant.
Employers must take care to follow the strict requirements set out in the Employment Relations Act 2000, their employees’ employment agreements and as determined by the ERA and Courts.
A redundancy must generally be a ‘last resort’ option, substantive fairness requires employers to explore all possibilities of maintaining the employee’s employment and includes investigating any alternatives to dismissal that the employee may raise during the consultation process. In the above case, the employer misled the employee by making the employee redundant because Maisie’s position was essentially surplus to requirements but then advertised for a similar position a week later.
A fair process is situation specific, but generally requires employers to do the following:
- Carry out a consultation process which includes giving employee/s enough time to consider, seek advice and comment on the proposal and genuinely considering employee/s feedback;
- Be open on their communication with employee/s;
- Give employee/s all evidence of the employer’s genuine business reasons;
- Have a fair selection criterion of the employee/s to be made redundant; and
- Give support to employee/s.
After determining that the employee will be made redundant, the employer must also review the employment agreement and pay the employee their notice period and any redundancy compensation.
Making employees redundant is a difficult process and one that can inherently attract personal grievances from employees who feel betrayed. The above case demonstrates the difficulties that some employers can face when making employers redundant and the consequences of getting it wrong.
