Spotlight on redundancy law

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A recent spate of cases dealing with redundancies has clarified various points in the law, Karen Radich, barrister with Clifton Chambers, wrote in a blog post last week: “Lessons from recent redundancy cases."

Some of these key points included the selection of employees for redundancy, the requirement to consider alternative roles for an employee, and whether the new role in a restructuring is really substantially different.


  • Selection of employees for redundancy: In a decision handed down by the Employment Court, Gilbert v Transfield Services (New Zealand) Limited, an employee was reinstated after three and a half years and awarded the full lost remuneration after being unjustifiably dismissed by means of redundancy. Radich wrote that there were several lessons in this case. These include the fact that an employer must focus on an employee’s skills, not their personal attributes, when considering who to make redundant, that an employer should also consult an employee’s performance history, and that psychometric tests are an “irrelevant criteria" when selecting employees for redundancy.


  • Requirement to consider alternative roles for an employee: Another case reinforced the point that an employer must proactively consider an employee for other positions that may be vacant company-wide before deciding to make him or her redundant. In an Employment Relations Authority (ERA) determination, Ford v John Holland New Zealand Ltd, the company was found to have breached its own policy by failing to do so. “While the employee’s direct manager may not have been in a position to investigate this, the Authority held that either he or ‘HR’ should have referred the matter to someone who was,” Radich wrote.


  • Is the new role in a restructuring is really substantially different?: An employee can only be made redundant if his or her position is well and truly disestablished. “In Kreider v Vodafone New Zealand Ltd, the Authority held that the General Counsel role with Vodafone was the same as the ‘new’ Legal Director role created in a restructuring,” Radich wrote. This was after careful consideration of the job descriptions of each position.



*To read Radich’s full post, click here.

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