'Frustrated' employer argues she no longer met 'commercial requirements'
The Employment Relations Authority recently dealt with a worker’s claim that she was unjustifiably disadvantaged when her role became redundant after her employer restructured the business.
She claimed her redundancy was “predetermined” and that she was “targeted” because she had workplace demands that the employer refused to meet.
Sherie Darvill, a senior lighting consultant employed by Targetti (NZ) Limited (Targetti), faced termination of her employment on June 20, 2022, due to a role redundancy. Darvill contested her dismissal, asserting it was unjustified and involved unfair treatment.
Targetti, in response, rejected Darvill’s claims, arguing that its actions aligned with what a fair and reasonable employer could have done given the circumstances.
Darvill joined Targetti in August 2019 as a lighting consultant responsible for promoting and selling lighting products. Initially, the employer paid her $80,000, and her employment included “tools of the trade” such as a work vehicle, mobile phone, and laptop.
Pay reduction and business restructuring
In March 2020, the Prime Minister announced its COVID-19 lockdown, and management met with Targetti staff members to organise work arrangements during the lockdown.
The discussion included an agreement on reducing staff pay while staff worked from home. Although Darvill and Targetti agreed on reducing her pay, “they disagreed on aspects of how her pay would be reduced and whether her pay would be restored to its original amount.”
Darvill returned to work in the Targetti offices in May 2020. Leading up to and after her return, she had asked Targetti when her salary was to return to its original amount. The matter remained unresolved until she went on parental leave in October 2020.
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While on leave, Targetti introduced a new remuneration structure, and discussions about her returning to work in February 2022 raised concerns about salary, travel expectations, and using a work vehicle.
‘Not meeting commercial requirements’
On May 26, 2022, Darvill went on a work trip to Tauranga. The trip led to a dispute between her and Targetti about whether she was authorised to go and whether she was entitled to be paid expenses for its entire duration.
Then, on June 7, 2022, Targetti sent Darvill a letter proposing to make her role redundant “because her role was not efficiently meeting its commercial requirements.” Targetti sought feedback from her before making its decision, and Darvill provided her insights.
A few weeks later, Targetti wrote to Darvill answering her concerns and confirmed its decision to terminate her employment on the grounds of redundancy. Her termination was effective immediately, and she was paid in lieu of notice.
Threatened with redundancy
Darvill claimed she was unjustifiably disadvantaged by Targetti “when it had threatened redundancy if she did not agree to the new remuneration structure.”
She also claimed she “was not properly consulted on the change and was misled by Targetti when it said the remuneration structure applied to all sales staff and she could earn the same salary amount as her original salary.”
She further said, “her redundancy was predetermined” and Targetti’s consultation process “was a charade,” adding that the “restructure of her role was not genuine because the main reason for it was to end her employment.”
The employer’s “frustrations”
Meanwhile, Targetti disagreed with Darvill and believed “its actions were those of a fair and reasonable employer.”
“During the two months since Darvill’s return from parental leave, Targetti said it was frustrated in its interactions with Darvill in trying to establish the expectations of her role. Specifically, the frustration centred around [her] out-of-town travel, her access to tools of the trade, and salary expectations,” the employer said.
Targetti said these frustrations meant Darvill’s role was “not meeting the commercial requirements of the company.”
“The new role was a sales-focused role which was to be paid in accordance with the new salary commission remuneration and will require consistent out-of-town and overnight travel. This also meant the product specification aspect of her work was no longer required,” the employer added.
Targetti also said it followed a proper consultation process where Ms Darvill was given appropriate opportunity to respond to the proposal.
Was there genuine redundancy?
In its decision, the Authority said, “Targetti was entitled to make commercial decisions, which included making a decision to restructure its operations.”
“Given the ongoing employment relationship problem leading up to the restructure, it is understandable why Darvill disagreed with Targetti’s reasons for the restructure. This is especially given the similarities between the new proposed role and her previous role at the time.”
However, the Authority said, “her expectations to keep her original terms and conditions of employment were untenable in a situation where Targetti opted to make a commercial decision to change its operation for the future benefit of the company of its size and scope.”
“For these reasons, a fair and reasonable employer in Targetti’s position could have made that decision to end her employment on the grounds of redundancy and so, Darvill was not unjustifiably dismissed by Targetti,” it added.
Compensation for personal grievance
Although there was a genuine redundancy, the Authority dealt with the worker’s claims of personal grievance.
After her return from parental leave, Darvill said she was “greatly stressed about the loss of her vehicle. At the time, she did not have a personal vehicle of her own, and she felt Targetti did not properly consider her personal circumstances.”
Additionally, she said the failure of Targetti to provide her with a laptop, mobile phone and access to the quotation system “had only contributed to her stress.”
Furthermore, with respect to her travel, she felt Targetti’s requests for overnight travel were an “unreasonable demand for a breastfeeding mother of a young family, newly returned from parental leave.”
“Overall, she had become increasingly upset about not being heard, and had lost trust in Targetti. She also said she was made to feel worthless and unwanted,” the Authority said.
Thus, as for the worker’s claims for personal grievance, the Authority determined an appropriate compensation award for the humiliation, loss of dignity and injury to feelings. It ordered the employer to pay her $18,000 for her suffering.