Managers had alleged union activities, loud opposition before company's restructure
The Employment Relations Authority (ERA) recently dealt with a case involving two retail managers seeking interim reinstatement after being made redundant by their employer, an Asian grocery store chain in Auckland.
The workers argued that their dismissal was unjustified, claiming their roles were deliberately targeted due to their union activities and opposition to previous company proposals.
They also raised concerns about the fairness of the selection process and the employer's consultation efforts during the restructuring.
Background of the case
The employer operates five stores in Auckland selling Asian, particularly Korean, groceries. On 13 June 2024, the company started a consultation process on a proposal to replace its five retail manager roles with three operational manager positions.
The proposal included criteria for selecting appointees to the new operational manager roles if the retail manager roles were disestablished.
The two workers and their union representative provided feedback about the proposal, raising concerns about the rationale and financial basis for the proposed changes. On 5 July 2024, the employer gave a personal evaluation assessment to the workers.
Their individual assessment used the selection criteria for the proposed new operational manager roles. The retail general manager had prepared it, and the scores given to the two workers were lower than the other three retail managers.
The workers were told that if those "current evaluations" were confirmed, they would not be appointed to an operational manager role. Instead, their positions would be disestablished and they would be given notice of termination of their employment. They were given the opportunity to provide feedback on the evaluations.
The restructuring process and managers’ grievances
In the days following their evaluations, the workers provided feedback, questioning the evaluation and the selection criteria used and seeking further information from the company's representatives.
On 15 July, the workers raised personal grievances of unjustified disadvantage about the restructuring process. Later that day, they were advised by letter that their positions were to be disestablished and given three weeks' notice of the termination of their employment. Their employment ended on the grounds of redundancy on 6 August 2024.
In their statement of problem lodged with the ERA, the workers sought findings that the employer failed to carry out a fair and reasonable process and did not act in good faith in providing information and making decisions about restructuring the business.
They said their two roles were deliberately targeted for disestablishment because they had opposed a recent, earlier company proposal to reduce rostered working hours for all staff from between 45 and 54 a week to 40 hours a week.
The workers also said the employer had failed to properly consider redeploying them to other positions rather than dismissing them. They sought remedies of lost wages, distress compensation, reinstatement to their previous or no less advantageous positions and, until their claims were investigated and determined, interim reinstatement.
Is it unfair redundancy?
The employer, in its statement in reply, said it carried out a fair process in restructuring its business, by providing information and responses to queries from the workers and their union representative and by extending timelines during the consultation period.
It denied its decisions were influenced by the workers being union members. The employer said redeployment had been considered but no similar positions were available.
Two other roles were vacant – one as an assistant manager and one as a retail assistant – but the workers did not apply for either role.
Reinstatement or redundancy
In assessing the case for interim reinstatement, the ERA considered several factors, including the strength of the workers' case for unjustified dismissal, the likelihood of permanent reinstatement if the dismissal was found unjustified, the balance of convenience between the parties, and the overall interests of justice.
The ERA found that the workers had an arguable case for unjustified dismissal. It noted:
"There was an arguable inference that the proximity between [the workers'] opposition to reductions in rostered hours in April 2024 and [the employer's] restructuring plans begun in May 2024, and resulting in removal of [the workers'] roles, was related to [the workers'] involvement in union activities and protecting staff interests."
However, the ERA also acknowledged the employer's position:
"If [the employer] can show the redundancy is genuine and that the notice and consultation requirements of s 4 of the Act have been duly complied with, that could be expected to go a long way towards satisfying the s 103A test."
After weighing all the factors, the ERA declined the application for interim reinstatement. The decision was based on several considerations:
"Weighing the elements discussed above, the balance of convenience did not favour reinstatement of [the workers] for the period from now until the eventual determination of their personal grievance applications."
The ERA also noted:
"While [the workers] faced some financial difficulty during this time, they had some resources from their final pay and the opportunity to seek alternative work meanwhile. The balance also favours [the employer] on the relative strength of the cases."
This case highlights the importance of fair and transparent restructuring processes and the challenges workers face when seeking interim reinstatement. It also underscores the complexity of balancing the interests of both employers and employees during organisational changes.
