ERA decision: Worker claims redundancy package after working for another company
The Employment Relations Authority (ERA) recently dealt with an employment dispute between a worker and their employer, Auckland Transport.
The case revolved around the worker's claim of unjustified dismissal and disadvantage following a restructuring process that resulted in the termination of their employment due to redundancy.
The legal issue between the two parties raised questions about the continuity of employment and its impact on redundancy compensation.
Background of the case
The worker was initially employed by Auckland Council as a senior security analyst from January 2017 until November 2019. He then transferred to Auckland Transport, a company controlled by Auckland Council, where their employment was treated as continuous with their service at Auckland Council.
This was allegedly confirmed in a letter from Auckland Transport's People Solutions Manager, which stated, "As you are transferring from Auckland Council (or other CCO) Auckland Transport will regard all previous service as current and continuous."
The worker's first period of employment with Auckland Transport lasted from December 2019 until October 2021, when he resigned.
During this time, Auckland Transport paid the worker all outstanding holiday leave entitlements as required by law.
Return to prior workplace
After working for an unrelated company for nearly 11 months, the worker was contacted by Auckland Transport's Head of Digital Architecture in March 2022 about potentially returning to work for them in a security architect role.
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In July 2022, the worker received an offer letter and employment agreement from Auckland Transport, which he signed on July 26, 2022.
The employment agreement contained a redundancy clause that specified the worker's entitlements in the event of their position being made redundant.
It also included a completeness clause that stated, "This Agreement, along with your letter of appointment, replaces all previous written or oral agreements and understandings between the parties and constitutes a complete record of the Agreement."
Redundancy and legal dispute
In April 2023, Auckland Transport commenced a restructuring process that resulted in the termination of the worker's employment by reason of redundancy, with their last day of employment being June 30, 2023.
The worker claimed that he was unjustifiably dismissed and disadvantaged, and that Auckland Transport had excluded their past service period from the calculation of their redundancy compensation.
Auckland Transport, on the other hand, argued that the worker's employment with them was broken, which impacted the redundancy compensation that he was anticipating.
The ERA’s investigation aimed to determine whether the worker had continuity of employment with Auckland Transport from January 2017 until June 2023.
The ERA’s findings
The ERA determined that the worker's first period of employment with Auckland Transport ended on October 29, 2019, when he resigned.
The Authority found that, unlike the transfer from Auckland Council to Auckland Transport, there was no continuity of employment during the nearly 11-month period when the worker was employed by a third party.
"I find that [his] period of employment with Auckland Transport ended on 29 October 2019 by reason of his resignation," the ERA stated in its decision.
"During the intervening period after October 2019 and [the worker] rejoining Auckland Transport he worked for a third party employer. I find this situation differs from the first period of employment when [he] worked at Auckland Council and Auckland Transport because there was a complete severing of the employment relationship with Auckland Transport in October 2019 when he resigned and worked for another employer,” it added.
The ERA also noted that when the worker rejoined Auckland Transport, it was as a new employee, as indicated in the offer letter and employment agreement.
The Authority found no indication in any of the documents that the worker's first employment period with Auckland Transport would be recognised as continuous with the second period.
"Unlike the situation in transfer from Auckland Council to Auckland Transport, there was no External Employee transfer form completed because Auckland Transport regarded [him] a new employee," the decision stated.
‘No continuity of employment’
The ERA’s preliminary determination that there was no continuity of employment between the worker's first and second periods of employment with Auckland Transport has implications for any claims and remedies he’ll pursue, should he be found to have been unjustifiably dismissed or disadvantaged.
"I determine that [his] first period of employment with Auckland Transport ended on 29 October 2021. The second period of employment with Auckland Transport commenced on 12 September 2022. There is no continuity of employment between the first and second periods of employment with Auckland Transport," the ERA said.
"This will have implications for any claims and remedies [the worker] can expect, should he be determined to have been unjustifiably dismissed and/or disadvantaged following the substantive hearing of this matter," it added.