Targeted redundancy? Manager calls restructure was a 'sham'

The Employment Relations Authority recently dealt with a case involving a worker who claimed unjustified dismissal and disadvantage after being made redundant by his employer, WorkSafe New Zealand.

The worker, who had been employed as a manager of the Certifications, Approvals, and Registrations (CAR) team since March 2016, argued that the restructure was a sham and that he should have been redeployed to another role within the organization.

The decision discussed the complexities of restructuring and redundancy processes, and the Authority examined WorkSafe's actions and whether it met the standard of a fair and reasonable employer.

Manager’s redundancy

According to records, the worker's employment with WorkSafe ended on 6 October 2018 as a result of redundancy. He claimed that this constituted an unjustified dismissal, arguing that the prior restructure was essentially a “sham” because there was no substantive reason for it to affect his position.

The worker also claimed that he was disadvantaged in his employment in several ways, primarily because the restructure was “carried out for personal reasons.

On the other hand, WorkSafe denied that the worker was unjustifiably dismissed or disadvantaged, stating that the decision to terminate his employment was substantively justified.

They maintained that there was a genuine rationale behind the restructure and that they had engaged an external consultant to advise on the structure of the organization and what leadership accountabilities would be most effective for WorkSafe going forward.

Restructure: Genuine or a sham?

The worker argued that the restructure was not genuine and that he was unfairly targeted. He claimed that tensions had developed between him and his employer, and that the employer had retaliated with the restructure.

The worker believed that the Chief Executive had “predetermined” that his employment needed to end because the latter had been convinced that the worker was “misogynistic.”

However, WorkSafe provided strong evidence that there was a genuine rationale behind the restructure, including engaging an external consultant.

They argued that the current leadership and team arrangements did not easily enable visibility of, and sufficient focus and resource allocation to, important areas. WorkSafe said that it wanted to align their functions and services to how they were thought about by external stakeholders.

The Authority found that WorkSafe's decision to restructure how it carried out its business was a decision open to it. While the worker strongly disagreed with WorkSafe's "business judgment," the Authority noted that it is not its role to substitute its judgment for that of the employer.

Redeployment and dismissal: Fair and reasonable?

Despite finding that the restructure and disestablishment of the worker's position followed a fair process, the Authority still had to assess whether WorkSafe's redeployment process and decision to end the worker's employment by way of redundancy met the justification requirements under section 103A of the Employment Relations Act.

The worker argued that WorkSafe did not take sufficient steps to find him a place in the new structure. He claimed that he was unjustifiably disadvantaged by the reassignment/redeployment process and that, as the only manager facing redundancy, there should have been no necessity for him to undergo a formal interview process to assess suitability for reassignment or redeployment.

WorkSafe maintained that the approach taken was to assess whether the worker was capable of functioning effectively in the roles he had expressed interest in. If he had been, he would have been appointed.

WorkSafe argued that the worker was not being compared to any other internal or external candidate and was being given the first opportunity at these roles as a person whose role had been disestablished.

Standards for redeployment

The Authority referred to the case of New Zealand Steel Limited v Haddad, which outlined the proper approach for employers when considering redeployment:

"When considering redeployment, the employer must comply with the good faith obligations in s 4 and, in particular, must consult with the employee in accordance with s 4(1A)(c). Finally, when deciding whether to redeploy the employee, the employer must be active and constructive in maintaining the employment relationship in accordance with s 4(1A)(b), including being responsive and communicative."

The Authority found that there were two roles where opportunities to redeploy the worker were potentially missed.

The Operations Support Manager role was a redeployment option, if not a reassignment one, but WorkSafe did not mention the role to the worker, who remained unaware of it. The Technical Programmes and Support (TP&S) role was also one that may have been suitable for reassignment or redeployment, but again, the worker was not advised of its potential availability.

"In order to discharge its obligations of good faith, it needed to advise [the worker] of the potential that role would soon be available and consider him for it," the Authority said.

Was it a fair and reasonable process?

The Authority concluded that WorkSafe did not give the worker all the information he needed to engage fully with the redundancy process and protect his employment.

It said that WorkSafe failed to meet its obligations under section 4(1A) of the Employment Relations Act.

"It follows therefore that [the worker's] dismissal on the grounds of redundancy was unjustified. He was not treated fairly and reasonably in relation to redeployment," the Authority determined.

The Authority also found that WorkSafe's decision to dismiss the worker without meeting with him, despite promising to reschedule a meeting, was not the action of a fair and reasonable employer. Additionally, the decision to lock the worker out of the network without consultation was unjustified.

"Whether or not that was the case, is unknown because [WorkSafe] took the action with a total lack of process. [The worker] was not consulted and [WorkSafe's] actions were based on a unilateral decision [it] made with no input," the Authority noted.

While the decision to disestablish the worker's position followed a fair and reasonable process, the Authority ultimately found that the worker was entitled to a consideration of remedies due to WorkSafe's failings in the redeployment process and the manner in which the dismissal was handled.

"[WorkSafe's] actions have disadvantaged [the worker]. Having reached these conclusions, [the worker] is entitled to a consideration as to remedies," the Authority said.

It then ordered the employer to pay him six months’ lost salary before the termination of his employment (less PAYE); and a sum of $25,000 as compensation for humiliation, loss of dignity, and injury to feelings as a result of the unjustified disadvantages he suffered.