How not to make someone redundant


Re-advertising redundant role results in unjustified dismissal

In these days of economic recession, there is inevitably a major focus on redundancies. Hundreds, if not thousands of jobs are disappearing every week, and on one day recently, 75,000 jobs were lost around the globe.

These sorts of numbers mean that if you do happen to lose your job, the chances are that in seeking a new one you'll be competing with far more people than you would have been a year ago. All this makes it even more important to stay with your current employer if you can - if your existing role disappears, then you have to grab any in-house vacancy.

Paul Cochrane, an Operations Manager employed in November 2006 by Kitchen House Ltd in Henderson, faced just this sort of scenario. In November 2007, employees were told at a staff meeting that unexpectedly low sales, and high expenses, meant there would have to be redundancies.

Mr Cochrane met the CEO and another manager on 21 November 2007 and was immediately advised his position was redundant (it seems therefore that there was no consultation, as is essentially required, on the decision to disestablish his role). He was asked to think about other opportunities but was given only a day to do so (an extremely short consultation period by any standards).

The next day he was made redundant.

He began searching for a new job in the third week after his employment ended. He came across three successive advertisements for Kitchen House roles, at least two of which were apparently at its North Shore branch. Kitchen House claimed that these ads were mistakes, but the Authority said it thought this was highly unlikely.

The third role was "Operations Manager", the same job title as the role Mr Cochrane had just been made redundant from. The Authority did not say where this role was based, but said that Mr Cochrane had observed that Kitchen House's website detailed a position of Operations Manager at Henderson (his own branch). He therefore argued that his former position continued to exist.

Kitchen House said that the ad for the Operations Manager role was supposed to include a sales element, but did not. Kitchen House had ruled Mr Cochrane out for any sales positions it had available because it decided he did not have sufficient sales experience.

The Authority said however that the employer did not ask him about this, and that he said he did have such experience. Moreover, the recruitment agent who had advertised the vacancy on Kitchen House's behalf was aware of his sales experience, having already referred him to three other vacancies with a sales element. Nevertheless, the agent told Mr Cochrane he was not right for the Kitchen House role (with its sales focus).

Not surprisingly, the Authority was very suspicious about all this. It concluded there was an operations manager vacancy when he was made redundant, and that there were sales positions Mr Cochrane was not informed of or considered for.

The Authority said Kitchen House had failed to consult him properly about alternatives to redundancy, and to consider properly his redeployment. Therefore, the dismissal was unjustifiable on the basis that it was procedurally unfair. It awarded him $10,000 compensation for hurt feelings, but no reimbursement of lost income.

This failure to award reimbursement of lost income was slightly puzzling. The Authority concluded that because Kitchen House was in serious financial trouble, the redundancy was genuinely for commercial reasons. Therefore, Mr Cochrane had suffered no loss of income as a result of the unfair process (because the job was redundant so even a fair process would not have changed the outcome). This meant he could not be given any reimbursement of lost income. The Authority said it was suspicious of Kitchen House's defence, but was not prepared to find that there was a "sham".

The mere fact, however, that a company is in financial difficulty and needs to cut costs does not make a particular redundancy automatically genuine. If a company immediately re-advertises the same role, or uses this situation as an excuse to get rid of someone who is pregnant, no one would say that this is genuine just because of the company's general financial position. In other words, each individual case must be considered on its own merits.

If Kitchen House was advertising an Operations Manager role at Mr Cochrane's own (Henderson) branch, then his role was not genuinely redundant (assuming there were no major differences between the two roles, and no other people doing exactly the same job - which there was no suggestion of). If this was the true position, he should never have been made redundant.

Similarly, even if that vacancy was at the North Shore branch, a fair process would have meant he would have either got the role or had a real chance of getting it, given his previous experience, including sales. In other words, this is not (or at least should not be) just a question of process.

All this suggests that Mr Cochrane was a little hard done by. The Authority was not prepared to find this was a "sham" redundancy, despite the strong suspicions it expressed in its decision. All the evidence it pointed to, however, suggests that a sham is exactly what this redundancy was.

On that basis, there appears to be no reason why Mr Cochrane could not have been awarded reimbursement of lost income as well as compensation for hurt feelings (which related to the flawed process). His position, it seems, may not actually have been redundant.


Greg Cain

Greg Cain is an employment lawyer at Minter Ellison Rudd Watts.



Photo: Paul Estcourt

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