There are lessons for all employers in the case of David Bate, who was awarded $189,950 after taking an unjustified dismissal case against IBM New Zealand, a top employment lawyer says - particularly local subsidiaries of multinationals "left grappling" to speedily implement a restructure ordered by an offshore parent.

In a determination filed on April 5, the Employment Relations Authority awarded Bate $15,000 compensation for "humiliation, loss of dignity and injury to feelings".

It noted evidence that in the wake of his firing, the 22-year IBM veteran "required medication to sleep, and that he was easily agitated and prone to disproportional responses to minor irritations."

IBM was also ordered to pay him $174,950 as reimbursement for six months' lost wages.


Bate, who was on a $349,000 a year as IBM Asia-Pacific's Asia-Pacific VP for hybrid cloud, told the ERA that a July 2017 reorganisation of the company left him with nothing to do.

As he saw things, the merger of Asia Pacific cloud and analytics sales teams, and the addition of another manager above him, had made him redundant.

'Chee has got my job now'

Bate was reporting to veteran Kiwi IBMer Katrina Troughton, who at the time was based in Australia.

On July 3, 2017, Troughton sent Bate an email saying, in part: "Your current role remains … You will continue in your current role and responsibilities reporting to the new leader [Martin Chee]."

Bate replied, the next day: "The appointment of Martin Chee as VP Hybrid Cloud and Analytics for Software has come as a surprise to me as that is my position … Simply put, Martin Chee has got my job now. I cannot 'continue in [my] current role and responsibilities reporting to the new leader' as you said in your email to me on Monday evening because the role and responsibilities I had [have] been taken over by MC."


The ERA's judgment records that Bate, who was on assignment in Singapore, was then "away from the workplace for several days".

After he returned to New Zealand on July 31, Troughton emailed him to complain he had not attended scheduled meetings or phone conferences.

Bate reiterated that he had lost his primary responsibilities in the restructure, and that nobody at the company had explained his new responsibilities. He added that he was equipped to work remotely, and that since returning to New Zealand he had been monitoring his cellphone and company email, and was willing to do any tasks assigned to him. He declined a performance review meeting offered by Troughton on the advice of his lawyer.

On August 25, Troughton emailed Bate, "to raise IBM's concern with your prolonged and unexplained absence from work".

Bate had not been in touch with his manager, or any members of his team, or performed any of his duties, she said.

She added that his failure to perform while working remotely meant he had to work from IBM's Wellington or Petone offices.

The VP countered that he had not received any meeting requests from Chee, and that he continued to perform the tasks he understood remained from his former role, and that he was available for others.

Working relationship deteriorates

Bate and Troughton reiterated their positions in further emails, and a face-to-face meeting on September 1, but failed to make any headway.

On September 8, Troughton dismissed Bate with immediate effect, saying he had failed to follow a lawful instruction to perform his role.

"Against a backdrop of restructuring, and with the knowledge that Mr Bate considered his role had been disestablished, the ERA considered that a fair and reasonable employer had to act in good faith and there had to be more communications to discuss the effects of the restructure on Bate. In the absence of such discussions, the Authority concluded it was unfair for IBM NZ to issue an instruction to Bate, and dismiss him for failing to comply with the instruction," employment lawyer Jennifer Mills says.

"In this case, two business units were brought together, and an additional level of management was added above Mr Bate's position. This was only communicated to Mr Bate on the day it was effected, and he questioned whether he still had a job as a result of the restructure," she adds.

"During the case, IBM NZ properly conceded that it could have better managed the communications relating to its restructure."

'Left grappling'

Mills also notes it wasn't one-way traffic. The ERA rejected Bate's claim that he had been made redundant, and his claim that IBM embarked on an unsubstantiated performance process.

Nevertheless, Big Blue did make mistakes, and ones that have happened before with multinationals.

Local subsidiaries of multinationals
Local subsidiaries of multinationals "left grappling" to speedily implement a restructure ordered by an offshore parent, employement lawyer Jennifer Mills says. Photo / Supplied.

"Generally speaking, we find that many organisations wish to move quickly through its restructuring, particularly where it is at the senior management level," Mills says.

"At times, broad decisions may have been made by overseas parent companies, and the local company is left to manage the effects of those decisions.

"However, the statutory of good faith in NZ will require employers to be active and communicative with its employees."

In terms of restructuring, this requires employers to consult with the affected employees about any proposed changes which could impact on their employment," Mills says.

"This process will involve providing sufficient information to the potentially affected employees, in order to allow them to understand the proposed changes and meaningfully respond to them.

"In this case, it would have involved earlier and more specific communications to Bate regarding the changes in combining two business units, and how this could impact on his role. In particular, given that the proposal included an additional level of management above Bate, IBM NZ ought to have provided information and discussed how this could affect his duties and responsibilities."

Lands on his feet

For his part, Bate went on to join Dell subsidiary VMWare, where he is serving as vice president for cloud in Asia-Pacific and Japan.