Silver Fern Farms faces a bill of up to $3 million after it was ruled it made more than 100 Dunedin seasonal meat workers redundant.
New Zealand Meat Workers Union (NZMWU) went to the Employment Relations Authority (ERA) seeking redundancy payments for up to 180 Silverstream staff after no lambs were offered for processing during their usual working season, between about December last year and about June this year.
At an ERA hearing in Dunedin in October the union argued Silver Fern Farms had acted in a "reprehensible" way over the matter, given workers had been left in limbo, and faced uncertainty and reduced income for 18 months.
Silver Fern Farms argued the usual "seasonal layoff " had just been extended, meaning no redundancy situation existed.
However, ERA member Christine Hickey, in a decision just published online, disagreed, ruling staff positions were made redundant when the decision was made not to open for the 2013-14 season.
Ms Hickey rejected Silver Fern Farms argument the workers were on an "extended seasonal lay-off".
If its interpretation was correct, it would "theoretically never be in a position in which it was required to make redundancy payments for seasonal employees", she said.
The clause in the collective agreement referring to "seasonal lay-off" was included so it did not have to pay redundancies at the end of each season, Ms Hickey said.
"On the face of it, the Silverstream seasonal employees' usual seasonal employment was made unavailable because their positions were superfluous to the needs of their employer in the 2013-14 season.
"Therefore, according to [a clause in the collective agreement] they were made redundant."
She called on the union and Silver Fern Farms "to work together to establish which staff are redundant and how much their redundancy compensation should be".
Ms Hickey did not rule on whether about 70 Silverstream workers who accepted work at Finegand were eligible for redundancies and instead called on the parties to come to an agreement on issue.
If one could not be reached they could return to the ERA.
Silver Fern Farms chief executive Dean Hamilton said it was "genuinely surprised" by the ruling as it felt it was doing the right thing.
It was expected the redundancies would cost between $2 million and $3 million, depending on how it was defined who had been made redundant.
"That's a significant [cost] for any organisation."
He did not believe the ruling would have widespread implications for employers, as it was a "highly unusual" situation.
Silver Fern Farms was yet to decide whether to reopen Silverstream for lamb processing this season, but the ERA ruling would have no bearing on the decision.
A decision on whether to appeal the ERA ruling would be made by the end of January.
NZMWU Otago Southland branch president Daryl Carran said the decision was a "major relief" for the workers, because it put a definition around how long meat companies could "park up" staff and call it an extended off season.
He remained angry about the way Silver Fern Farms had handled the situation, calling its actions "deplorable" and "cruel" on staff members.
It was now two years past their normal start date and the company was yet to tell staff if they had been made redundant.
"Silver Fern Farms have had a reasonable reputation on dealing with closures, up until Silverstream."