David Grindle: Redundancy? No thank you

As major tech firms such as Twitter and Google set about making sweeping staff redundancies, Northland businesses should not be keen to follow their example. Photo / AP

OPINION

Northland is not the canary in the coal mine when it comes to employment trends. As major tech firms such as Twitter and Google set about making sweeping staff redundancies, Northland businesses should not be quick to follow their example.

Closer to home, the Warehouse Group, one of the country’s largest retailers, may cut 190 jobs at its Auckland support offices as it responds to what it called “challenging market conditions” and increased online shopping. Radio and outdoor advertising company MediaWorks has also indicated an intention to lay off up to 90 staff members in an effort to cut costs.

However, Northland is not influenced by some of the trends that play on the employment markets in larger cities, and in some respects our geographical isolation is of benefit to us.

So a word of warning: if your company decides to restructure the workplace, and that process results in new roles being created, pay special attention to the obligation to redeploy staff impacted by the restructuring. Employers have often paid lip service to redeployment but the obligation to meet the good faith duties codified under the Employment Relations Act 2000 are real and more extensive than you might think.

When restructuring, employers owe their existing employees a duty of good faith. Case law seriously questions the practice of going “to market” when a new position becomes available as a result of the new structure.

The law supports the view that existing employees who are impacted by the new structure, who have suitable qualifications, skills and experience already, or can gain these through training, should be offered the role without the burden of going through an application or contested process.

Three cases each demonstrate the obligation on employers to redeploy where possible.

In Jinkinson v Oceana Gold (NZ) Ltd, Oceana Gold operated a gold mine in Otago. It had various field staff positions, including two particular roles: grade controllers and ore spotters. It instituted a restructure whereby seven occupied positions would be disestablished, and six new mine technician positions created.

Along with the other affected staff, Tracey Jinkinson, a grade controller, sought appointment to one of the new mine technician positions. She was unsuccessful, and raised a personal grievance.

In the course of the hearing, the employer accepted that Jinkinson had all the practical skills necessary for redeployment to the mine technician position, and the only reason she was not appointed was the employer’s perception that she lacked the necessary teamwork skills.

The court found this perception unreasonable, and accordingly, the decision not to redeploy her into the role was unsuitable.

In the second case, Wang v Hamilton Multicultural Services Trust, the trust decided not to appoint Ning (Neil) Wang to the position of finance manager following a redundancy process. Witnesses conceded he was capable of performing the role, with some upskilling, and the court found that by failing to consider redeploying Wang into the role, the employer had failed to act in a way that a fair and reasonable employer would have in the circumstances.

The case of Rittson-Thomas t/a Totara Hills Farm v Davidson highlighted the question of redeployment again.

Hamish Davidson was employed as one of two unit managers on a farm. The farm also employed a shepherd. Davidson’s position was disestablished and his employer said he was entitled to apply for the junior shepherd position that was being created in place of the unit manager position.

The court found that it was not enough for the employer to simply offer Davidson an opportunity to apply for the new position of junior shepherd. The position should have been offered to him, as he clearly had the skills and experience for it.

It is clear from the case law that where a new position is similar in duties, remuneration and skill level to the redundant position, redeployment should be offered. In addition, an employer’s redeployment obligations will not be discharged by simply inviting a departing employee to apply for a new position. There is an expectation that an existing employee will be given preference over external candidates.

Employers thinking about embarking on a redundancy process would be wise to take advice before taking the first step.

David Grindle is the director in charge of the employment law team at WRMK Lawyers. He has practised in this area of the law for 17 years