Employer ordered to pay over $33,000 for sham redundancy

The Employment Relations Authority (ERA) has ordered an employer to pay an employee over $33,000 for unjustified dismissal after replacing him, and then dismissing him “by reason of redundancy” afterwards.

The employee worked in a high-level management role. Following concerns about costs and operations, the employer contracted a company to provide a report on how to better manage the business.

The report suggested several changes including a restructure. A few months later the employee received an email from the employer telling him that another, new, employee would be taking over all of his duties from that point onwards.

Following the email, the employer told the employee that it was carrying out a redundancy process. The employee was not provided copies of any information that resulted from the report.

The employee was made redundant, and raised a personal grievance with the employer.

The Authority held that the employer unjustifiably dismissed the employee through an improper redundancy process. Internal communications showed that the decision to replace the employee was made before the employer began the redundancy process.

The Authority explained that coming to a decision, or making changes, before carrying out a redundancy process, is a significant flaw. Replacing the employee, and then carrying out the process to justify the action, meant that the process was carried out for an improper purpose.

Employers are also required to provide employees with copies of all relevant information so that they can provide feedback on redundancy proposals.

The Authority ordered the employer to pay the employee $8,150 for lost wages and $25,000 in compensation.

It is important that employers have a good understanding of the redundancy process, and their obligations when carrying one out. Failing to follow the correct process may result in employees raising expensive personal grievances.

If you are considering carrying out a redundancy process, and are unsure how to do so correctly, it pays to speak with a professional experienced in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.