$22,000 compensation for poor redundancy consultation process…

The ERA has found that an employer was genuine when undertaking a redundancy process, but that the actual process followed was insufficient. 

The employer decided to reduce the number of foreman from six to four and developed a scoring matrix to assess each of its six employees before reaching conclusions as to redundancy.

The ERA found however, that although the scoring mechanism was fair, the employer failed to discuss the individual scores with the two employees selected for redundancy before it reached the decision to make them redundant.  In addition it failed to consider alternative positions within the company before making them redundant.  The employer did offer alternative positions within a related company, but this would have involved them being made redundant.  It should have considered positions within the company they were employed by rather than a related company.

One employee was awarded $10,000 compensation for the poor consultation process and the other employee was awarded $12,000 compensation.  Neither employee was awarded any loss of wages because both employees had set up a business in competition with the employer and carried on that business after they were made redundant.  They had therefore failed to mitigate any losses from their redundancy.  The two employees were penalised $4,000 each for undertaking work in competition with their employer when they were still employed.




Alan Knowsley
Employment Lawyer
Wellington