Business penalised over $100,000 for poor redundancy process …

Three employees of a business brought personal grievance claims of unjustified disadvantage and unjustified dismissal against their employer in the Employment Relations Authority (ERA).

During the Covid-19 lockdown, the business initiated a closedown and required its staff to take leave. This occurred only a few months after its annual closedown over the Christmas period. Under our employment laws, businesses may only have one closedown period over the course of 12 months, so the ERA stated the business was in breach of its employment requirements.

The business also unilaterally reduced the salaries of the employees without their consent. Our employment laws require that employees give written consent to any deduction from remuneration, and in this case, there was a clause in the employees’ employment agreement that any changes to the agreement will not become binding unless mutually agreed and recorded in writing.

While the ERA found the reason to dismiss the employees were genuine, the business did not follow a reasonable redundancy process. It dismissed two of the employees in a work teleconference attended by other employees, and did not allow the employees a reasonable chance to consider and comment on the proposals being made. The ERA stated that there was no reason why the business could not have held individual consultation meetings, and it should have provided sufficient information regarding the process at an appropriate time to avoid making the employees feel as though the decision to dismiss them was pre-emptively made.

The third employee was asked to go on unpaid leave for seven months. However, he was shocked to find a new role was created in the new structure which was substantially similar to his existing role. It was offered to a colleague on the same day the employee was asked to take leave. The ERA stated this could have been a redeployment opportunity for the employee if he was asked to consider it, and that the employer did not act fairly or reasonably in this instance.

The ERA found that all three employees were put at an unjustified disadvantage and unjustifiably dismissed, and are all entitled to three months wages, and compensation for humiliation, loss of dignity, and injury to feelings totalling over $100,000.

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Alan Knowsley and Hanifa Kodirova