Unjustified dismissal - How following a false redundancy process cost an employer $55,000

The Employment Relations Authority has upheld a personal grievance for unjustified dismissal and ordered an employer to pay an employee $55,000 after it fired her for redundancy.

During the level 4 Covid-19 lockdown, the employer approached the employee and told her that she had been selected for a pay cut. The employee contacted the employer for more information.

A few weeks later, the employer called the employee and told her that he was not happy with their business relationship. The employer asked the employee what she would do in the circumstances, and the employee said to make her redundant.

The employer made the employee redundant by giving her notice shortly after the phone call. The employer’s email said that a restructure was taking place, and her role would be affected.

The Authority held that the employer did not carry out a genuine redundancy process. The Authority raised concerns about:

• How quickly the employer made the employee redundant;
• That making the employee redundant went against both the terms of the wage subsidy it was receiving and what was said to the employer’s bank (that all employees would be kept employed);
• The failure to tell the employee that her role would be outsourced;
• The lack of any financial assessment on the impact of the employee’s redundancy to the business; and
• The fact that no other employees were made redundant.

It was also highlighted that the employer did not follow any fair process by considering other alternatives to redundancy or providing the employee with information about the process being followed.

The Authority ordered the employer to pay the employee $30,000 lost wages and $25,000 compensation for hurt and humiliation.

It is important that employers only follow redundancy process when there is a genuine reason to do so. Dismissing employees by reason of redundancy, instead of following performance or disciplinary processes, may result in expensive personal grievances.

If there is uncertainty about when or how to carry out a redundancy process, it is wise to speak with a professional experienced in the area.

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