The Employment Relations Authority has ordered an employer to pay two employees $58,000 after unfairly making them redundant during Covid-19.

The employer emailed its employees to inform them that it had applied for the wage subsidy, and that if approved, things would be “good and well”.

However, before being approved for the wage subsidy, the employer decided to make several employees redundant.

The employer called the department processing the subsidy application and provided it with names to exclude from the application. The employer then gave notice of redundancy to the employees.

The Authority held that the employer dismissed the employees without consultation. The failure to consult with the employees was described as a significant defect in the redundancy process, and resulted in their dismissal being unjustified.

The Authority explained that due to correspondence that the employer had with the department processing the subsidy application, it would have had a good idea that the application would be approved.

Given the employer had a good idea it would be approved for the subsidy, and had given reassurances to its employees, the Authority found that the employees could not truly have been surplus to requirements, and the decision to make them redundant was not one that would have been made by a “fair and reasonable employer.”

The Authority ordered the employer to pay the first employee $18,907 in lost wages and $10,000 in compensation, and the second employee $14,132 in lost wages and $15,000 in compensation.

Failure to follow the redundancy process correctly, despite the Covid-19 lockdown and wage subsidy, may result in expensive personal grievances.

If there are uncertainties around how to carry out an appropriate redundancy process, or concerns about the process an employer has followed, 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.


Alan Knowsley
Employment Lawyer