The Employment Court has upheld a challenge to an Employment Relations Authority finding following a successful unjustified dismissal and unjustified disadvantage claim.

The ERA had found that a redundancy was carried out without a proper process and was unjustified.  It had awarded $10,000 compensation, but reduced that award because it held that the employee was 50% responsible for the redundancy, having acted inappropriately towards his employer and other staff during the process.

The Court held that the $10,000 compensation award made by the ERA was too low.  It was outside of the range which should have been awarded which was between $10,000 to $40,000 and that a proper compensation amount was $22,500.

The Court also found that the 50% contribution level found by the ERA was incorrect.  A 25% contribution was substituted.

The Court’s findings increased the compensation from the $5,000 awarded by the ERA (after a 50% reduction) to $16,875 (after a 25% reduction).

The Court dismissed the employee’s claims for increased lost wages.  The ERA had awarded three months and the Court reached the same conclusion, but for different reasons.  The Court also dismissed the claim that the employer should be penalised for breaches of good faith and for breaches of the employment agreement.

In setting the compensation award the Court adopted the three band approach.  Low level hurt and humiliation will result in awards of up to $10,000, mid-range compensation will be in the range of $10,000 to $40,000 and high level compensation will be over $40,000.

It pays to get your processes right and the business case for redundancies correct before embarking on a redundancy process.  Getting it wrong can prove very expensive.

Alan Knowsley
Employment Lawyer