A recent Employment Relations Authority decision has upheld a personal grievance for unjustified dismissal.  The employee was the General Manager, and following a merger of two companies was offered a fixed term agreement on the basis that he was not the right fit to take the combined company forward.  He was paid a $20,000 incentive payment to enter into the fixed term agreement.

The ERA held that the reason given to the employee was not the genuine reason for the fixed term, which meant the employee had not had a real opportunity to bargain and consider whether to sign up for the fixed term.

The employee was awarded four months salary plus $8,000 compensation and legal costs.

What makes this case very interesting is that the real reason found for the fixed term was that the employer was going to make the position redundant (which it subsequently did do).

The employer had tried to be kind to the General Manager by not making him redundant (no redundancy payment was payable), keeping him on for six months instead of one month’s notice, and paying him a significant incentive payment.

This came back to bite the employer.

It would have been far better in the particular circumstances for the employer to have gone down the redundancy route without a fixed term agreement. If it wanted to be generous it could still have done so, and without getting “hit” twice.

If you need help getting your redundancy process right give me a call on (04) 473 6850.