A common redundancy mistake

A recent decision of the Employment Court: New Zealand Steel Limited v Haddad [2023] NZEmpC highlights a redundancy mistake that employers often make as part of a redundancy process.

Mr Haddad was employed in the position of Process Computing Manager by New Zealand Steel Limited. His position was disestablished as part of a wider restructure at New Zealand Steel. Both the determination of the Employment Relations Authority and the judgement of the Employment Court held that the restructure was genuine. Despite the Court confirming the restructure was genuine, it held that the decision to terminate Mr Haddad’s employment was unjustified. Mr Haddad was awarded compensation of $25,000 and approximately the sum equivalent to 18 months loss of earnings.In addition to monetary remedies, Mr Haddad was reinstated. Mr Haddad is currently employed by New Zealand Steel.

So why did Mr Haddad succeed? All though the company argued it considered redeployment and genuinely believed there were no options for redeployment – the Court disagreed. The Court made an important point at [62](c):

“When considering an employer’s decision not to redeploy an employee, the Authority and the Court may consider the merits of the employer’s decision under s 103A.”

Here is the redundancy mistake that the employer made: it was not able to justify its decision to not redeploy Mr Haddad. Often employers see redeployment as a “tick the box exercise” – they tell the employee to visit the careers page on the website or tell the employee that “there are no suitable options” without explaining in detail their decision to not redeploy.

If you are an employer, then don’t make that mistake. Instead, spend time carefully considering redeployment options and then set out in detail why the employee cannot be redeployed. If your find yourself in this scenario or have any questions, please get in touch with the Watermark team, we are happy to discuss your situation.