Redundancy is complicated, not a quick fix.
How an employer chooses to run its business – the structure – can be complicated. When an employer decides to change how it does things and the employment of staff could be affected as a result, a redundancy situation might arise.
The case of Caddy v Vice Chancellor, University of Auckland shows just how involved the redundancy process can be. This article will move through the case, and as it does it will provide a clear picture of the redundancy process and its complexities. In the case of Caddy, the Court looked at a complicated redundancy situation arising from a restructure of the School of Music at the University of Auckland – the case is a valuable reminder of just how complicated these situations can become, and the level of depth the Court expects of an employer in justifying its decisions.
Dr Caddy was employed by the University of Auckland as Senior Lecturer in Musicology (a specialised study of music from a variety of historical, intellectual, socio-cultural and theoretical/analytical perspectives). The School of Music was reviewed in 2017 and a number of issues were discovered. A committee was formed (which Dr Caddy was a part of) to redesign the curriculum. The committee did so, and in January 2018 the redesign was approved.
In March 2018 a restructure was proposed to implement the changes – this was not well received by employees. The Employment Relations Authority decision notes some staff became “verbally abusive” at the meeting.
The proposed restructure was comprehensive – it involved numerous changes to the curriculum, including the disestablishment of Dr Caddy’s position. Staff provided approximately 400 pages of feedback across 22 submissions (Dr Caddy herself providing 165 pages of feedback). The Union was involved throughout, advocating and supporting employees. A restructure review committee consisting of three people (later expanded to five after a request from the Union) was formed, with a month allowed for feedback (subsequently extended by two weeks).
After receiving all feedback the restructure review committee recommended 15 changes to the proposal, all of which were accepted by the decision maker (the Vice Chancellor) and implemented. Of importance, the changes included the creation of a new role – Lecturer/Senior Lecturer in Music Studies – which Dr Caddy sought redeployment into. The role however was contestable – Dr Caddy and another (Dr Camp) both sought redeployment into the role, with Dr Camp eventually securing the role after selection criteria were applied (based on two scoring matrices following a approximate one hour interviews by a redeployment interview panel made up of five people).
The Court’s approach
Dr Caddy raised a number of issues with the restructure – the Court analysed these and made a decision regarding whether how the University acted was justified.
Substantive justification
The Court first looked at whether the decision was substantively justified – were there genuine reasons. The Court applied the section 103A test.
The Court analysed the reasons for change and found they were “good reasons”. Dr Caddy essentially agreed with the reasons, but said the proposal would not fix the problems – the Court analysed her arguments in significant detail, really ‘digging into’ the reasons for change and the anticipated effect of the proposal. The Court looked at each decision by the University and determined whether it was reasonable:
- The University used EFTS (equivalent full time students, a metric which essentially translates a student into a financial unit) to determine the budget and staffing requirements. Dr Caddy said this was not appropriate for the Music school, and the court agreed saying it was a ‘blunt instrument’ – however, the Court said it was justified for the university to use this measure in the context of the restructure – it was just one of many measures used.
- The University looked at international practice – Dr Caddy said this varied wildly and was unreliable. The Court agreed, but said it was clear the University did not rely on this as a justification, it was used only predominantly for ‘benchmarking’.
- The University did not include Professors and Associate Professors in the restructure, saying they were important leaders and gave international standing to the University – Dr Caddy said this was unfair, that by doing this it essentially guaranteed the redundancy of her position. The Court looked at this and said the Universities justification for not including Professors and Associate Professors was fair and reasonable.
The Court ultimately looked into what the University did and its reasons for doing so – it found that a fair and reasonable employer could have made the decision to proceed. The Court commented that it was not to substitute it’s business judgement for that of the employer, citing Brake Team Accounting v Brake but the important point is it did not ‘take the restructure at face value’ – there was a detailed analysis of the University’s decisions and why it made those decisions. This is consistent with the existing case law – the Court will not substitute its judgement, but will inquire into the matter sufficiently to determine the reasoning of the employer is sound and in accordance with the legal test.
The process
The Court then looked at the process of this complicated redundancy – there were terms in the collective agreement covering the process (which were consistent with the statutory requirements).
Dr Caddy said not enough information was provided (relevant information) – the Court said no, there was sufficient information. The Court cited the volume of feedback provided by Dr Caddy.
Dr Caddy said she should have been consulted on the position description for the new role – the Court said no, this was unnecessary, and even if the Court was wrong this would have been minor and not result in unfairness. The Court did not believe that any consultation on the PD would have led to changes.
The Court summarised the process followed by stating “This was a comprehensive consultation process. There were no deficiencies…”.
Redeployment
Dr Caddy was concerned the possible redeployment role focussed on Jazz, which favoured Dr Camp.
The Court said it was fair for the position description to focus on Jazz – this was consistent with the aim of the restructure. The Court said that it did not believe the position description was designed to “… favour or frustrate a particular candidate.”.
Dr Caddy said, if Dr Camp had been appointed to the Music Education position she could have been appointed to the position and the complicated redundancy avoided. The University argued Dr Camp was not qualified for the Music Education position – a fact which the Court inquired into, and ultimately accepted. The Court said it was satisfied the University investigated in good faith redeployment opportunities which would have prevented any loss of employment, but the outcome was Dr Camp was not suitable for the Music Education role – the Court accepted this.
Dr Caddy challenged the selection process on the grounds two panel were not qualified to assess the candidates as they did not have any experience in music. The Court said no, they were qualified – they had considerable interviewing and recruitment experience which was relevant.
Dr Caddy challenged the selection process saying some panel members were biased against her – the Court did not accept this, saying there was no evidence of “lingering animosity” from previous events. The Court further noted even if that member’s scores were excluded, the same outcome would have been reached.
Dr Caddy challenged the selection process saying basing it on one interview was unreasonable – the Court said no, this complied with their policies and involved “significant discussion among members of the redeployment panel which were far from surface level.”.
Dr Caddy’s challenge was dismissed, the Court found the University acted fairly and reasonably.
The case is a helpful reminder of just how complicated redundancy and restructuring situations can become, and the level of depth which is required to meet the legal tests.
If you have any questions or queries in relation to your work situation as an employer or employee, please get in touch with the Watermark team directly. We are happy to advise you.
Jonathan Charlton
Solicitor
09 532 8211