With advancements in technology and automation, many employees are understandably concerned about the potential for their jobs to be replaced by artificial intelligence. With such a significant advancement in technology, it is only natural that AI will impact employees and employers.
Despite this, we note that the law remains the same. Therefore, the risk of redundancy is only realised when the law and the advancement of technology align – creating a justified redundancy.
Redundancy
A redundancy is when an employer decides to reduce their workforce because positions are no longer required. At the outset, it is important to note that redundancy is about the position, not the person. A position is made redundant and consequently, the employment of the person who held that position comes to an end (unless redeployment is available).
This being said, an employer must follow a fair and proper process when making positions redundant. Section 4(4)(e) of the Employment Relations Act 2000 (“the Act”) confirms that the duty to act in good faith still applies in scenarios where employers make positions redundant.
Why Do We Have Redundancy?
In a seemingly counterintuitive way, the ability to make positions redundant acts as a both a ‘safety net’ and ‘springboard’ for the economy.
Firstly, the safety net of redundancy allows employers to adapt to changing economic conditions and remain competitive. By restructuring their workforce, employers can streamline their operations and reduce costs, which can help them to weather economic downturns and remain profitable.
Secondly, the springboard of redundancy can help to promote efficiency and productivity. When companies are forced to make tough decisions about their workforce, they often take the opportunity to re-evaluate their operations and make changes that can lead to increased efficiency and productivity.
General Overview
From a legal perspective, there must be a genuine commercial justification for making a position redundant, and a fair and proper process followed.
In Caddy v Vice Chancellor, University of Auckland, the Court assessed whether a redundancy was justified by analysing firstly, whether the employer had a substantive justification for the redundancy, and secondly, whether the employer followed a reasonable process.
In doing so, they applied the test for justification as set out in s103A of the Act. The court found that a reasonable employer could have proceeded with the redundancy, namely because 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. The court found that, overall, the employer’s process was comprehensive, and that the University had acted fairly and reasonably.
AI in the workplace may prove to be a compelling substantive justification for restructuring in the near future, particularly in some industries. Despite the rise of AI in the workplace and the prospect of certain positions being in the crosshairs of redundancy, employee’s still have the right to have a fair and proper process followed which includes genuine consultation.
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.
09 532 8211