Restructuring and redeployment of employees

There is a clear process to follow when restructuring an employee’s position within your business. Your business may have expanded or needs downsizing and accordingly your employment needs may also change. But be warned, this is not a way to remove an unsatisfactory employee.

A 2010 case from the Employment Court highlights that where an existing employee can do many of the tasks involved with a new position, they should be redeployed to that positon automatically.
This should always be the case where:

  1. There is no other employee that may be suitable for the position;
  2. Where the employee concerned can carry out in the main, most of the tasks of the new position; and
  3. During the proposal and consultation process about the restructure, the employee has been offered the role.

Wang v Hamilton Multicultural Trust

Mr W was the financial administratorfor the Hamilton Multicultural Trust (“the Trust”). After a period of negotiating Mr W was unable to agree with Ms F, a director, about what exactly his job description should include. This stalemate led to a proposal by the Trust to restructure its business. The Trust’s treasurer carried out the review and although he was consulted during the review process, Mr W was not given a copy of the review report.

The outcome of the review was that Mr W’s position was to be disestablished. There would be a new role of finance manager, which would carry more responsibility than Mr W’s existing position. Accordingly the salary for the position was also significantly higher.

Mr W was encouraged to apply for the role, which was also externally advertised. Mr W would have been able to carry out many of the tasks of the new role, given his previous experience, his qualifications, and with some training.

Mr W did not apply for the role, believing that it would affect any claim he wished to make against the Trust, that the redundancy of his position was not genuine.

Genuine redundancy

In the Employment Relations Authority the redundancy was held to be genuine. The Authority held that it was procedurally unfair of the Trust to have failed to supply Mr W with the Treasurer’s report. Mr W appealed this decision to the Employment Court.

The Employment Court agreed that the redundancy was genuine and that Mr W should have been given a copy of the Treasurer’s report as part of the review process.

However the Court held that the Trust had failed to redeploy Mr W in the redundancy process.

The Trust was obligated to consider all other alternatives to making Mr W redundant.

Given that Mr W could carry out many of the new position’s tasks and that the Trust had encouraged him to apply, the Court considered that Mr W should have merely been promoted to the newly created positon.

The Court held that the failure to consider redeployment meant that the Trust had failed to act in a way that a fair and reasonable employer, judged objectively, would have done in all of the circumstances at the time the dismissal occurred. This is the test set under section 103A of the Employment Relations Act 2000.

Award lessened by employee’s actions

Mr W was initially awarded 12 months lost wages and $10,000 compensation for the personal grievance. However the Court was obliged to consider whether Mr W’s behaviour had contributed in any way to the personal grievance. The Court held that because Mr W had refused to discuss his position duties at the very beginning of the matter, he had contributed to the situation that eventually led to the personal grievance.

Significantly, the remedies awarded to him were reduced by 50%. Mr W was awarded 6 months’ salary and $5,000 compensation for hurt and humiliation