By Claire Mansell - 26 Mar 2014
Being a good employer sometimes means making difficult
choices. Decisions aimed at improving profitability and
efficiency can come at the cost of someone's job. Good
communication and transparency from a company is important if
you're to avoid employment disputes and litigation
headaches.
When an employee brings a personal grievance for unjustified
dismissal an employer will be called upon to justify that
dismissal. The employer's decision and actions will have to be
shown to be "what a fair and reasonable employer could have done in
all the circumstances at the time of the dismissal".
The recent case of Ledger v Delmaine Fine Foods
Limited, is an example of redundancy process gone
wrong. In this case the employee was told that there was no
longer a job for her due to the "economic downturn" and financial
pressures upon the company. The Employment Relations Authority
criticised the employer for not providing detailed supporting
financial information or projected costs savings to show the
reasoning behind her redundancy. Reliance on "economic
downturn" and rumours of mergers in the industry lacked
substance and therefore were no justification for the
dismissal. The employer had to pay the employee approximately
$36,000 plus costs.
A reading of that case suggests that this may well have been a
good justifiable business decision on the part of the employer for
reasons more specific than "economic downturn". However, there had
been no objective analysis by the employer of the financial health
of its business and how making Ms Ledger redundant would improve
that situation - or at least not in a form that could be presented
to the authority.
A decision to make redundancies cannot be made in a
vacuum. It must be supported by analysis and
information. That analysis must then feed in to the
consultation process.
Contact us for information in relation to redundancy and
restructuring processes.
Contact
Claire
Mansell