Published: Fri, Sep 27th, 2013
Employers - Are you aware of important Redundancy Caselaw?
In assessing whether termination of employment by reason of redundancy of the employee's position is justifiable, the Authority will assess whether or not the decision is "…what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred."
This has included whether the employer's decision is genuine (i.e. not a sham to dismiss an underperforming employee), and whether or not the employer has followed a fair and open process of consultation and negotiation (including assessing redeployment options) with the employee prior to making the decision to terminate the employee's employment. It has long been the case that the Authority have not looked at the detail of the employer's business reasons for the restructure or redundancy, so long as the proposed restructure was genuine. But in a recent decision from the Employment Court (Totara Hills Farm v Hamish Davidson), the Employment Court held that it CAN examine those reasons. In other words, the employer must be able to prove that the decision to carry out the restructure is based in sound business reasons. As an example, if a financial analysis or forecast demonstrates that savings need to be made to ensure the survival of the business, it is essential that the financial analysis or forecast is accurate. Accordingly, the merits of the decision to restructure will be open to examination and a prudent employer will ensure that all documentation is in order prior to considering restructuring and redundancy. Please do contact us for preliminary advice if you are considering taking this action in your business. We are able to assist you through the process.
Further Proposed Amendments to Employment Law:
The Employment Relations Amendment Bill ('the Bill') will, if past, amend current employment law. Some of the proposed changes most pertinent to our clients are as follows:
Timeframes for employment relations authority ("authority") determinations
- The Bill proposes to provide clearer guidance to the Authority, to give certainty and to speed up delivery of its determinations. The Bill provides that at the conclusion of a hearing, an oral determination will be required of the relevant Authority member, including the member's preliminary findings. A written record of the determination is to be provided within three months of the hearing, except in exceptional circumstances.
- This change is presented as an opportunity for parties to consider their respective positions at the conclusion of a hearing, including whether or not the best solution to an issue would be for the parties to settle it amongst themselves.
Rest and meal breaks
At present, the Employment Relations Act 2000 ('ERA') outlines rigid guidelines for employers with regard to employees' rest and meal breaks. Depending on the nature and operation of a business, this can pose difficulties, as the current prescribed law may be impractical for some industries or businesses.
In an attempt to provide employers greater flexibility, the Bill would allow an employer to place restrictions on an employee's breaks where it is reasonable and necessary with regard to the nature of an employee's work, in return for reasonable employee compensation. For example, it is inconvenient for air traffic controllers to take regular breaks given the constant arrivals and departures of aircraft while they are on duty. Under the Bill, their breaks could be reduced, with compensation such as additional paid leave or an earlier working day end time given.
Changes to Part 6A of the ERA
Part 6A of the ERA is aimed at protecting vulnerable employees such as workers in the cleaning and food catering sectors, by imposing additional obligations on their employers. These obligations can at times be costly and unclear. The Bill outlines amendments that seek to provide clarity and to alter the obligations of the employers when Part 6A of the ERA is applicable.
Currently, where a business is being restructured, vulnerable employees may elect to transfer to a new employer. Under the Bill an employee would need to notify the outgoing employer within five working days of their desire to transfer to the new employer.
The process at present for incoming and outgoing employers with regard to accrued employment entitlements is not clear. The Bill recognises the need for negotiation between the outgoing and incoming employer as to who pays what. There is also the inclusion of practical requirements for the provision of information on transferring employees, such as records regarding wages and holidays. A key component of the Part 6A amendments is the proposed exemption for small businesses from some aspects of Part 6A – significantly, businesses employing 19 or fewer employees will not be required to employ employees affected by the restructuring, eliminating those employees' current right to elect to transfer.
The submissions on the Bill have displayed a diverse range of reactions to its proposals, and the Select Committee report, due by 5 December 2013, will be keenly anticipated.