The Employment Relations Authority (ERA) has once again reinforced the importance of following a genuine and procedurally fair redundancy process. In this case, an employee was awarded over $19,000 after her employer failed to meet their legal and contractual obligations when ending her employment.

At Core Legal, serving Masterton and Wellington, we assist both employers and employees in understanding their rights and responsibilities when it comes to redundancy and dismissal processes.

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⚖️ What Happened: Unfair Redundancy Leads to Legal Action

The employee, who was on a fixed-term contract, was informed that her role was no longer needed due to a downturn in work. She was told to finish up immediately but was promised two weeks’ pay to allow her time to find another job.

However, after her employment ended:

• The employee’s final pay was incorrect, with unlawful deductions made by the employer citing alleged past overpayments.

• The promised two-week payout was not honoured in full.

• Only one week after her departure, the employer advertised a similar role under a different title — suggesting that the work had not actually dried up as claimed.

Feeling misled and unfairly treated, the employee raised a personal grievance for both unlawful deductions and unjustified dismissal.

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🧐 What the Authority Found

The ERA assessed whether the employer’s actions complied with the employee’s employment contract and New Zealand’s statutory employment law.

• Contractual obligations: The contract allowed for redundancy only if the role genuinely ceased to exist — which was clearly not the case, given the subsequent job advertisement.

• Good faith obligations: The law requires employers to act honestly and genuinely when proposing redundancy. The employer’s conduct — providing false reasons for termination and making unlawful deductions — was a breach of these obligations.

• Procedural fairness: The employee was not consulted properly or given the chance to respond to the redundancy proposal, which is a key requirement under employment law.

The Authority concluded that the redundancy was not genuine, the dismissal process was flawed, and the employee had been misled and unfairly dismissed.

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💰 The Outcome

The employer was ordered to pay a total of $19,612 to the employee, covering:

• Compensation for hurt, humiliation, and loss of dignity

• Reimbursement for lost wages and unlawful deductions

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📌 Key Lessons for Employers

Employers must remember that:

• Genuine reasons must exist for redundancies.

• Good faith consultation with affected employees is legally required.

• Employees must be given a real opportunity to comment before any final decision is made.

• Unlawful deductions from wages are prohibited without written agreement.

Failing to comply with these obligations can lead to significant financial and reputational damage.

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📞 Need Help with Redundancy or Employment Disputes?

At Core Legal in Masterton and Wellington, we provide fixed-price Initial Consultations to help you understand your options quickly and cost-effectively. Whether you’re an employer needing guidance on the correct process, or an employee questioning the fairness of your dismissal, we are here to support you.

Contact Core Legal today for professional, trusted advice on all employment law matters.