A recent case before the Employment Relations Authority (ERA) highlights the serious financial consequences of failing to follow a fair redundancy process. The employer in question was ordered to pay more than $28,000 in compensation and penalties after an employee successfully claimed unjustifiable dismissal. This serves as a stark reminder for both employers and employees about the importance of following correct employment law procedures in New Zealand.

⚖️ Case Summary: Redundancy Gone Wrong

The employee, working 45 hours per week, was suddenly informed in October 2022 that the company was “on the verge of bankruptcy.” Shortly after, the employee was told that his position was being made redundant, and without any proper consultation, his work hours were cut to 30 hours per week. He was also instructed not to return to the workplace, effectively ending his employment.

The employee then raised a personal grievance with the ERA, claiming the dismissal process was unfair and unlawful.

❌ What the Employer Did Wrong

The ERA found multiple procedural and substantive failures by the employer:

• Unilateral Reduction of Hours: The employee’s hours were reduced without consultation, breaching his employment agreement.

• No Valid Redundancy Rationale: The employer failed to explain why the employee’s position was selected for redundancy.

• Lack of Consultation: There was no meaningful discussion or process around the redundancy decision.

• No Alternative Roles Considered: The employer failed to explore other options for redeployment.

• Insufficient Evidence of Financial Distress: No documentation was provided to support the employer’s claim of impending bankruptcy.

The ERA determined the employer did not act as a fair and reasonable employer should have in the circumstances. As a result, the dismissal was ruled unjustified.

???? Compensation Ordered

The employer was ordered to pay:

• $3,400 in unpaid wages

• $1,020 for unpaid notice

• $1,430 in lost earnings

• $20,000 for emotional harm (humiliation, loss of dignity, injury to feelings)

• $2,250 towards legal costs

✅ Legal Advice Is Crucial

This case is a powerful reminder of the importance of legal compliance when restructuring or making staff redundant. Employers must ensure all processes are transparent, fair, and well-documented. Employees who feel they’ve been treated unfairly should seek advice as soon as possible.

At Core Legal, based in Masterton and Wellington, we provide expert employment law advice and can assist both employees and employers in understanding their rights and obligations. Our fixed-price consultations are designed to provide clear, affordable legal guidance.

Contact Core Legal today to ensure you’re protected and informed when it matters most.