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Case Redundant Employee Reimbursed Lost Wages

Posted on: May 24, 2013

Generally, when a redundancy has been found to be genuine but the procedure undertaken by the employer in effecting the redundancy is procedurally flawed, the employee will not be entitled to be reimbursed for the resulting loss of remuneration. However, as the Employment Relations Authority pointed out in Rose v New Leaf Beauty Therapy Ltd [2013] NZERA Wellington 32, even when a redundancy has been found to be genuine it is still necessary to consider whether, if the employer had acted fairly, a redundancy would have occurred. That consideration is necessary because, if the employee is able to provide plausible evidence of reasonable alternatives or other options that might have prevented the job loss, the employee may be able to prove that he or she lost remuneration as a result of the grievance (not of the redundancy) and therefore be entitled to be reimbursed for the lost remuneration.

In Rose v New Leaf Beauty Therapy Ltd [2013] NZERA Wellington 32, the employer advised the employee that it was having financial problems and asked the employee to reduce her working hours. The employee indicated she would accept a reduction to 25 hours per week and when the employer suggested 15 hours, the employee made a counter proposal of 20 hours. The employer did not advise the employee that if the employee did not accept the proposed 15 hours she would be made redundant, which is what happened.

The employee brought a personal grievance for unjustified dismissal and said that if she had known that 15 hours was the employer’s final offer she would have accepted the 15 hours. The employer admitted that if the employee had accepted the 15 hours the position would have remained open. The Authority found that the employee’s redundancy was genuine but the employer had failed to consult adequately with the employee. Accordingly, the employee’s loss of remuneration was caused by that failure, not by the actual redundancy, and the Authority ordered that the employee be reimbursed wages for loss of the 15-hour position until she had obtained alternative employment 11 weeks later.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

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