The importance of consultation in redundancy dismissals

An employee was redundant before he even started work, the Employment Relations Authority recently heard.

Computer technology provider, IndeServe Limited, decided to recruit another web development team member. On 7 June 2001, it offered the position to Stephen Ford. The parties agreed that Mr Ford would commence work on 25 June 2001.

On 12 June 2001, the Company's Board of Directors passed a resolution that, amongst other things, costs were to be cut by $500,000. To achieve this, the Company decided to implement redundancies, including the cutting of staff numbers in the web development team.

The Company decided to select employees to be made redundant on the basis of "last on first off". On 15 June 2001, it telephoned Mr Ford, who at that time had not yet commenced work, and advised him that he was redundant. It later followed this advice up with a letter.

Mr Ford filed a personal grievance against the company for unjustified dismissal. The Employment Relations Authority upheld his claim. While the Authority accepted that the company had a genuine need to effect redundancies, it failed to treat Mr Ford fairly and reasonably. In particular, the Authority criticized the company for failing to properly consult with Mr Ford about his redundancy. While Mr Ford was the obvious choice for redundancy,

"the company, on this occasion, gave up an opportunity to properly address his legitimate human concerns. It gave away an opportunity to reassure [him] that the decision had nothing to do with him personally and everything instead to do with an unanticipated board directive . While swiftly addressing its own, legitimate need - to effect cost savings - the company failed to provide a similar duty of care to one of its latest recruits" Authority member, Denis Asher said.

The Authority ordered the company to pay Mr Ford the balance of the one months' pay owed under the notice provision of his employment contract, plus $6,500 compensation for humiliation and distress.

This case illustrates the importance of consultation in redundancy dismissals. Even though Mr Ford had not started work and was the obvious choice to be made redundant, consultation was required to allay his concern that a third party had interfered with his appointment. The company's failure to consult caused him unnecessary distress.

More on Termination & Dismissal

An employer's rights: Surfing all the day	Driver lost license
Dealing with absent employees	Importance of procedural fairness
Must consult in redundancy dismissals	Dismissal must be procedurally fair
Misconduct discovered after dismissal	Another procedural fairness example
Dismissed for benefit fraud	Terminated before started
The danger of secret witnesses	Expired employment contract
Cannot intimidate employer	Cannot rely on police enquiry
Reasonable notice of redundancy	Contractural obligation must be met
Reinstatement and workplace democracy	Employment and criminal investigation
Attack not always good defence	Dismissal of persons in authority
Employee responds by going on offensive	Legality of secret video surveillance
ERA classifies contractor as employee	Redundancy law unchanged by ERA
Loss of use of company car	Significant difference
Resolution of criminal charges	Redundancy and changed hours
Discrimination for being non Asian	Cannot take retaliatory action
Failing to meet sales targets	Misconduct outside of work
Abuse of Internet & Email	Suicide and communication
Redundancy definition	Unjustified dismissal for pornography
Abandonment of employment

More on Employment Agreements

Employee trial periods	Can change pay frequency if properly managed
More on secret video cameras	Appeal Court decision on harsh and oppressive contracts
When is an employment relationship formed?	Employment contracts must be negotiated - they cannot just be presented
Employer can still be bound by oral agreements	Cannot limit remedies for personal grievances
Common problems with employment agreements	Cannot dismiss without reason even if written in agreement
Take care when preparing employment agreements	Can a collective employment contract negotiated with union members be applied to non union members?
Importance of disclosing correct employer	Employee must disclose information at interview only if asked
Disputes resolution procedure must be included in staff agreement	Cannot require all employees to apply for new positions
Renegotiation of employment contract on sale of business	What an offer of employment might look like
Expired contracts continue with same terms and conditions

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