New Zealand Employment Update: Restructuring? Think About Redeployment Obligations Early

The Employment Court has provided a timely reminder about an employer’s obligations to consider redeployment of an employee following the disestablishment of their role.

New Zealand Steel Ltd v Haddad [2023] NZEmpC 57 concerned a 2019 restructuring, in which Mr Haddad’s role was disestablished and three new similar roles were created. Mr Haddad applied for all three roles but then declined to actually be interviewed for them. He felt that NZ Steel should appoint him to one of those roles, and that having to go through an interview process was humiliating when he had worked for the company for years.

NZ Steel claimed that it was not obliged to offer Mr Haddad one of those roles. It felt that they were different from his current position and it wanted to treat other applicants fairly. NZ Steel did not ultimately appoint Mr Haddad to any of the roles. It claimed that, in the absence of him interviewing, it was not able to determine his suitability for any of the open roles.

Mr Haddad had also indicated interest in roles outside his department during the restructuring process. Beyond a holding response, NZ Steel did not respond to Mr Haddad’s enquiries about those roles for almost two weeks, at which point, it had already made offers.

Mr Haddad’s employment was then terminated due to redundancy. He subsequently challenged his dismissal, in particular, how NZ Steel had handled the redeployment process.

In considering his claim, the Court was clear that the proper approach for employers considering redeployment is that the employer must comply with its good faith obligations as set out in section 4 of the Employment Relations Act 2000. For instance, the employer must be active and constructive in consulting with the employee about potential redeployment options, as required by section 4(1A)(c) of the Act. The employer must then also comply with its duty of good faith in deciding whether to redeploy the employee. For example, the employer must be responsive and communicative in responding to employee enquiries about potential redeployment options (as did not occur in this case).

The Court held that NZ Steel did not treat Mr Haddad fairly and reasonably in relation to redeployment, including by failing to engage with him in relation to the roles outside his department in a responsive and communicative manner. In addition, the Court considered that Mr Haddad was not treated fairly and reasonably in the selection process for his preferred role and that NZ Steel had predetermined that another employee (whose position had not been disestablished) would be offered that position. Mr Haddad’s dismissal was therefore unjustified.

The principles set out by the Court in New Zealand Steel sit alongside the well-established principle set out by the Court in Wang v Hamilton Multicultural Services Trust [2010] NZEmpC 142 that, where an employee’s role has been disestablished, (unless multiple roles have been disestablished and there is need for a selection process) an employer must offer them any new or vacant roles that they have the skills and experience to perform. That is the case even if to do so would require some reasonable training or upskilling.

The takeaway for employers is that they are required to give genuine consideration to potential redeployment options within their business, although they are only required to consider options within the entity that employs impacted employees. Employers must also engage with employees in good faith. It is generally not enough to make a unilateral determination that there are no suitable roles available within the business – if an employee challenges their dismissal, the Employment Relations Authority or Employment Court is entitled to look into the merits of the employer’s decision not to redeploy. If an employer has not complied with its statutory obligations, this could end up being a costly mistake. For these reasons, we recommend that employers think carefully about potential redeployment options prior to commencing consultation. If you would like to discuss those options, or your legal obligations generally, please feel free to reach out.

By Quigg Partners, New Zealand, a Transatlantic Law International affiliated firm. 

For additional information about labor and employment law in New Zealand, contact David Quigg at newzealandlabor@transatlanticlaw.com. 

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