OPINION: Employers are entitled to restructure their business, writes Mary-Jane Thomas in Work to Rule.

I tell the employers all the time that the purpose of being in business is to make a profit.

The purpose of being an employer is not solely to provide jobs.

You are entitled to run a business as leanly as you want to in order to generate the most profit.

What is vital, however, is that before decisions are made that result in positions being lost, there is consultation.

Mr J was employed as a fitter, welder and crane operator at Service Engineering Ltd (SEL) since November 2004. At a meeting with human resources manager Ms Reid, Mr J was told he had been made redundant and was given one week's notice of the end of his employment.

In shock, Mr J obtained a copy of his employment agreement two days later and realised he was entitled to four weeks' notice. Ms Reid acknowledged there was an administration glitch and had his notice changed to four weeks.

At a meeting three days later, in response to Mr J's frustration at the lack of due process, Ms Reid and a manager attempted to explain the reasons for the redundancy to Mr J and offered him alternative employment as a casual contractor.

He refused, having already arranged work in Christchurch.

Mr J claimed to the Employment Relations Authority that it was an unjustified dismissal and claimed compensation of $15,000 for being personally "belittled, humiliated and undervalued" by Service Engineering in its treatment of his redundancy.

The authority held that the unfair process of termination of Mr J's employment constituted a personal grievance for which he was entitled to a remedy. Service Engineering did not act as a fair and reasonable employer would in the circumstances.

First, the company failed to adequately provide Mr J with information of the possibility of his redundancy and to consult with him before making him redundant. While it had been mentioned at staff meetings that Service Engineering was under financial strain and had a "light" workload in relation to the number of employees, the discussion was vague and there was no referral to specific restructuring or redundancies.

Consequently, Mr J could not have anticipated redundancy so suddenly.

Second, the short notice period (a week) given to Mr J was "inexcusable".

This was in breach of Mr J's contract of employment, which prescribed a four-week notice period, not the one-week period given to Mr J.

Thus, according to the authority, although the restructuring by Service Engineering may well have been genuine (in other words there may indeed have been insufficient work to justify Mr J's continued employment), the procedure taken was still unfair.

The explanations by the company of the reasons for the redundancy came too late for Mr J.

Mr J was awarded a sum of $8000 compensation for his personal grievance.

Note that had the Employment Relations Authority found that the restructuring was not genuine, Mr J would have been entitled to claim any lost wages in addition to compensation.

On a final note the minimum wage will increase on April 1.

The new minimum hourly rates of pay are $13.75 per hour for adult workers (increased from $13.50 per hour); and $11 per hour for new entrants and trainees (increased from $10.80 per hour).

» Mary-Jane Thomas is a partner at Preston Russell Law. E-mail questions to mary-jane.thomas@prlaw.co.nz.

- © Fairfax NZ News

Comments