Employment Update – Week 5, June

Updated: Jul 5, 2019

Workplace relocation was not a redundancy

Where an employer is in the position of considering relocating the place of work, it is important to consider whether the extent of the change may amount to a redundancy for affected employees. This is particularly important where the employment agreement provides for redundancy compensation. The history of case law demonstrates that whether a relocation amounts to a redundancy is a matter of fact and degree in each instance. The terms of an employment agreement are also of crucial significance, as some employment agreements provide an employer with more flexibility as to where the place of work can be than others.

In a recent determination, the Employment Relations Authority rejected the claim that an employee’s position had been made redundant as the result of a relocation that would have involved a 150-km round trip for the employee to and from work. Part of the reasoning for the decision was that the flexible work hours offered by the employer would have reduced the travel concerns. The Authority also considered that there were other options such as payment for his travel, working from home and standalone Auckland premises for his use which potentially could have avoided redundancy (although the employer had not offered the standalone Auckland premises until after the employee had left due to resignation). The employer had relocated its premises from Otahuhu to Warkworth. The employment agreement made provision for redundancy compensation. The Authority did not accept that there was a redundancy situation at the time of the employee’s resignation. The claim to an award for redundancy compensation was declined.

However, while it was found that no redundancy took place, the employer was found to have liability for different reasons. The employee’s resignation was found to amount to a constructive dismissal due to his resigning as a result of the employer notifying the employee by letter that should the employee choose not to relocate to the new place of work and not resign from his employment on notice that the employee would lose his to final pay for wages worked and holiday pay. The Authority observed that resignation is not required for employees to receive their entitlement to wages and holiday pay. The Authority found that the view evidenced in the letter was legally incorrect, misleading and not the action of a reasonable employer.

See Leahy v Fairfit Tooling Ltd [2019] NZERA 105.

Reproduced by permission of Wolters Kluwer NZ

bossed employment representatives can advise you on workplace redundancies, relocations and any other employment disputes.
Workplace relocation can effectively be a redundancy, but it doesn't always

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