Redundancy selection methods under scrutiny

As employers become familiar with the requirement to follow selection processes specified in their employment agreements and otherwise consult over the selection methods used in a restructuring process, the Employment Court has delivered a judgement (in Gilbert v Transfield Service (New Zealand) Ltd [2013]) that encourages employers to take another look at the selection tools they may use in a restructure process. 

In this case the company did have a selection method in its collective employment agreement which specified that they would consider the skills and attributes needed to continue operations.  However it instead used psychometric testing, primarily designed for recruitment processes, as part of the process, and the company refused to disclose the test scores to the employees who had completed a test.  Also, the company did not have access to the core data used i.e. the tests questions and individual answers, which was held by the testing organisation.  The Court found this was not consistent with the duty of good faith under s4(1A) of the Employment Relations Act 2000.

Interestingly, the collective employment agreement also stated that redundancy was a situation involving the employee's "position" becoming surplus to the company's requirements, and the Court said that Gilbert would not have been made redundant if the company had assessed his actual “position” as required by the agreement, i.e. indoor plant technician, instead of considering the role to be general “field staff” as it had.

The Court also noted that the company had used “irrelevant considerations” including an assumption that longstanding technical employees were unprepared to update.  However, Gilbert had maintained and advanced his qualifications and skills over his career.  The Court observed that a fair and reasonable employer would have discussed upskilling with the employee and their willingness to do so.

The Employment Court ordered that Gilbert be reinstated and ordered the company to pay him $15,000 compensation for distress.

This case again reminds us to follow the requirements of our employment agreements as well as use tools or systems that are clearly understood and appropriate to the process being undertaken.