Recruiting After Restructuring

A number of businesses are showing signs of recovery post COVID-19 lockdown, and while business is no bed of roses for many, the impact of COVID-19 has not been as catastrophic as anticipated for many.

Some businesses have found themselves needing to expand their team and advertise for more staff, after initially making people redundant.

So – what if you had to let an employee go recently due to the COVID downturn and now you need to refill that position – must you re-employ your ex-employee?

There is nothing in legislation requiring you to rehire redundant employees or show them preference (with the exception of people who were on maternity leave), and there is nothing stopping redundant employees from applying for rehire when jobs are reposted. Former employee-applicants should be given the same consideration as all other candidates, barring any rehire policies the employer may have, or undertakings made when making staff redundant. You can legitimately recruit someone else.

The challenge may come if the former employee-applicant makes a claim that the redundancy was a sham with its key purpose to ‘get rid’ of that individual, ‘proven’ by the fact you are now recruiting and have not appointed them.

Circumstances change, and they change rapidly in our current environment. As such a business decision made a few weeks ago could have been the correct one at the time. Therefore having a vacancy for a position you disestablished not so long ago, will not necessarily be deemed to be unjustified. If you are challenged, you will need to demonstrate why it was the appropriate decision at the time with the information you had at the time.

If you do wish to re-hire the redundant employee, you are under no obligation to wait a certain period of time before offering the job. If there is less than one month between the end of the employment and the start of the new employment, then service would be deemed continuous meaning the employee would be eligible immediately for service-based leave entitlements such as sick and bereavement leave, and annual holidays.

However, there are a few things to consider before you do make a decision…

An employee has 90 days following the date of termination or first came to the employee’s attention which could be argued as being when the recruitment came to the notice of the employee, whichever is the later, to raise a personal grievance. That means, a redundant employee could raise a claim for unjustified dismissal when they become aware of the recruitment activity even if that is beyond the 90 days since their employment was terminated.

If you do receive a personal grievance claiming the redundancy/dismissal was unjustified, you will be required to demonstrate that the redundancy was genuine and that the new work requirements were not known or foreseeable at the time the termination decision was made.

To illustrate – consider the case of MacDonald v The Optimum Clothing Co Ltd [2012] & [2013] NZERA.

Ms MacDonald was made redundant from her job at the end of April and her former employer, Optimum, advertised a very similar role five weeks later. Ms MacDonald raised her grievance outside of the 90 days from her termination date but within 90 days of when the action alleged to amount to a personal grievance came to her notice i.e. within 90 days of the advertisement of the new role. The Employment Relations Authority held that Ms MacDonald had raised her personal grievance within the statutory timeframe.

Optimum went on to satisfy the Authority that the basis of the original decision (for redundancy) was genuine and that its circumstances had changed. The Authority was also clear that there could be no legal obligation to appoint Ms MacDonald to the new role, notwithstanding the very short time between her dismissal for redundancy and the advertising of the new position.

If you are considering recruiting to positions that employees were made redundant from, call us as we have extensive experience in guiding employers through these highly complex and potentially risky situations. We may be able to help you reframe the situation and thereby, decrease risk to the business.

Contact us now if you need help.