The Most Common HR mistake made in restructures this year

The Most Common HR mistake made in restructures this year

Practicing in Wellington gives an employment lawyer some unique insights into what issues are coming up in restructures.

As Wellington is home of the government departments and ministries, there have been a significant number of complex restructures occurring. A flow of business to Auckland also appears to be creating a number of significant restructures.

There is one mistake that is commonly made in these restructures. On average, I am involved in a grievance dispute on the same issue 1 to 2 times every month. The issue is the obligations arising to redeploy employees where a role is disestablished, and a new role created.

The mistake arises when the employer determines that it will introduce a new role into its structure and that other roles will be disestablished, as they no longer meet the employer’s needs. Often the new role is advertised internally and externally, and employees contest the role with external candidates.

The Employment Court made itself clear on the issue of redeployment in the decision of Wang v Hamilton Multicultural Society Trust. In the Wang decision, the Court found that where an employee’s role is disestablished and a new role is created, if the new role is within the employee’s capability, the employee must have the opportunity to be redeployed to the role. This is in preference to any external candidate. This should occur regardless of the new roles content or position description. Further, a role will be within an employee’s capability if the employee could perform the role with reasonable retraining or up-skilling.

three people in human resources meeting taking notes

What does this mean practically for HR? Well it means that in the first instance, new roles need to be offered to employees who have lost their existing roles due to the restructure. If this does not occur the redundancy will very likely be an unjustified dismissal. The only way to avoid this is to assert that a role is not within an employee’s capabilities; even with reasonable retraining.

However, my view on this is that it is not enough to simply assert a role is outside an employee’s capability. You have to be able to stand behind it – the assertion must pass the fair and reasonable test! Although this point has not come before the Court yet, I believe that the Employment Court will require robust evidence that the employer made a fair inquiry as to whether the employee could be retrained for a new role. I personally don’t believe a simple interview for the role is sufficient. I believe there needs to be a process where there is a genuine assessment of the employee’s skills.

I also consider that it is very likely that the Employment Court would require consideration of the employee’s past performance. This is due to the decision in the matter of Gilbert v Transfield Services. This decision is important because the Court considered the methods used to select between employees to decide which employees would be placed in new roles and which employees would be redundant. The Judge was very critical of Transfield’s approach and rubbished its use of psychometric testing. The Judge was concerned that Transfield had not made reference to its performance review and appraisal material.

I believe this means we will see the methodologies used to select employees come under increased scrutiny. The Court requires genuine and high quality assessments of employees that focuses on relevant skills connected with the role.

This, in my view, will also translate to assessments made of whether an employee can perform a role with reasonable retraining. Methodologies used will be tested against the standard required by the Employment Relations Act 2000, being that the conduct was fair and reasonable in all the circumstances.

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