How long is needed for fair consultation about a redundancy proposal?

The Employment Court has confirmed in many cases over the years that consultation about a redundancy proposal requires more than merely prior notification.  Employees must be given sufficient time, sometimes expressed as “reasonable time”, to consider the proposal and provide feedback.

But how long is reasonable – days, weeks, or even months?  Two cases determined by the Employment Relations Authority in July this year considered whether periods of 4 and 5 days might be sufficient.

In Hardikar v Klein Ltd,  there was less than 5 days (including a weekend) between an employee being given a proposal (on 26 Nov) and a meeting held for him to give feedback (on 30 Nov), about both a proposal to reduce headcount and a proposed selection process.

The Authority held that this period was sufficient to allow the employee to consider both the mooted reduction of headcount as well as selection criteria proposed, and that the subsequent advice to him only a few days later that he was to be redundant was justifiable.  A feature of this case was a previous restructuring in which the same selection process had been used.  This meant that the employee was already familiar with how the process would work and the Authority held that he was able to provide feedback relatively quickly.

In another recent case, Elliott v Age Concern Rodney Inc, a period of 4 days was not long enough to fairly allow a group of employees to consider how to respond to a need to reduce their hours.  In this case, a pool of drivers using three vans transported patients to medical appointments.  When the employer was no longer required to transfer dialysis patients, the number of funded operational hours reduced.  This in turn meant that less driver hours, and one less van, were needed.

Facing this situation, the employer met with the three drivers individually and told them that there were essentially two options:  (1) for all three drivers to agree to reduce their hours;  or (2) for one driver to be redundant.  The employer encouraged the drivers to meet to discuss this, although it seems that they never did and no feedback was received by the employer.  The employer then decided that one driver would be redundant, selecting her on a ‘last on/first off’ basis and because she was on extended sick leave at the time.

The Authority held that 4 days was not enough time for ‘a good and fair employer’ to have provided a group of employees to engage with each other about its proposals.  It was also critical of the employer having left the onus on the employees to consult with each other, without then following up when it received no feedback.

Having determined that the redundant employee had suffered a disadvantage for this reason, it ordered compensation of $500 be paid.  However, the Authority held that there was a genuine redundancy due to a need to take cost out of the operation (which was a legitimate business decision), so the employee’s claim of unjustifiable dismissal did not succeed.

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