Costly Error - Redundancy while on Parental Leave

A recent determination from the Employment Relations Authority (ERA) shows just how costly it can be for employers when they get things wrong.

In February 2012 “Mrs A” was employed as a National Key Accounts Manager by a company specifically to service a national supermarket chain.

In April 2012 “Mrs A” applied in writing for six months parental leave.  The company verbally approved this leave, with a return to work date of January 2013. (Note - the company should have put the approval in writing in accordance with the Parental  Leave and Employment Protection Act 1987 [PLEPA]). 
 
During an informal discussion between the employee and a manager from the company in September it was mentioned that there might be some changes to the sales team later in the year or early the next year.

The company’s manager telephoned “Mrs A” in December and told her that the company had identified that the existing sales team could manage the supermarket chain and that the National Key Account Manager’s role could be restructured.  At a face to face meeting a few days later the manager confirmed that “Mrs A’s” position was redundant and a letter of confirmation would be sent.

In late January 2013 “Mrs A” received the company’s letter confirming the redundancy – after she had raised a Personal Grievance.  The company gave a reason of “economic downturn” for the redundancy.

When the grievance was considered by the Employment Authority, It was unclear “in the lack of detailed  supporting financial information or projected cost savings, exactly why the position of National Key Accounts Manager had become redundant”, particularly as there had been no indication (to the Employee) that the economic climate had significantly worsened the company’s financial situation during the period  of the employee’s appointment.

The Authority also noted that the company was in breach of the PLEPA.  The company “failed in its obligation to keep the employee’s position open during the period of parental leave”.  Having other employees covering the duties of a colleague absent on parental leave on a temporary basis is permissible, however (using a previous determination from the Employment Court), the Authority observed that “there is a higher threshold created by the criteria of the PLEPA, which employers must meet”.

The Authority ordered the company to pay $19,000 in lost wages, $15,000 for injury to feelings and $2000 penalty for breach of the PLEPA.

This is a strong message for employers who may contemplate making a position redundant while an employee is on parental leave.   Employers must be open and communicative, follow a fair process and have genuine reasons that have evolved or arisen after the employee was told that their position would be held open.

Two things to note in this case – if you are citing economic reasons for a redundancy you must have figures to support your reasons, and, be extra careful if you are considering a redundancy for an employee on Parental Leave.

Take professional advice before you make an error that could be costly.

Paddy Battersby www.battersbyhr.com 
Phone 09 838 6338  paddy@battersbyhr.com

Share This:




Back to News

List a new job
List your wine event
The New Zealand Wine Directory - Linking You To Industry Information & Communities Online.
Apex Labelling
Telehandlers for sale or hire

Your web site is very informative and streamlined, regarding the New Zealand wine industry, and applicable job opportunities. Thanks again,

----Dominic Burke | View more testimonials