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An employer must be “active and communicative” when consulting with employees about redeployment opportunities

December 16, 2019

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The Employment Relations Authority (ERA) in Keir v Fonterra [2019] NZERA 676 recently ruled that Fonterra fell short of expectation when it came to how it dealt with offering redeployment opportunities to the applicant, Mr Keir.

Once the decision to disestablish his role was reached, the ERA held that Fonterra failed to communicate in a timely manner that:

  • The co-operative would avoid Mr Keir being financially disadvantaged;
  • There was the possibility of grandfathering conditions to take into account his current salary; and
  • The consideration of redeployment could continue for an extended period.

Mr Keir was left thinking that any of the redeployment options put to him would mean a substantial drop in his salary.

This was to his disadvantage in a situation where he had indicated he was looking at external options and had not been informed that taking an external role would mean he would not receive redundancy compensation.  

The ERA’s determination held that merely presenting an employee with redeployment opportunities was not sufficient. Employers must act fairly and with good faith when engaging employees about redeployment. Communication, as held by the ERA, is key to upholding this good faith.

Employers could face costly ramifications if it is found that they have failed to be sufficiently communicative about redeployment opportunities, causing their employee to be disadvantaged. In this case, Mr Keir had been a long serving employee, who wanted to stay with Fonterra if at all possible. There was evidence presented that the actions of Fonterra had had a significant impact on the employee.   The ERA ordered Fonterra to pay $25,000 for unjustifiably disadvantaging Mr Keir as well as a portion of his redundancy compensation.



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