High Cost for No Procedure and Confusion over Holiday Pay

The former CEO, of Adecco New Zealand, has won $29,000 in compensation after having been made redundant in 2007. Ms Board claimed in the Employment Relations Authority that her redundancy was not genuine and that her final holiday pay had been wrongly calculated.
 
Ms Board had worked for Adecco for 17 years when her role as NZ CEO was disestablished and Adecco changed the organisation's reporting structure.
 
Genuine Redundancy?
 
Ms Board had been in the NZ CEO role for four years before she was made redundant. Adecco gave evidence that when she was hired for the role, Ms Board was aware that the role may be disestablished further down the track. To reflect this, certain redundancy provisions were inserted in her contract. However, these were not included in her renewed agreement.
 
Adecco also gave evidence that the NZ branch had at various times in the past reported directly to Australia, and that there was a perception that the NZ branch was in fact part of Australia.
 
In February 2007, the Board of Directors travelled to Australia and made a presentation to Mr Roy (head of Australia) on the strategic direction of the business, as the NZ branch had been failing.
 
The ERA found that after hearing this presentation Mr Roy made his decision that the NZ CEO role was no longer needed.
 
The Regional head, Mr du Ree then travelled to NZ in March and informed Ms Board that her was would be disestablished and they would discuss redeployment options. A replacement position was not found and Mr du Ree then proceeded to negotiate an exit package with Ms Board.
 
The ERA found that "there is essentially no dispute that the decision to disestablish the CEO position was presented to Ms Board (on 1 March) as a fait accompli. Mr du Ree simply handed her a letter which contained the bad news".
 
Although the ERA were satisfied that Adecco had genuine commercial reasons for the redundancy, it awarded Ms Board $10,000 by way of compensation for hurt and humiliation. 
 
The ERA held: "The respondent in this case needed to put Ms Board properly on notice of the fact that the disestablishment of her position was in contemplation, and provide her with an opportunity to address that specific point (as distinct from the performance of the New Zealand operation in general)."
 
This case serves as a reminder of an employer's obligations under the Employment Relations Act which apply in a redundancy situation or situations where an employer is proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of employment. Employers should be careful to develop a fair consultative process when undergoing any restructuring, disestablishment or redundancy.

In particular, employers should: