Offer of suitable alternative employment required in a restructure

There’s an important Employment Court case which many New Zealand HR practitioners may have heard about by now, but in case not, here’s a short synopsis.

It’s called Wang v Hamilton Multicultural Services Trust and can be accessed on the EC website under October 2010 decisions. In short, the case decided that, where an employee whose post has been genuinely lost through redundancy is able to perform the duties of a new position the employee should be offered the position by way of redeployment rather than having his previous position terminated and requiring him to apply for the new position when it was advertised. This is the case even where some up-skilling may be required.

This changes the law which has prevailed since the Employment Contracts Act, which was that, in the absence of an express contractual provision to the contrary, it cannot constitute unjustified dismissal not to offer a redundant employee a different position.

So, employers need to beware of merely allowing an employee to apply for an alternative position which could be a suitable alternative position for him or her. There is now an obligation to offer the alternative position to the employee. This may be affected by the new justification test that’s coming into force on 1 April 2011, but I doubt it. For years the UK has had the same range of reasonable responses test that the new justification test will impose, and has also recognised employers’ obligation to offer suitable alternative employment. The two are not incompatible.

There was one aspect of the Wang decision which I believe is totally wrong though. The EC refused to order reinstatement of the employee partly because his claim of racial and ethnic discrimination had caused “great stress and grief” and had “potentially undermined the culture of the Trust”. However, unless the EC had found that his discrimination allegations had been made in bad faith (which it did not) Mr Wang was entitled to bring the claims in law and should not be penalised for doing so. To use this as a reason not to reinstate him is, in my view, akin to victimisation.