The Cost of Ignoring Process

This case is one where you will easily guess the ending. The lack of following a redundancy process cost the employer nearly $30,000.

The employer, Jayu Developments (JDL), sent their 17 year old apprentice an email saying there was a shortage of work, and a contract had disappeared, and therefore they were going to have to make cuts. The email gave the apprentice two weeks’ notice effective from that date.

The apprentice was confused as he had worked with the owner the day before and nothing had been said. The next day JDL advertised for an apprentice. Unsurprisingly a personal grievance was raised. Shortly after, the company ceased trading.

Although the employer did not appear at the Employment Relations Authority (ERA) hearing, in previous correspondence they claimed to have kept employees regularly up to date about the state of the business. The apprentice responded that most meetings were held at venues where alcohol was served so he was unable to attend them because of his age.

The ERA understandably concluded the apprentice was unjustifiably dismissed because the employer failed to:

• Consult with the employee before deciding to make them redundant
• Provide financial information (or any other information) to the employee for them to consider and respond to as part of the consultation process
• Allow the employee to seek advice
• Consider alternatives to redundancy such as redeployment

Irrespective of the dire financial circumstances or sudden changes in a business, it is essential to consult with employees before making a decision which may affect their employment.

Because of the significant process failures and despite no longer trading, Jayu was ordered to pay Mr Witana $15,000 as compensation for hurt and humiliation, $13,260 for lost wages and $2,250 in costs.