Redundancy is a situation where an employee is terminated when his position becomes superfluous to the employer The concept of redundancy focuses on the position and not the performance of the individual. Recent cases confirm the right of an employer to declare redundancies provided they are for genuine commercial reasons, which call include the contracting out of part of an employer's business. Employees no longer have implied entitlement to compensation on a redundancy if the employment contract does not expressly provide for compensation.

An employee's rights in a situation of redundancy will depend upon what is expressly contained in the employment contract, and what additional rights will be implied into the contract (for example, in relation to consultation, fair treatment and reasonable notice of termination).

Contractual Provisions

Obviously the best way for the association's members to protect their positions is to negotiate into their employment contract rights and protections which apply in the situation of redundancies. Basically, whatever the parties agree will be binding on the employer. Members should consider the inclusion of a clause giving them an express right to redundancy compensation. Redundancy clauses normally relate compensation to length of service, and a common formula is four weeks pay plus two weeks for each additional year (or part year) of service. Members should also consider negotiating for the right to tender for any contract if a club is contemplating the contracting out of maintenance services and for members' tenders to be fully considered before any final decision is made.

It is less important to include in the employment contract a provision relating to notice of termination, because employees are always entitled to the implied right of reasonable notice of termination. Although there is also an implied obligation on clubs to consult with employees in relation to redundancies, it is preferable if the obligation of consultation is included expressly in an employment contract so as to ensure that the clubs are aware of their need to discuss contracting out proposals with superintendents.

Changes to employment contracts can occur when a new contract is offered, or at any time by way of variation if the parties agree.

Consultation

There is general implied obligation on clubs to treat members fairly in a redundancy situation. The most important aspect of fair treatment is the need to consult with employees about what is proposed, what alternatives may exist for members (such as redeployment) and what the consequences of a redundancy would be for the superintendent.

In this type of redundancy situation, clubs should consult with superintendents at an early date, because superintendents will often be in the best position to offer suggestions and recommendations on how maintenance services might be improved or carried out at a reduced cost. Consultation gives members the opportunity to persuade clubs that there is an acceptable alternative to contracting out and to persuade them not to disestablish their positions.

Notice

Redundancy is not a reason to summarily dismiss an employee, and therefore the employment contract must be properly discharged by the giving of proper notice or payment in lieu. If a notice provision is expressly provided for in the employment contract, then that is the period of notice which must be observed by the club, and there is no basis for contending an entitlement to a longer period of notice. On the other hand, if the employment contract is silent on notice, members will have an implied entitlement to receive "reasonable" notice, which will depend upon size of the job and the length of service. Reasonable notice may often be a period longer than one month.

Employers are usually entitled to make a payment in lieu of notice. However, there may still be a need to provide the employee with a period of employment after notification of redundancy is given to avoid the appearance of summary dismissal, allow the employee to say goodbye to other employee's and to leave with dignity, and to allow the employee to apply for future employment whilst still in the position (which will often be an advantage to the employee).

Compensation

The Aoraki Corporation decision of the Court of Appeal last year ruled that employees no longer have a right to redundancy compensation if it has not been expressly agreed to by the parties (previously, many employees were able to claim redundancy compensation, even if it was not provided for in their employment contract, as an aspect of the implied obligation to treat redundant employees fairly). Therefore, any entitlement to redundancy compensation will depend upon whether members are successful in negotiating into their employment contracts a clause setting out an entitlement to compensation.

Personal Grievance Claims

If any express entitlements in the employment contract are not observed by the clubs in a redundancy situation, members will have a right to pursue a personal grievance claim against the club for breach of contract and unfair dismissal. A failure to consult over a proposal to contract out maintenance services or terminating a superintendent in an abrupt fashion will usually result in breach of the implied term to treat members fairly. Personal grievance claims must be filed within 90 days of dismissal.

If you have any questions or concerns about your personal circumstances, you should contact the NZGCSA for further information.