February 2021

One of the issues that we often see coming up in restructuring and redundancy situations is redeployment. When disestablishing a role, does the employer have to offer the affected employee a vacant role (either existing or new) within the organisation? The answer to this question depends on a number of factors, including the duties and responsibilities of the vacant role and the employee’s skills and experience.

The Employment Relations Act 2000 (“Act”) imposes a statutory duty of good faith on employers, which includes the requirement to consult with potentially affected employees when proposing to terminate their employment for redundancy. In addition, s103A of the Act sets out the test to be used when considering whether an employer’s decision to dismiss an employee, for example by way of redundancy, is justifiable. The test is whether the employer’s actions were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred.

One of the consequences of this statutory framework is that dismissal should always be the last resort. Employers must actively explore alternatives to dismissal, which in a redundancy situation means considering whether there are any alternative roles available. Where such a role is available, then the employee should be offered it, not merely given the opportunity to apply for it.

The vacant role does not need to be the same or even substantially similar to the original role (if it is, it’s strongly arguable there isn’t actually a redundancy). The vacant position may have different duties, location, seniority and even remuneration. However, redeployment should be offered if the role is one that the employee can perform, even if it is a step up and requires a reasonable amount  of training and/or support. A vacant lesser role (less seniority and pay) should also be offered. It shouldn’t be assumed that the employee isn’t interested just because they would get paid less.

However, an employer does not have to offer redeployment to a position that is significantly more senior and would require a higher level of training, or it is a specialty position requiring particular qualifications, skills and experience which the affected employees does not have.

In some cases, if an employee affected by redundancy rejects an offer of redeployment, it may impact on their entitlement to redundancy (if any). This can depend on the wording of the relevant employment agreement.

In summary, it is important that you consult with employees about alternative positions, especially if you are proposing to create new positions as part of a restructure. You should explain to affected employees what alternative roles may be available and ask whether they are interested in a particular position.

Please contact our team if you are considering any restructuring or redundancies, including redeployment, and we can assist you throughout the process.

back to top