Two employers set out to restructure. Both had a real commercial reason for it. Both, in the end, lost at the Employment Relations Authority — one large and well-resourced, one small and stretched — and they lost for the same reason. Not because the redundancy was a pretext, and not because the numbers were wrong, but because the process that carried the decision was not good enough, and because neither employer did the one thing the law asks before a role is disestablished: look, honestly and with an open mind, for somewhere else the person could go.

A genuine business reason is not a defence to a bad process. Read side by side, that is the whole of these two determinations.

The spine both cases sit on

New Zealand law expects a restructure to rest on a genuine, demonstrable commercial reason; that much is not optional. What it will not do is sit in judgment on the commercial wisdom of the decision, or tell an employer how to run its business. Under s103A of the Employment Relations Act 2000, the question is whether the dismissal, and the way the employer went about it, was what a fair and reasonable employer could have done in all the circumstances. Over that sits the s4 duty of good faith: the parties must be active and constructive, and before a decision that may cost someone their job, the employer must give that person the information relevant to the decision and a real opportunity to respond.

The Authority has said for years that a genuine redundancy, run with proper notice and consultation, can “go a long way” towards satisfying that test (Grace Team Accounting v Brake). But a long way is not all the way. Consultation must be, in the words of Stormont v Peddle Thorp, “a reality, not a charade” — undertaken with an open mind, before the decision is fixed, at a point where the employee’s answer can still change the outcome. And where a role is going, the duty does not end at explaining why. It extends to redeployment: an active search for alternative work the employee might do, taken seriously rather than performed (NZ Steel v Haddad; Jinkinson v Oceana Gold).

That is the spine. Now the two cases.

The large employer: de Zwart v Landpower

Ms de Zwart was Landpower’s General Manager People and Culture, on a base salary of $291,250, with more than three years’ service, based in Christchurch. Landpower is a substantial business, and the Authority accepted that its reason for restructuring was real: the board had mandated cost savings of about $9 million as the post-COVID rural-machinery market softened. The redundancy was genuine. There was no ulterior motive and no disguised dismissal.

And still it failed, on two counts.

First, the consultation was rushed and lacked candour, and the Authority was not satisfied it was genuine. Once the board had endorsed Mr Wilson’s strategy of devolving the People and Culture functions to the regions, Landpower had, in the Authority’s words, bound itself to an outcome — which left Ms de Zwart entitled to feel she had been misled into thinking her input, and the cost-saving alternatives she put up, would be weighed with an open mind. When she asked for more time, a reasonable request, she was refused.

Second, and this is the part that should give every employer pause, the redeployment search barely happened. The one alternative Landpower put to her was a Customer Experience role at about 36 per cent of her salary — $105,000 against $291,250 — a role a colleague had already turned down. Meanwhile a General Manager role for Eastern Australia sat vacant, and was neither offered to her nor considered; Landpower filled it with someone else during the consultation, which the Authority found showed predetermination to close off an option it never explored. Landpower’s chief executive, Mr Wilson, accepted that he “should have been more thorough.” Neither he nor the external consultant had so much as looked at her CV.

Sit with that for a bit. The employer was restructuring its own Head of People and Culture, the person whose job is to run fair processes, and it ran an unfair one. It was a large, well-resourced business, and it took no legal advice on its good-faith obligations before it began. Resources were not the problem. Attention was.

The Authority found Ms de Zwart had been unjustifiably disadvantaged — not by the decision to disestablish her role, which it accepted was a genuine redundancy, but by the way Landpower ran the process and the redeployment around it. It awarded her $20,000 for humiliation and injury to feelings under s123(1)(c)(i). It declined lost wages: she had found comparable work quickly, and because the redundancy itself was genuine, what she had lost was the opportunity to be redeployed, not the job. It imposed no penalty and made no reduction for contribution. Her last day was 27 September 2024, with her notice paid in lieu.

The small employer: LUO v BAZ

At the other end of the scale sits LUO v BAZ. The employer was a small, predominantly online wholesaler with two hands-on directors; the determination is fully anonymised, and we will not name it. The employee was a recent graduate in a marketing role, with about seven months’ service.

Here too the reason was real. The business had suffered a genuine loss of wholesale revenue in early 2024, and the Authority accepted there was a pressing reason to look hard at costs. Its own phrase captures the case: the restructure was “substantively genuine and procedurally deficient.”

The deficiency was in the doing. The process was piecemeal, largely verbal, and poorly documented — no written proposal, no timeframe, no notes. The employee was never told her role was at risk; she did not understand that “roles will change” meant “roles will be reduced,” and she was, in effect, told her position was gone before she grasped it had ever been in doubt.

Then came the redeployment point, arriving from the opposite direction to Landpower’s. The restructure merged two roles into one — a “new” Digital and Customer Service Manager position that LUO called “awfully close” to her own, and the Authority agreed there was very little between them. In substance it was her job. Yet rather than redeploy her into it, the employer required her to reapply, and could not explain why. One director even accepted that LUO “likely would have got the role” and that it was one she “could have done.”

The Authority did not allow the employer’s size to excuse the process. Its line is the one to keep: “Even for a small employer with limited resources, that process was demonstrably unreasonable.” Her unjustified-dismissal claim succeeded; separate complaints of bullying and harassment did not, on the evidence, and the redundancy process is where the case turned.

On remedy, the Authority awarded $11,000 for hurt and humiliation under s123(1)(c)(i) but declined lost wages: LUO had chosen not to apply for the new role and had finished four weeks early, so had not taken reasonable steps to mitigate her loss. It also declined a penalty for the good-faith breach, compensation having already answered it. In doing so it cited, as it happens, Mandeep Singh v PR Kahlon, the determination behind our earlier note.

Where they meet: redeployment

Strip away the difference in scale and the two cases converge on one point. Both employers were right that they needed to change. Both were entitled to restructure. Both fell at redeployment, from opposite ends.

Two curved paths converge across a room split between a burnt-orange wall and a slate wall, with a lit doorway open in the centre and a closed door set into the slate wall, and a hammered brass bowl resting on a stone plinth.

Landpower offered a redeployment option that was really a demotion, and filled a general manager vacancy with someone else without ever assessing her for it — no one had opened her CV. The wholesaler did the mirror image: it held a role that was substantively the employee’s existing job and, instead of placing her in it, made her compete for it as though she were a stranger.

Both are failures of the same duty. Redeployment is not a courtesy, and it is not a box to tick. It is an active obligation to match a real person, with a real history, against the real vacancies the business has, and to do it with an open mind. You do not discharge it by offering a token you expect to be refused, and you do not discharge it by dressing up continuity as a fresh contest. In both cases the role that mattered was right there. In neither case did the employer look with an open mind.

Redeployment is not a courtesy. It is an obligation.

The takeaway

For employers, the lesson is an uncomfortable one, because it takes away the thing that feels like protection. A sound commercial reason is necessary, but it is not a shield. It will not save a rushed consultation, an undocumented process, or a redeployment search that was never really a search. Landpower had money, advice within reach, and an HR function of its own, and it lost. The wholesaler had none of those things, and its size bought it no allowance. What decided both was not the reason for the restructure. It was the care taken in carrying it out.

If you are weighing a restructure, the reason is the easy part. The work is in the process: consult before the decision is fixed, not after; write it down as you go; and when a role is disestablished, run a redeployment search that begins with the person’s actual experience, CV in hand, against every real vacancy you have. Do that, and a genuine reason will, as the Authority keeps saying, take you a long way. Skip it, and the reason will not save you.

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Sources

Lex Praxis advises New Zealand employers on employment law, including restructures, consultation, and redeployment obligations. This article is general commentary and does not constitute legal advice. For advice specific to your circumstances, contact us directly.