Redeployment: A practical guide

Redeployment is when an employer tries to find a new job within the company for an employee whose current role is being disestablished. It is a key and often overlooked step in conducting a lawful redundancy process. In this article, Duncan Cotterill partner Alastair Espie and solicitor Lauren Tonkin discuss how builders should manage the process

A common mistake we see from employers is failing to offer an employee redeployment into a suitable vacant role, leading to an otherwise wholly justified redundancy being deemed an unjustified dismissal.

In this guide, we will unpack what employers need to consider when it comes to redeployment by outlining its requirements, explaining how to work through the process, and highlighting the importance of consultation.

When is redeployment required?

When an employer disestablishes an employee’s role, they are required to explore any potential opportunities to retain the employee in a different role before dismissing them for redundancy. Remember, termination of employment should always be a last resort.

Where there is a vacant role, which an employee impacted by restructuring has the necessary skills and experience to perform or would be capable of performing the role with reasonable training, the job should be offered to the employee. A common example of this is where a role is disestablished and replaced with a newly established role, which the affected employee would be capable of performing. However, this obligation may also arise where there is a vacant role, which may be substantially different from the employee’s current position but which they are capable of performing or would be capable of performing with additional training.

In situations where more than one affected employee is suitable for the same redeployment opportunity – for example, where two positions have been disestablished and a new hybrid position established – the employer would need to undertake a selection process to determine which of the impacted employees should be redeployed into that position.

There may be circumstances where it is unclear whether the employee has the necessary skills to perform the duties of the role and the employer may offer them an opportunity to apply for the role. This would generally be limited to situations where the vacancy is for a completely different role or one that is considerably more senior.

To be clear, the affected employee should still be considered as the preferred candidate prior to considering other unaffected employees or taking the role to market. This is another common mistake we see employers make by advertising a vacant role while the restructuring process is ongoing, without first giving the affected employee an opportunity to be considered for it.

It is only after an employer has considered all possible redeployment opportunities and has reasonably concluded that they are not suitable that they can move forward with declaring an employee redundant.

How to work through redeployment?

Employers are expected to take a proactive approach to redeployment and not treat it as an afterthought. This derives from the good faith obligation to actively and constructively seek to maintain the employment relationship and to give an employee the opportunity to comment before any decision is made that could impact their employment.

In practical terms, the case law has indicated that, to meet its redeployment obligations, an employer needs to:

• Identify any potential vacancies or redeployment opportunities within the business and present them to the employee.
• Actively engage with the employee about these vacancies (or lack thereof) and seek their feedback.
• If the employer decides that the employee is not suitable to be redeployed into a particular role, explain its reasoning for coming to that conclusion.

Identification

As set out above, employers have an obligation to proactively identify any potential alternative positions within the business. The extent of this duty is broad and may, for example, extend to exploring roles unrelated to the employee’s current position and/or vacancies in different branches of a larger organisation.

Differences in duties, terms, remuneration and/or skillset required for a role may or may not be a barrier to redeployment. Ultimately, the employer must take all reasonable steps to identify any possible redeployment opportunities and then consult with the employee on the reasonableness of the redeployment in the circumstances.

Consultation

As with any decision which may adversely impact an employee’s employment, the key word is consultation. An employer shouldn’t decide on their own if a redeployment opportunity is suitable without first consulting with the affected employee as part of the restructuring process.

Even where it may seem clear that the employee lacks the necessary skillset for a vacant position and/or the employee has expressed no interest in the role, the employer should still consult with the employee about the opportunity. It may be the case that it is reasonable to conclude that the employee was not suitable for the position; however, failure to consult with the employee about the vacancy before reaching that conclusion may lead to a successful unjustified dismissal claim.

When consulting with an employee about a redeployment opportunity, the employer should seek feedback on whether they are interested in the role and what their skillset is.

For example, when considering whether to offer an employee a vacancy, which would require the employee to undergo additional training, it would be helpful to get the employee’s feedback on how they could apply their current skillset, whether, and to what extent, they are prepared to undertake additional training, as well as their view on any other relevant factors about the role (eg, seniority, remuneration and/or other terms) to gauge the reasonableness of the redeployment.

While the issue of how far an employer must go to upskill the employee when considering redeployment is yet to be fully tested before the courts, consultation should flush out the employee’s views as to why they consider themselves to be capable of performing a particular role. If the employer ultimately concludes that an employee is not suitable for redeployment into a particular role, the decision will naturally be more robust if it has been arrived at via a thorough consultation process.

Finally, and importantly, even where the employer has been unable to identify any vacant roles, there is still a requirement to consult with the employee about any potential opportunities the employee may be able to identify.

If, following consultation, the employer concludes that the employee is not suitable for any of the identified redeployment opportunities, it needs to explain its reasoning to the employee.

Case study: Stellar Elements New Zealand Ltd v Amesbury [2024] NZEmpC 136

This case concerned an application for interim reinstatement; however, the Employment Court discussed the issue of the sufficiency of an employer’s efforts to explore redeployment opportunities.

In this case, the employee had been informally seconded to a different role within the business and ultimately applied to be permanently appointed to this role; however, he withdrew his application due to bonus-related issues. Notably, the employee continued to perform the duties of the ‘seconded’ role. The company subsequently disestablished the employee’s primary role but did not offer to redeploy him into the role he was currently performing (which was still vacant).

What if the employee has already expressed that they are not interested in the role?

Case law suggests that an employer may still be required to present a role the employee has previously expressed no interest in as a potential redeployment opportunity.

With Stellar Enterprises, the Court considered the employer’s duty to explore a redeployment opportunity in circumstances where the employee had previously withdrawn his application for the role (prior to the redundancy process).

While the employee had previously withdrawn his application, his circumstances had since changed in that his primary role was being disestablished; however, he was under the impression that the permanent position had been filled when, in fact, the original preferred candidate had ultimately decided not to accept the role.

The Court found that it was reasonably arguable that the employer was obligated to be proactive in informing the employee of the availability of the permanent role and explore it as a redeployment opportunity.

What are employers’ obligations in relation to overseas redeployment opportunities?

An employer’s obligation to explore redeployment opportunities may extend beyond New Zealand’s borders to international roles.

Stellar Enterprises was part of a larger international organisation, Amdocs. There was evidence that suggested there may have been vacancies within Amdocs that could have been considered.

The Court considered it arguable that a fair and reasonable employer, supported by a well-resourced international organisation, would be expected to explore such options.

While the Court did not go so far as to say that employers must redeploy staff into an entirely separate legal entity, employers who are part of broader corporate groups should at least be mindful that this is an area where the law may evolve moving forward.

Key takeaways for employers

Redeployment is an important step in the redundancy process, as required by the employer’s duty of good faith, and is where we see a lot of employers fall short. To avoid stumbling at the final hurdle, we advise employers to:

• Think carefully about other potential roles within the business, including at other branches or locations if applicable. Take a proactive approach and engage with the affected employee to explore whether there may be any reasonable redeployment opportunities before dismissing them for redundancy. Only terminate an employee’s employment as a last resort.

 

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

This article is provided by Duncan Cotterill, a full-service law firm with offices in Auckland, Wellington, Nelson, Queenstown and Christchurch. If you have any questions relating to this article, please contact your local Duncan Cotterill advisor duncancotterill.com

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.