A case of throwing the baby out with the bathwater

5 February 2014

The year has just begun and already we’ve seen a spate of electioneering from our political parties. Markers are already being laid down for what will no doubt be a tightly contested election and paid parental leave is one topic that has been at the centre of the conversation in recent weeks.  However it’s not just politicians grappling with the issue as the Employment Relations Authority was recently asked to hear the case of an employee who was made redundant while on parental leave.

The facts

Katherine Ledger was employed by Delmaine Fine Foods as a National Account Manager in February 2011. In her role, she was responsible for managing the account of supermarket juggernaut, Foodstuffs.

In April 2012, Ledger applied in writing for seven months’ parental leave. Delmaine confirmed verbally that her position would be kept open with a return date of 29 January 2013. However no written notification was provided.

After several months of leave, Ledger enquired about the possibility of returning early on a part-time basis. She was however informed that due to an Export Manager relocating from Christchurch to Auckland, there was no work for Ledger before Christmas.

Delmaine only intended to cover Ledger’s responsibilities on a temporary basis. However as a result of the Export Manager transferring to Auckland, Delmaine identified that Ledger’s role could be permanently absorbed by other employees.

Shortly before Christmas 2012, Ledger had a telephone conversation with Nicky Morton, Delmaine’s sales and marketing director, who informed her that the company was considering disestablishing her role. Morton and Ledger dispute what was said during the conversation. Regardless, Ledger was left with the distinct impression that  her position would cease to exist.

Ledger’s view was confirmed at a meeting held a few days later where Morton confirmed the disestablishment of her role and that a letter formalising redundancy would be sent out in the new year.

The letter however was not forthcoming despite Delmaine announcing to staff that Ledger had been made redundant. It was only after Ledger raised a personal grievance that Delmaine wrote to Ledger confirming the redundancy and claiming that it was a result of the ongoing economic downturn.

The Authority

Ledger took her grievance to the Employment Relations Authority which found that although Delmaine did need to improve its efficiency in light of the poor economic climate, this had been the case since before Ledger commenced her employment. In the absence of any detailed financial records or projected cost savings, the Authority concluded that the redundancy was not genuine. It further held that Delmaine had not followed a fair and proper process in terminating Ledger’s employment.

Notably, the Authority also found that in the absence of genuine reasons for making Ledger redundant, Delmaine could not rebut the statutory presumption that an employer will keep an employee’s position open for them while they are on parental leave.

Accordingly, the Authority held that Ledger’s dismissal was unjustified. For her troubles, she was awarded $15,000 compensation for hurt and humiliation and nearly $20,000 reimbursement of lost wages.

Conclusion

What you should take away from this case is not that an employee on parental leave cannot be made redundant. An employer’s actions may well be justified provided a fair process is followed and there are genuine reasons for the redundancy. However the plight of Delmaine highlights the cost of getting it wrong and is a reminder that employers need to tread carefully when dealing with staff on parental leave.