Is 20% Change In Your Job Enough To Justify Redundancy?
About the Author:
Mark Donovan
Barrister Specialising in Employment Law And Litigation
Mark specialises in Employment Law and Civil Litigation. He is a graduate of the University of Auckland with bachelor degrees in Arts and Law (Honours).
If you are an employee, you may find talk about changes being made to your role get your back up.
You signed up to perform certain duties (hopefully set out in a job description). That’s what you committed to, and you’re aware that employment agreements can’t be changed unless both parties agree.
Yet the reality is that employers do need to make changes to their business from time to time. Those changes can affect the types of duties you are asked to perform.
To what extent, then, can your employer change your duties?
And what if the amount of change made to your role starts to feel like you are no longer doing the job you initially signed up for?
Does that mean your role is redundant?
WHY CHANGES TO ROLES MATTER
The Court of Appeal has said that no employee can expect their duties to remain unchanged.
In the natural course of business, employers will require employees to make changes to the scope of their duties or how they carry them out. They may even want to change your job title or reporting lines to meet the needs of the business.
This right for employers to manage their business is something that they can do at their discretion. (Though the obligation to act in good faith towards employees suggests that employers would be wise to always consult with their staff about significant changes.)
This is an important right for employers, because if they had to get your agreement about every trifling change to your role, they might feel there is limited flexibility in their business.
However, some changes are not so trifling.
In some cases, so much change is implemented that it would be unfair to suggest the role you are being asked to now perform is the same one you agreed to when you started.
And if the role is really different, you might argue that your original role has been made redundant.
That will be important if you are entitled to a redundancy payout. You may prefer to be paid out those contractual entitlements rather than carry on in a different capacity.
On the other hand, your employer may want to avoid that outcome – they may genuinely want to keep you in the business and avoid their cash flow being affected by paying you out lump sums as you walk out the door.
IS THIS ROLE A NEW ONE?
When can we say a role is a new one?
The courts say that you answer that question by applying the following test:
Would a reasonable person, taking into account the nature, terms and conditions of each position, and the characteristics of the employee, consider that there was sufficient difference to break the essential continuity of the employment?
As with many legal tests, this is no easy formula. It requires the application of fair judgment, taking into account all the relevant circumstances.
Ultimately, however, it’s a common sense test: would a reasonable person think your job was the same or a new role?
CAN WE USE 20% AS A GUIDE?
Despite the legal test, employers and employees pine for a simple formula to help them determine if changes to a role are so significant that it has become redundant.
In many cases, parties in discussions may refer to whether there has been 20-percent change to the role as the threshold that signals the original role is redundant.
Why 20 percent?
This appears to stem from at least two decisions of the Employment Court, where there was evidence that a role had changed by 20 percent. Both cases supported the Court’s view that a new role was now on offer and the original role was redundant.
However, those cases were decided on their own facts. In each, the Court took into account all the circumstances, including the wording of the redundancy clauses and the type of duties the employee was now being asked to perform. In other words, they applied the full scope of the legal test referred to above.
In no case has the Court said that a change of 20 percent in the duties of a role will always mean that the role is redundant.
Nevertheless, a 20-percent change to an employee’s role remains a useful guide for determining whether there has been enough change to say the role is different.
CONCLUSION
Your employer has a right to tell you what duties you must do, within reason. It is their right as business owners.
Nevertheless, there is a limit to how much change they can implement.
If the changes are sweeping, they may in fact create an entirely new role, as opposed to merely tinkering with your existing role.
In that event, your employer should follow a fair process to propose that your current role is redundant.
As we have seen, the line can be tricky to determine. It requires the application of a common sense test, to which not everyone will agree.
Nevertheless, if you can demonstrate that there has been a change of 20 percent or more to your role, you may be well on the way to demonstrating the employer is asking you to perform an entirely new role.
Barrister
09 550 9854
Barrister specialising in Employment Law and Litigation
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