Legal Update: Restructuring and redundancy
Jason Kiteley v Carbine Aginvest Corporation Limited  NZEmpC 106 concerns a claim by Mr Jason Kiteley that he was unjustifiably dismissed from his employment. The judgment of the Employment Court provides interesting reading for employers on restructure processes.
Mr Kiteley had been employed by the defendant (at the time known as Tru-Test) for over 18 years when his employment was terminated due to redundancy, following a restructure process. At the time, Mr Kiteley was employed as a senior manager in the role of Head of Operations and Business Transformation.
Mr Kiteley brought a non-de novo challenge to the Employment Relations Authority’s earlier determination on the justifiability of his dismissal. Mr Kiteley sought lost remuneration plus payment of significant incentive bonuses.
Tru-Test had employed a new Chief Executive Officer in September 2017. During October 2017, the new CEO, who had a background in operations, reviewed the operations structure within the business and in particular the need for the Head of Operations and Business Transformation role. In October 2017, the CEO also had discussions with Mr Kiteley about Mr Kiteley’s plans to restructure his own team. They did not discuss the potential disestablishment of the Head of Operations and Business Transformation role. In this time the CEO also spoke with a recruiter about the possibility of a new Supply Chain Manager role and posting an anonymous job advertisement online for such a position. The CEO’s evidence was that the recruiter was a “sounding board”, someone with whom he met regularly to discuss his ideas and plans.
On 25 October 2017, the CEO presented to the Board a proposal to restructure Tru-Test’s operations function led by Mr Kiteley. The CEO presented two alternative options for this. Option 1 involved the disestablishment of Mr Kiteley’s role with roles currently reporting to Mr Kiteley instead reporting directly to the CEO. Option 2 also involved the disestablishment of Mr Kiteley’s role. However, it included the disestablishment of a second role, the Group Logistics Manager, and the creation of a Supply Chain Manager role which would report to the CEO.
Option 2 was removed from consideration on 30 October 2017 after the Chair of the Board and the CFO raised concerns about the business risk associated with it. However, the anonymous advertisement for the Supply Chain Manager role had been placed a few days earlier and was not removed. In the days following, the CEO engaged with the recruiter about potential candidates.
On 3 November 2017, the CEO invited Mr Kiteley to a meeting to discuss his proposal to disestablish the Head of Operations and Business Transformation role. The CEO was about to depart on an overseas trip and offered Mr Kiteley the option of postponing the discussion. Mr Kiteley chose to proceed.
The proposal followed Option 1 and did not mention the creation of a Supply Chain Manager position. The only redeployment opportunity identified was an opportunity to apply for a new Head of Marketing position, which arose out of a separate restructure of another function of the business.
On 8 November 2017 Mr Kiteley provided written feedback. Two days later, the CEO responded to that feedback and confirmed his decision to proceed with the proposal. Mr Kiteley’s final day was 30 November 2017.
Just over two weeks later, the Group Logistic Manager resigned. Tru-Test appointed a candidate, sourced by the recruiter, to the role of Global Supply Chain Manager.
Mr Kiteley’s challenge in the Court focused largely on this appointment, and the fact he was not offered redeployment to the Supply Chain Manager role and was not told about the possibility of the role under Option 2.
The Global Supply Chain Manager role was resurrected two days after the sudden resignation of the Group Logistics Manager on 15 December 2017. This was an employee the Board had wished to retain, a key driver in the CEO adopting Option 1 over Option 2. The CEO’s evidence was that the appointment of the Global Supply Chain Manager was made purely in response to the sudden resignation, which occurred after Mr Kiteley had left. However, ten days prior to Mr Kiteley’s departure, the CEO had met with the ultimately successful candidate. Tru-Test then arranged for the candidate to meet with Tru-Test’s Manufacturing Manager on 6 December 2017. It was not until 12 December 2017 that the recruiter was told that Tru-Test would not be proceeding with the Supply Chain Manager role.
Mr Kiteley also argued the CEO was obligated to consult him about Option 2 and the potential for a Supply Chain Manager role under that alternative.
The Court observed that the sequence of events and their proximity to Mr Kiteley’s departure raised concerns. However, the Court concluded that the events did not undermine the genuineness of the redundancy. There was no obligation to offer Mr Kiteley the Global Supply Chain Manager role because he had left employment by the time the role was created following the sudden resignation of the Group Logistics Manager. The role did not come into existence until after Mr Kiteley had departed and, prior to his departure, Tru-Test had not intended to create the role nor appoint anyone to it.
The Court also observed that there was no obligation to consult Mr Kiteley about Option 2 once the CEO decided to proceed with Option 1 in light of concerns voiced by the CFO and the Board about Option 2. Mr Kiteley had no entitlement to be privy to decisions made at that level.
The Court dismissed Mr Kiteley’s challenge.
Jason Kiteley v Carbine Aginvest Corporation Limited  NZEmpC 106 case summary was prepared by David France, Partner, and Hannah King, Associate, Kiely Thompson Caisley.