The redundancy scam

There's a new management 'strategy' businesses are using to avoid paying redundancy entitlements to workers. It goes like this: The employee is offered an incentive to take on new tasks or change their position in the business. The new position will be high stress, fast paced and micro-managed. The aim is to get them so stressed out, they'll leave. If they make any sort of claim, especially regarding redundancy, the employer will fight it, even if there is no chance of winning. The employer's aim is to draw the negotiations out as far an possible, incurring the employee so much stress and legal costs, that they give up. First there's meetings that go nowhere until the employee realises they are being scammed. A smart employee will get a lawyer involved by now. Next it's a negotiation session with the MBIE - usually a total waste of time because the MBIE has no authority to make a decision. By this stage the employee is looking at a legal bill of thousands. Next it's a hearing at the ERA, which involves legal submissions and arguing like a court case. Finally we are in front of a body that can make a decision that can be enforced but the employee is looking at legal costs somewhere between $20 and $25,000. Even if the ERA awards legal costs to the employee, that doesn't cover all their legal fees (typically only about half). In most cases the employee gives in, believing the legal fees will swallow up any redundancy payments and the stress just isn't worth it. The system is skewed in favour of the employer every time. In our next post we'll look at how to beat it.