Bank giant chided over manager's neglect

By Deborah Hill Cone

Friday 2nd April 2004

Westpac Bank has been censured by a three-judge bench of the Court of Appeal for not doing enough to find a new job for a redundant Wanganui bank manager.

The case appears to raise the bar of what an employer is expected to do how far it should bend over backwards when making a staff member redundant.

And it may serve as a warning to employers to check the fine print of contracts and make sure they slot staff into replacement jobs if there is one available.

Bruce Money, an agribusiness manager based in Wanganui, was made redundant by Westpac in 1999 after a restructuring that saw smaller agribusiness customers in his area serviced by a call centre in Wellington.

The number of Westpac agribusiness managers was to drop from 65 to 42 and one of the positions to be scrapped was Money's job.

Under his individual employment contract Westpac was to "make every reasonable endeavour to identify and offer at least one job option which is substantially similar to the position being made redundant."

Money indicated an interest in a position based in Palmerston North.

But Westpac said this job was not directly comparable to his current job and the role would be contested. When Money applied for it, he didn't get it.

Money took legal action in the Employment Tribunal, which he lost, but appealed to the Employment Court, which he won. Westpac appealed to the Court of Appeal.

The chief judge of the Employment Court, Tom Goddard, found the Palmerston North job was in "reasonable commuting distance" of Wanganui and as it was a substantially similar position, Westpac was obliged to offer it to Money.

Westpac appealed, arguing Judge Goddard had got two aspects of the law wrong his conclusion that Palmerston North was a reasonable commute from Wanganui and the scope of Westpac's obligation to a redundant employee.

Acting for Westpac, Keith Binnie of Simpson Grierson said there was no evidence before the court about the reasonable commuting distance point.

The distance between Wanganui and Palmerston North was 75km, involving an extra hour and a quarter travelling time each way.

But the Appeal Court said Judge Goddard was entitled to take that position.

Binnie argued Judge Goddard had also been wrong in finding that under Mr Money's contract Westpac was obligated to find him a substantially similar job and offer it to him. Westpac had to make "every reasonable endeavour" to find a substantially similar position, rather than being under an "absolute obligation," Binnie said.

He said where Westpac had more than one redundant employee, but only one substantially similar position, it was entitled to conduct a contestable process and give each employee the chance to apply for the single job.

But Peter Reardon of Palmerston North firm Cooper Rapley, acting for Money, pointed out the successful employee for the Palmerston North job, which his client missed out on, was someone who had not been affected by the redundancies.

The Appeal Court dismissed Westpac's appeal.

Westpac media relations manager Paul Gregory said this case was the first employment-related appeal the bank had taken since 1995.

"Westpac appealed the original decision from the Employment Court because we believed the judgment would impose considerable restrictions on our ability to undertake any restructuring of the business," Gregory said.

Although it had lost the case, the Appeal Court did make some findings that were useful to Westpac including its ruling that the bank was entitled to use selection processes to determine the best candidate for a situation where, for example, five people were made redundant and only one redeployment job was available.

Employment law commentator Katherine Beck said the judgment was particular to the wording of the contract in question, which put a more onerous burden on the employer to provide another job than other contracts she had seen.

"This contract went a lot further, saying they would make every reasonable endeavour to offer at least one job option," Beck said.

Another employee-friendly finding was that the Court of Appeal said the Employment Court judge was entitled to find 75km each way a reasonable commute, if the employee themselves said they were prepared to do it. "Part of what the court would have seen here was a senior employee who was going all out to get a job," Beck said.

Comments from our readers

No comments yet