Restructure and Redundancy Case Law Development

Restructure Case Law: Why Selection Criteria Transparency Matters 

A recent case of Duvaux v Mega Ltd [[2026] NZERA 182; 27/03/26;S Greening] highlights the importance of an employer ensuring full transparency when applying Selection Criteria to potentially affected employees. While the employer got many aspects of the restructure correct from a procedural fairness point of view such as genuine reasons to initiate a restructure and correctly consulted potentially affected employees, it fell through due to flaws in its treatment of selection criteria.

Background

Mr Duvaux was employed by Mega Ltd (Mega) as a senior web developed until his redundancy November 19 2024.

Mega provided cloud storage services and its technology department grew substantially during Mr Duvaux’s tenure. Concerns about declining revenue per employee and rising salary costs led the Board to undertake an operational review in August 2024 to identify cost savings and efficiencies. This led to Mega consulted potentially affected employees, including Mr Duvaux, on a proposed restructure of the technology department 4 November 2024

Feedback was extended to 18 November 2024. Mr Duvaux provided written feedback and met with the chief technology officer, Mr Meister, on 18 November 2024. Later that day, Mega confirmed its decision to disestablish 22, including Mr Duvaux’s role. On 19 November 2024, Mega made Mr Duvaux's position redundant. It paid notice, entitlements and an additional discretionary payment to him. Notwithstanding the latter, Mr Duvaux brought a personal grievance for unjustifiable dismissal, seeking compensation and lost wages.

The Employment Relations Authority (ERA) accepted Mega had genuine commercial reasons for restructuring, had mostly corrected correctly consulted with employees about the restructure proposal by providing information and allowing feedback. It extended the consultation period and responded in detail to issues raised, including alternative cost-cutting options and concerns about the effect of the restructure on projects and product quality. The ERA also accepted that Mega had only one possible alternative role Mr Duvaux could be redeployed to, which was not suitable for him.

The critical flaw was Mega’s treatment of the selection criteria that identified which web developer roles would be made redundant. Mega had already applied the criteria before the proposal was issued and before employees were consulted. Although the proposal identified the criteria used in the assessment (such as performance, criticality or risk, cost, and length of service), it did not disclose the specific scores awarded to Mr Duvaux or the weighting applied to those criteria. This meant he could not meaningfully test or respond to how the criteria had been used in his case.

Decision

The ERA found that Mr Duvaux was unjustifiably dismissed. Mega had not adequately consulted on the selection criteria because they were not put forward on a genuinely provisional basis. The underlying scores were withheld and Mega did not specifically engage with Mr Duvaux’s detailed feedback about the way the criteria had been applied to him. It deprived Mr Duvaux of a fair opportunity to influence the decision and therefore amounted to procedural unfairness that was sufficient to make the dismissal unjustified. 

Mega was ordered to pay Mr Duvaux $8,000 in compensation and three months’ lost wages.

Key takeaways

• Employers must get all aspects of a restructure process correct to avoid personal grievance risk

• Potentially affected employees in a restructure must have a genuine opportunity to provide feedback on selection criteria before they are applied

• Employers must disclose the selection criteria specific scores and weightings to potentially affected employees to allow them to test and respond to how they were used

For more information, refer the article and advice under Case Law. For specialist advice in this area, please contact me at michaelp@businesscanterbury.co.nz.