New Zealand Steel Ltd v Haddad

Ra’ed Haddad was a long-serving Process Computing Manager at New Zealand Steel Limited. In 2019, the company decided to restructure its IT department, which meant disestablishing Mr Haddad’s position and creating three new managerial roles. Mr Haddad, along with other affected staff, was invited to apply for these new positions. He applied for all three but made it clear he preferred one and was also open to other roles outside the IT department.

However, Mr Haddad declined to attend interviews for the new IT roles. He believed he was already suitable for at least one of them and felt the interview process was unnecessary and potentially humiliating, as he suspected the outcome was predetermined. NZ Steel, on the other hand, insisted that interviews were necessary to assess all candidates fairly. When Mr Haddad refused to participate, the company did not appoint him to any of the new roles and made him redundant.

Mr Haddad challenged this decision, claiming unjustified dismissal.

The Employment Court examined whether NZ Steel followed a fair and reasonable process in making Mr Haddad redundant. The Court looked at several key points: whether NZ Steel genuinely consulted with Mr Haddad, whether all relevant information was provided, and whether redeployment options were properly considered. The Court found that while the restructure itself was genuine, the process as it related to Mr Haddad was flawed.

Specifically, the Court decided that NZ Steel’s insistence on an interview was not justified, given Mr Haddad’s clear suitability for at least one of the new roles. The company’s failure to redeploy him, and its reliance on his refusal to interview as a reason for redundancy, was not the action of a fair and reasonable employer. As a result, the dismissal was found to be unjustified. The Court ordered Mr Haddad’s reinstatement, compensation for lost earnings, and additional compensation for hurt and humiliation.

This case is a warning to employers that redundancy processes must be more than a box-ticking exercise. Even if a restructure is genuine, the process must be fair and reasonable for each affected employee. Employers must:

Before making any role redundant, employers should work through a practical checklist to ensure compliance with employment law and reduce the risk of unjustified dismissal claims. Key steps include:

This case involved the interpretation of the Employment Relations Act 2000, particularly sections 4(1A)(b) (good faith obligations) and 103A (test of justification for dismissal). Employers must act in good faith, which includes being active and constructive in maintaining a productive employment relationship and providing all relevant information during restructuring.

Employment agreements may also contain specific clauses about redeployment and consultation. Failing to follow these can lead to findings of unjustified dismissal, even if the business reasons for restructuring are genuine.