All in a day's work: Dip, dip, dipping at Christmas time

Photo / Thinkstock

At this time of the year the word 'dip' might make you think of a dip in the pool, chocolate dipped ice-cream or strawberries, 'chips and dip' or even 'lucky dip' presents.

For former Papakura District Council CEO, Theresa Stratton, Christmas appears to have come early. Ms Stratton has effectively been able to 'double dip' - receiving redundancy compensation following the disestablishment of her previously held position, as well as taking up a new three year fixed term contract as a senior planning adviser in the Mayor's office.

Redundancy and in particular the entitlement to and payment of redundancy compensation is an interesting topic. It generated a lot of talk last year, at the height of the recession, as redundant employees lamented the fact that New Zealand does not have compulsory redundancy compensation.

This meant that many employees, including those with extensive service for their employers that spans many years, are not entitled to redundancy compensation from their employers in the event that their roles are disestablished. Instead, New Zealand employees are entitled to notice of redundancy. If the employee's employment agreement is silent in respect of any notice period, a reasonable period of notice will be implied.

To prevent a situation where an employee becomes entitled to both redundancy compensation and to new employment, many employment agreements contain technical redundancy clauses.

Such clauses specify that in the event a business is bought, sold or otherwise transferred and the employee is offered new employment, then the employee is not redundant regardless of whether or not the employee accepts the offer of employment.

Some clauses are even broader than this example, and often specify a threshold that the offer must meet before the clause is triggered. i.e. the offer must be on the same or no less favourable terms and conditions or on any terms and conditions the employee is willing to accept. If the clause determines that the employee is not redundant, then they are not entitled to redundancy compensation or notice.

Ms Stratton by comparison has received both redundancy compensation, as well as a new job. Her new role is a three year fixed term contract as opposed to a permanent position, therefore I assume that if her employment agreement contained a technical redundancy clause, perhaps the threshold was limited to the same or no less favourable terms and conditions.

As a fixed term contract is less favourable than ongoing permanent employment, that wouldn't trigger the clause. Without seeing her employment agreement, one can only speculate!

So, it's good news for Ms Stratton and a timely reminder for employers - it's worth checking the wording of your clauses, to see whether you need to dip into the company coffers, or not.

No doubt the employees of Silver Fern Farms' factory in Te Aroha will be closely checking the terms of their employment agreements to see what, if any, entitlements to redundancy compensation they may be due.



Bridget Smith is an employment lawyer at Minter Ellison Rudd Watts