What Is Technical Redundancy?

Technical redundancy, like constructive dismissal, is one of those terms in employment law that is often misunderstood.

Not every dismissal is a constructive dismissal. Likewise, not every redundancy is a “technical” redundancy.

So what does it mean for you to be redundant “technically”?

In short, it is where your role really is redundant. But, despite that redundancy, you get to keep your job.

If that seems like a contradiction in terms, let me try and explain.

REDUNDANCY IS ABOUT THE ROLE

You are redundant when the role you perform is no longer needed by the business you work for.

The emphasis is on the role, not the person. Roles are redundant, not those who perform the role.

Still, we often say that someone is redundant if their employment ends because the role they performed is no longer needed.

But that is not always the case.

Just because your role is redundant does not mean that you are out of a job. And that is why the distinction between the role and the person fulfilling the role is important.

HOW TO KEEP YOUR JOB WHEN YOUR ROLE IS REDUNDANT

There are two ways you can still have a job after your role has become redundant.

  • Redeployment to a different role, with the same employer. The first situation is where your employer offers you a different role after your previous role is identified as unnecessary. If you accept that offer, you carry on being employed by your employer but take on different duties. This is termed “redeployment”.
  • Retained in the same role, with a different employer. This is where your employer elects to sell their business, or the part of the business that you work in, to a new owner, and that new owner wants you to continue doing your job.

Think about the second scenario some more.

From your former employer’s perspective, your role is, strictly speaking, redundant. They no longer need the role you perform in their business because they no longer have a business at all!

However, from your perspective, you will turn up to work the day after the business sells to do the same job. The only thing that will have changed is that you now do that same work for a different employer.

This is a “technical” redundancy. Technically, your role is redundant, since your former employer does not need it any more. However, your new employer, who has purchased the business, still needs someone to perform your role.

DO I GET REDUNDANCY COMPENSATION?

A key question for employees in this situation is: if I am redundant from my former employer’s business, shouldn’t I get some compensation from them?

To start with, redundancy compensation is not compulsory in New Zealand. That means you will only get such a payment if your employment agreement provides for it. No express clause, no redundancy compo.

Even if you are entitled to redundancy compensation, your employer can guard themselves from paying that compensation out to you in the event you are only technically redundant. They can do that by including express wording in your employment agreement to that effect.

That may seem unfair because you were actually redundant. But at the end of the day, you kept your job and in theory you should carry on as you were. So you haven’t really been disadvantaged in reality.

CONCLUSION

You will be technically redundant when your employer sells their business and you get to stay on with the new owner in your same role.

In those situations, you may miss out on any redundancy compensation you might otherwise expect to receive, but only if the employer has included express wording in your employment agreement to deprive you of that benefit.