What a genuine redundancy still cannot excuse, according to the ERA
A New Zealand employer was ordered to pay a dismissed sales manager $18,000 plus five months' wages, even though its redundancy was genuine.
The Employment Relations Authority issued that determination on 19 March 2026, finding that Strautmann Hopkins Limited (SHL) had failed to meet its consultation obligations when it gave notice of redundancy to regional sales manager John Pio on 26 April 2023, with his employment ending on 26 May 2023.
SHL sold Strautmann farm machinery and other related products in New Zealand under agency from a German-based manufacturer. When SHL lost that licence in 2023, its core business ceased. The Authority accepted the redundancy was genuine. Where SHL came unstuck was the process.
Mr Pio had been employed as regional sales manager since 1 March 2020. From around October 2022, employees became aware the licence would move to a new company. Mr Pio says he was told his employment would follow. Max Sturt, a former director of SHL, denied this. Ian Hopkins, a director and shareholder of Strautmann NZ Limited and Strautmann Hopkins (2023) Limited, accepted in evidence that he had indicated to Mr Pio that Mr Pio would move with him to the new entity, because that was the intention.
On 18 April 2023, Mr Pio stopped into HFG's head office in Palmerston North after a three-week South Island sales trip and stayed overnight. On 19 April he was called into a meeting without notice, handed a letter proposing his termination for redundancy with a 26 April 2023 deadline, and not asked to bring a support person.
He sought legal advice, but the ANZAC Day holiday meant the earliest appointment was the morning of 26 April 2023. SHL later claimed Mr Pio had verbally accepted redundancy in a phone call on 24 April 2023. He disputed this, and the Authority rejected the claim.
That morning, before his response deadline had passed, Peter McCarthy, a director of HFG, texted asking him to arrive with all company property, including his work vehicle. By afternoon, his lawyer had written to SHL declaring the dismissal unjustified, and SHL confirmed his termination that day. Mr Pio's last day of employment was 26 May 2023, with his payslip recording garden leave until that date.
Mr Pio argued that, given his prior experience of transferring between entities within the group, SHL and its parent company Hopkins Farming Group Limited (HFG) should have considered whether his employment could transfer to HFG or to the new entity incorporated on 11 May 2023 to take on the licence. The Authority accepted this should have been part of the consultation process.
The Authority was unambiguous: "The deficiencies outlined above are not minor or technical and mean SHL cannot demonstrate it acted fairly and reasonably in dismissing Mr Pio."
Mr Pio also alleged SHL engaged in misleading and deceptive conduct in breach of good faith obligations. This was not established. A separate penalty application against HFG for allegedly attempting to remove SHL from the companies register to obstruct the Authority's process was also dismissed. His commission and holiday pay claims were dismissed, qualifying conditions for commission not having been met and the holiday pay matter resolved during the investigation.
Remedies awarded were $18,000 for humiliation, loss of dignity and injury to feelings, and five months' ordinary pay in lost wages. No reduction was made for any contribution by Mr Pio to his own dismissal. Costs were reserved, with the parties encouraged to resolve that issue between themselves and a timetable set for memoranda should they be unable to do so.
What this means in practice is that the validity of a business case for redundancy and the fairness of the process are assessed independently. The obligation to consult genuinely, allow adequate time for employees to seek legal advice, and consider redeployment across group company structures remains even where the commercial rationale is undeniable.
