Do I have to pay my unvaccinated employees redundancy compensation?

Vaccine vial, CC via pixabay

With New Zealand on track to have 90% of its eligible population double-vaccinated against COVID-19, it is clear that the country is overwhelmingly in support of the vaccine rollout.

However, a number of issues have arisen in respect of the approximately 10% of people not vaccinated. Employers in particular have had to grapple with these issues, with the introduction of vaccine mandates resulting in many employees being unable to continue in their role.

But what exactly is the nature of an unvaccinated employee’s dismissal under a vaccine mandate? Are such dismissals redundancy situations and if so, will redundancy compensation need to be paid? These were some of the questions considered in the recent Employment Relations Authority case of GF v New Zealand Customs Service (“GF”).[1]

Currently, there is no statutory definition of redundancy in New Zealand. A generally accepted definition comes from the now-repealed Labour Relations Act 1987, which called redundancy a termination of employment “…being attributable, wholly or mainly, to the fact that the position … is, or will become, superfluous to the needs of the employer”.

Many employment agreements provide compensation for employees whose roles become redundant. The basis for compensation is the ‘no fault’ aspect of the employee’s dismissal (their role having become surplus to the employer’s needs) and the amount of compensation is often dictated by the length of the employee’s service.   

In GF, the employee, an unvaccinated border worker who had been dismissed pursuant to the Vaccinations Order, initially claimed that the requirement to be vaccinated had altered the terms and conditions of her role such that she should have been the subject of a restructuring process and declared redundant. The employee sought to invoke the redundancy compensation provisions in their employment agreement.

The employee in GF withdrew her claim for redundancy compensation. However, the Employment Relations Authority still made some instructive observations on the issue.

The Authority pointed to the ‘no fault’ aspect of redundancy and noted quite pointedly that the employee could have preserved her employment by getting vaccinated. Accordingly, the alleged parallels between this case and the conventional understanding of redundancy were not convincing.

In effect, it appears that dismissal for failing to comply with a role’s COVID-19 vaccine requirements will not be a redundancy situation and affected employees will not be entitled to any redundancy compensation provided for in their employment agreements. 

The Authority’s comments will provide some relief for employers, who are now required to give employees dismissed pursuant to a vaccine mandate at least 4 weeks’ paid notice. However, with the COVID-19 landscape constantly in flux, a great deal of uncertainty remains and employers who fail to properly discharge their obligations to employees (even those affected by a vaccine mandate) may face legal action. Employers who want expert advice on how to navigate these tricky waters and reduce the risk of costly litigation should contact Jaesen, Ruth or Jordan.

[1] GF v New Zealand Customs Service [2021] NZERA 382.