Case Law Alert: When a Restructure Isn’t Really a Restructure

Restructure Gone Wrong: Lessons from Callen v Alaron

The recent case of Callen v Alaron Products Ltd [[2025] NZERA 165; 19/03/25; D Beck] highlights the importance of employer not having an ulterior motive or hidden agenda when initiating a restructure.

Background

A restructure, or retaliation?

Mr Callen was employed by Alaron Products Ltd (Alaron) in their maintenance department from 25 June 2018 until his employment was terminated on 23 May 2023 as a result of a restructuring process. While this is also about a bullying claim, I will focus on the restructure aspects.

Prior to the restructure, in June 2022, Mr Callen raised a complaint about his immediate manager, believing he was not resolving a safety matter relating to a forklift operator. Mr Callen claimed that after he made his complaint, the manager began to treat him differently and effectively ostracised him. In April 2023, Alaron commenced a change proposal. Mr Callen’s role was placed in a group of four roles, and the proposal was for one of those roles to be disestablished.

On 15 May 2023, the decision to disestablish Mr Callen’s role was confirmed. Around that time, the employment relationship was showing strain. Mr Callen submitted a personal grievance claim of bullying against his manager

Mr Callen applied for one of the maintenance support roles. However, he was unsuccessful. Despite Alaron claiming the change proposal was to enhance skills across the team, the criteria Mr Callen was assessed against was largely character-based. He did not apply for the other two roles as he did not have the requisite ten years’ experience. Alaron said it would not have offered him one of those roles because of the personality clashes with his manager.

The Employment Relations Authority (ERA) found the restructure process gave the appearance of having a sound basis and run in a fair manner. However, the ERA found enough evidence to conclude an ulterior motive at play. Alaron had grouped together Mr Callen along with three of his colleagues without any analysis of what their roles were and without regard to group dynamics. The role Mr Callen applied for was essentially the same as his existing role and no explanation offered about not appointing into that new role.

The ERA found Alaron had not genuinely considered redeployment options. Alaron wanted to end the relationship with Mr Callen not because his position was genuinely surplus or his skills were redundant to their needs, but because Mr Callen had displayed behaviour that made the relationship between him and his immediate manager deeply problematic.

Decision

When process isn't enough

The Employment Relations Authority found two major procedural defects with the restructure proposal.

1. The Employment Relations Authority (ERA) found the restructure process gave the appearance of having a sound basis and run in a fair manner. However, the ERA found enough evidence to conclude an ulterior motive at play. Alaron grouped together Mr Callen along with three colleagues without any analysis of what their roles were and without regard to group dynamics. The role Mr Callen applied for was essentially the same as his existing role and no explanation offered about not appointing him into that new role.
2. ERA found Alaron had not genuinely considered redeployment or options. Alaron wanted to end the relationship with Mr Callen not because his position was genuinely surplus or his skills were redundant to their needs, but because Mr Callen had displayed behaviour that made the relationship between him and his immediate manager deeply problematic.

The Authority found Mr Callen dismissal was unjustified. It awarded him $14,820 in lost wages and $20,000 compensation for hurt and humiliation in relation to the unjustified dismissal only .

Key Takeaways

Redundancy must be real

• Employers should only carry out a restructure for genuine commercial reasons, and not use the process to pursue hidden agendas or remove employees they have issues with.
• Selection Criteria in restructure proposal should be objective or evidence based rather than subjective criteria such as character or interpersonal fit
• Employers are required to genuinely consider redeployment and/or retraining options before selecting employees for redundancy.

Conclusion

A costly reminder

This case is a clear reminder that even well-documented processes won’t protect employers if the underlying intent isn’t genuine. Restructures must be based on business needs—not personal conflicts.

We can help

For specialist advice in this area, please contact me at michaelp@cecc.org.nz.