Redundancy in New Zealand: Procedural Fairness and Remedies

Redundancy in New Zealand: Procedural Fairness and Remedies ArJun Sree Raman Title of the study Redundancy in New Zealand: Procedural Fairness, Substantive Grounds, and Remedies. Introduction Redundancy has become a normal part of organizational life, researchers are predicting that both the rate and the extent of job losses through redundancy are likely to continue well into the twenty first century (e.g. Appelbaum and Donia, 2001a; Cascio, 2002; Dawkins et al., 1999). Generally redundancies within an organisation occur when there is a decline in company revenue and/or work available or the company is looking to restructure and streamline the organisation (Wooden, 1988). In these circumstances the employee may find that their position is surplus to the companys requirements or needs. Therefore, the organisation or employer will announce to the employee or employees affected that their contracts are going to be terminated as their positions will no longer exist. Redundancy in New Zealand    In the New Zealand Employment Law Guide (Rudman, 2014) the Labour Relations Act 1987 defines redundancy as a situation where a workers employment is terminated by the employer, the termination being attributable, wholly or mainly, to the fact that the position filled by that worker is, or will become, superfluous to the needs of the employer. Thus, it is the position itself that is made redundant and the decision to make a position redundant should have nothing to do with the particular employee who is filling that position. Redundancies have to be for genuine commercial reasons and not for any other underlining reasons such as capability or performance issues. Redundancy is acknowledged within New Zealands employment relations system, as it is in many countries. However, in contrast to the majority of foreign jurisdictions, successive governments in New Zealand have decided not to codify the law relating to redundancy and provide definitive protection for employees who face a redundancy situation (Hughes, 2011). Venn (2009) provides a comparison with other Organization for Economic Cooperation and Development (OECD) countries, highlighted New Zealands minimal protection for employees in situations involving redundancy. In particular, Venn emphasized New Zealands negligible cover in mass redundancy situations. The following figure clearly depicts the limited protection in correlation to the other OECD countries. Figure 1: Strictness of Employment Protection OECD Countries (Venn, 2009) Effects of Redundancy    From an organizational perspective, the economic outcomes of redundancy are open to debate (Cascio, 1993; Ryan and Macky, 1998) but it is widely recognized that for the individual, redundancy can lead to a wide range of negative outcomes. Redundancy is frequently associated with diminished psychological wellbeing, while long-term unemployment can lead to physiological deterioration (Leana and Ivancevich, 1987). As Wooden (1988) comments: The concern about redundancy stems from the perception that job loss involves substantial economic and psychological costs for the adversely aà ¯Ã‚ ¬Ã¢â€š ¬ected worker and his or her family. The worker made redundant must immediately deal with the shock of job loss. For example, redundancy has been found to impact on employees in terms of loss of morale, lowered organizational commitment, withdrawal behaviours such as absenteeism and increased turnover, loss of motivation, mistrust, uncertainty and insecurity (e.g. Brockner, 1988; Brockner, Grover and DeWitt, 1992; Dolan and Belout, 2000; Koslowski et al., 1993; Latack, 1990; ONeill and Lenn, 1995; Worrall, Campbell and Cooper, 2000). Waters (2007) study on voluntary and in-voluntary redundancy shows the different attitudes and thoughts employees are feeling when it comes to redundancy. Redundancy can have serious implications for those it has happened to and can be an extremely difficult time during the entire process. Employees fear for the future and responsibilities they have outside of their working life. Employers should let the remaining employees express their anger or frustration and inform them that it is perfectly normal to express their feelings. Burke (2008) investigates the effects of redundancy during a strong economy and low unemployment rates. Burke says that the number of people experiencing redundancy is surprisingly high. This can come as a shock and be difficult for employees who have been with an employer for a substantial number of years as they are suddenly back in the job market. Looking for a job after so many years of working and competing with thousands of others who have also lost their jobs can be very traumatic. According to Burke, Being made redundant can have similar emotional effects to bereavement. People still see a stigma attached to being made redundant and would feel embarrassed or humiliated about being in the situation. Redundancy also results in a range of negative economic outcomes, including interruption to employment and career paths, loss of income, and potentially à ¯Ã‚ ¬Ã‚ nancial hardship (particularly where it is followed by an extended period of unemployment). Ewart and Harcourt (2000) assessed the effects of a mass redundancy at a New Zealand airline on a group of 139 ground stewards in August, 1991. Findings show that the ground stewards post-layoff earnings have declined nearly 40% by 1996, from $50-55,000 to $30-35,000. This was a severe decline than that documented in most studies, in which earnings losses of 10 to 20% were more common and 5 to 10% were not unusual. Ewart and Harcourt identified the primary cause to be the non-transferrable highly specific training and work experiences to the airline industry. Furthermore, ground stewards also expressed profound feelings of bitterness post-redundancy as 94% of the respondents thought that the company had handled the dismissals very inappropriately. Those who remain after a period of redundancy are known as the survivors and are often described as suà ¯Ã‚ ¬Ã¢â€š ¬ering from survivor sickness (Noer, 1993) or survivor syndrome (Appelbaum and Donia, 2001a, 2001b; Brockner, 1988). Noer (1993) deà ¯Ã‚ ¬Ã‚ nes survivor sickness as a term that describes the attitudes, feelings, and perceptions that occur in employees who remain after involuntary staà ¯Ã‚ ¬Ã¢â€š ¬ reductions. Survivors may exhibit a range of emotions including fear, insecurity, uncertainty, frustration, resentment, anger, sadness, depression, guilt, unfairness, betrayal and distrust (Noer, 1996). Redundancy impacts further on the individual through changes to the psychological contract. Rousseau (1995) notes that, redundancy and restructuring have imposed on workers employment arrangements they did not choose. She suggests that the psychological contract, which the employee originally accepted, changes as organizations restructure and à ¯Ã‚ ¬Ã‚ nds new ways of doi ng things. In the process of change, jobs are altered but employees do not feel free to renegotiate the contract. Research Questions The research questions proposed below are the fundamental core of this redundancy study. It focuses on factors within the redundancy such as procedural fairness, substantive grounds, and remedy. The research questions are as follows: To what extent do employers follow procedural fairness? To what extent do employers have substantive grounds for redundancy? In situations where employers fail to follow procedural fairness and substantive grounds, what are the remedies offered to the employee? Low budget airlines | Analysis Low budget airlines | Analysis Ryan Air Europes First low budgeted airline. Ryan air was founded in 1985 by the Ryan family head by Tony Ryan. To provide scheduled passenger airline services between Ireland and the UK. Ryan Air Europe first Low-Fares, No-Frills carrier, offer a point to point service to customer that was the first European low-cost Airline in Airline Industry. Ryan Air was a full service conventional airline, with two classes of seating, leasing three different types of Aircraft. Ryan air Airlines is based on the model of southwest airlines. A new management team, led by Michael OLeary. In 1997 company was floated in an IPO on the Dublin Stock Exchange and on NASDAQ. (Gerry Johnson, et al, 2008) Mission statement of Ryan Air: Ryan air will become Europes most money-making airlines through its motto Low-cost- carrier, no- frills services in all market which Ryan air operates. Ryan air Objectives: To establish Ryan air as Europes leading Low-Cost airline through continued improvement and offering of low cost budget price. Ryanair Business Model Ryanair business model is based on Southwest Airlines, the highly successful Texas based operator. However, Ryanair was impacted by the financial difficulties in 1990 which required a complete restructure and new business model is formed. In 1991, CEO Michael OLeary visited US Southwest Airline and extracted their new strategy and business model from Southwests Low Cost leadership model. Ryanairs Low Cost leadership model encompasses a single passenger class, a single type of airplane, a simple fare scheme, unreserved seating, flying to secondary airports, fast turnaround times, no free amenities, minimum baggage allowance, employees working in multiple roles, and generation of ancillary revenue( Baker, 2006). Analysis strengthen and weakness of Ryanair Strength: Strategy of Ryan air is Marketing- strong branding and reputation of product. Ryanairs aggressive pricing strategy makes them different from other Airline companies in Europe. Low costing of tickets due to airport operator deals. A biggest advantage of Ryanair is Reputation as First Biggest Budget Airline in Europes. Main strength given to Ryanair by media through free footage to people from various Controversial issues created in flight and due to the tough decision made by chief executive Michael OLeary. Ryanair collects enormous profit from Ancillary revenues from on-board and online gambling, an in-flight mobile phone service, including non-flight scheduled services and also from Ryanairs website. On time delivery which help customer to reach at their target. In future Ryanair planning to purchase new aircraft with huge capacity for sitting which will generates lots of income as well as new routes for reaching destination much quicker. Ryanair control the fuel and noise emission by purchasing new Environmentally-friendly aircraft. (Sascha Mayer, 2007). If any delays due to climatic condition or technical quandary, then Ryan air Customer Service Desk (CSD) prompt refund is provided to customer. Weakness Employee relations: Ryan airs relationship with employee is Fraught. Extra work load for Pilots. Also provide poor working condition for staff. For example: Banned from charging of mobile phones at work place. Ryan air has been involved in number of labour union disputes. Lack of scales: The Company is small in sizes compared to its competitors. Its competitors, such as British Airways, Lufthansa, Virgin Airlines all these Airlines are large in size and enjoy competitive advantages in financial, technical better human resources. As it was low fare Airlines in-flight Entertainment facilities were not available to passengers. Prone to bad press: Relationship with media is always dreadful for Ryan air. Even it may be the incident of staff sleeping in the air craft or forcing pilots to sign new deal in order to fly new air craft. Every time Ryan air is on head line of media. Blocking Finance: In increasing their passenger Ryan air has block lots of money in purchasing new Boeing in next six year. Long Routes: Instead of main airports choosing Secondary and Regional airports destinations for short haul which much more far-off from passengers destination. For examples, Ryanair uses Frankfurt Hahn, 123 kilometres from Frankfurt; Torp, 100 Kilometres from Oslo; and Charleroi, 60 kilometres from Brussels. Customer service: Services provide to customer by Ryan air cabin crew were not satisfactory. Even breathing spaces for leg were narrow down. STRATEGICS CAPABILITY OF RYANAIR Every company must have adequacy and suitability of the resources and competences for survive and prosper in the market. Henceforth Resources and competences are essential for any organisation. Initially Ryan air started their operations with a team of 25 and a single 15-seat Bandeirante Turbo-prop, flying between Waterford and London (Box.T, et al 2007). In 1986, Ryan air received permission from the Regulatory Authorities to begin flying four flights a day on the Dublin-London route with two 46-seat BAE748 turbo-props, by the end of 1989 Ryan air had six BAC-111 jets and three ATR 42 turbos (Box.T, et al 2007). Now Ryan air is giant player in Budgeted Airlines in Europe with 100 new Boeing 737-800 which flew out 18European base. According to Ryan Air Chief Executive Officer Michael OLeary organisation as place the order of 200 newest Boeing by end of 2009 and required the aircraft delivery by 2012(Robert 2009). Boeing 737 planes used frequently which were replaced with new aircraft , more environmentally- friendly aircraft. Its reduced the average age of fleet by 2.4years. Newer aircraft does not require more crew member. Before 2006 capacity of staff were around 700, in fiscal 2006, employee tally rise by further 700 to 3500 people from different nationalities. Cabin crew were given commission from on board sales i.e. Euro49, 612 which is higher figure than any other leading airlines. Due to a low-cost HR strategy, which includes low costs via wage minimization, union avoidance and employee control, had contributed to making the company highly profitable. In addition, both strategies are similar in that they also include achieving low total costs by increasing operational productivity (Zagelmeyer.S, 2009). Core Competence: A corporate strategies are made with lots of research and development of product and services in todays world. Ryan air have made strategic decisions based on increasing their competitive edge, the main one reason involved in attracting customers at both ends of their routes (Haberberg and Rieple 2001). In Ryan air case company focal point is on providing low cost, efficient, frequent connections and subsequently offering no other frills or supporting services on their flights, due to this outcome, Ryan air has no need for the numerous subsidiaries that Aer Lingus own(Peter Kangis, M. Dolores OReilly, 2003). The performance reliability of Ryan air is high for the reason that customer product quality and the airports served, airline product is not delayed because of point to point services due to this check-in is much quicker and less complex than an interline one as well as boarding is quicker because seat choice is greater for earlier passengers at the departure gat e for the reason that it operates from lesser-used non-hub airports the airline encounters less airport congestion than airlines serving major hubs (Barrett S. D. 2004). Ryanair Financial Analysis During the period of 2004 through present, Ryanair has experienced significant growth in sales revenues and net income. Since 2004, sales revenue has grown at a yearly average of 32%, highlighted by a 41% growth from 2006 2007. Net income has experienced a yearly average growth rate of 25%, highlighted by a 51% growth from 2006 2007. While sales revenue continued to increase from 2007 2008, with 33% growth, net income was down from $563M to $559M. This decrease in profits was largely due to the 50% increase in fuel prices during the year. The growth experienced by Ryanair in sales revenue and net income during the period of 2004 2008 (AOL Finance 2008) Portfolio Analysis by BCG Matrix Portfolio of any business is important in order to analyse its market shares and where the business is standing. It can achieve through the BCG Matrix. In Ryanair case, as per the above diagram of BCG (Boston Consulting Group) matrix Ryanair comes under the cash cow. Cash cow is that section of BCG matrix where market share of any business is high and their growing maturity is low in market. Ryanair being a low-fare airlines in European market have captures the entire market in budgeted airlines. Ryanair have outstanding market share and generate a lot of revenue for the company as well as for investor, but they cannot expand their business. Ryanair is domestic flight within the European territory and accumulate high revenue but cannot expand their airline business from European market due to low cost strategies and short haul. They extract profit from the market and investing as little cash as possible. Critical success factors of Ryanair: Success of any organisation depend upon various factors such as Brand: Brand of Ryanair has been cultivated through constantly providing the same product services to customer. Ryanair brand has been built through their strategies i.e. low budgeted airline in Europe with no frills and sell product on board. Most important part in creating the Ryanair brand is played by the CEO Michael OLeary and international media. Michael hard-hitting decision, autocratic behaviour against employee and competitors and controversial statement- if you want a quiet flight, use another airline. Ryanair is noisy full and always try to sell something ob board. Media always providing free footage to viewer about the incident in flight for example: Ryanair aircraft unhygienic and poor staff morale and cabin crew sleeping on the job. All these incidents have helped the Ryanair to build it brand image in the world market. Location: Ryanair being a low-cost airline, airport used by the Ryanair for landing aircraft were secondary and regional airport destination. For example, Ryanair uses Frankfurt Hahn, 123 kilometres from Frankfurt. During second half of fiscal 2007 Ryanair faces various challenges related to extra capacity and new routes and location. Speed: Ryanair started with fewer flights with the low cost airlines strategies and through these strategies they started capturing the market at a greater speed. Become the world most profitable airline in whole Europe. During March 2006 other airlines started charging for check-in bags due to this passenger were carrying fewer bag probably zero check-in bags which reduced the cost and enhance the speed of aircraft. Technology: Ryanair incorporated its own travel website, www.ryanair.com, for direct sales of tickets over the Internet to avoid fees and commissions associated with travel agents and reservation systems. Ryanair has steadily achieved the most Environmentally- friendly and sustainable by investing in the latest aircraft and technology which reduced 50 per cent less emissions, 45 per cent less fuel burn and 45 per cent lower noise emissions. Ryanairs grown-up Boeing 737-800 aircraft has been replaced with new aircraft which more environmentally-friendly reducing the average age of fleet to 2.5 years. Fuel Emissions:International airlines have been responsible for emitting 2.5%- 3% anthropogenic carbon dioxide (CO2), International Civil Aviation made regulation to reduce the CO2(Scheelhaase J.D, Grimme W.G, 2007). Due to new technology aircraft of Ryanair has reduce fuel emission by 50%. Noise: Ryanair minimised noise pollution through modern technology aircraft and new modified winglet. Waste: All International Airlines generates significant amount of waste mater material through food, packaging, and newspaper distribution. All these item are available free in international airline. Ryanair a low-cost airline with no-frills due to these reason Ryanair is free of from waste. Management Quality: Ryanair management qualities from the success point of view were efficient to carry out the productivity in the organisation, due to the leadership Quality of Michael OLeary. From employees view management were autocratic. Management behaviour towards staff was not acceptable. Thus critical factors such as Brand, Technology and Management Quality play important role in performance of business activity, if any of these factors fail, success fails. Benchmarking Approach of Ryanair: A set of information has been developed by separate indices of benchmarking for different business model. In Ryanair case, Profitability of Ryanair signifies the overall achievement of the business, collection of ancillary revenue from flight is much more than the any other international flight by selling various goods and services on flight. Distribution strategies of Ryanair: The proportion of sale made by Ryanair is through online reservation system and even they promote the Ryanair through web page. Ryanair has set up the four benchmarks which its competitor cannot match their strategies with Ryanair strategies- firstly airport cost per passenger is calculated, secondly they land on secondary and regional airport which offer lower landing fees, thirdly the weighted average number of full service carriers at the airports served and lastly Ryanair has created the monopoly in budgeted airline (Mason k.J, Morrison W.G, 2009). All this factors make the Ryanair airlines are best- in- c lass benchmarking in Europes airlines. Leadership of Ryanair: In todays Airlines business leadership and culture is essential in achieving strong business operation. In Ryanair case, Ryanair was struggling to survive in early 1990 but then after new CEO Michael OLeary. OLeary changed the design of Ryanair in the model of southwest airlines i.e. a low cost airline this strategy worked for Ryanair. Being transformation leadership his clear vision and empowerment are often observed as important element that has changed the view point of Ryanair. In 2006 Ryanair airline received WORLD MOST FAVOURITE AIRLINE. Michael OLeary has served Ryanair for 20 year and makes Ryanair most profitable airline in 2006. In 2005 he was 18th among the Worlds Most Respected Business Leader in financial times. Ryanair comprising over 25 different nationalities this shows culture of Ryanair is diversifying. CONCULSION On the intact Ryanair seem to be following a strategy which works for them. They are obviously aware of their business environment and understand the importance of monitoring it as they took advantage of the opening in the market when they restyled themselves over a decade ago. 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