A Tauranga accountancy firm is facing an $85,000 payout to a former employee after the Employment Court overturned the firm's decision to make her redundant.

Grace Team Accounting employed accountant Judith Brake in October 2009 on the promise of a permanent job, and made her redundant in April 2010.

She took a personal grievance to the Employment Relations Authority which upheld Grace Accounting's actions and later awarded costs to GTA.

But this week The Employment Court has completely overturned the ERA decision ordering the accountancy firm to pay up to $100,000 in costs.

The Court has ruled Judith was unjustifiably dismissed and ordered Grace Accounting to pay its former employee $65,000 in lost wages, plus $20,000 for her humiliation, loss of dignity and hurt feelings. She is also awarded costs which are yet to be determined.

In his decision Employment Court Judge Travis points to erroneous assumptions GTA directors made about the financial state of their business and the manner in which the redundancy was handled.

'The defendant [Grace Accounting] ran a substantial accounting practice with major clients and was used to providing accurate financial analysis of its clients' financial affairs.

'It did not, from the evidence I heard, adequately apply such analysis either to its decision to employ the plaintiff or the decision to make her redundant.”

Judith had been with KPMG for about eight years when in July 2009 she saw the GTA job advertised. She inquired about the pay and did not pursue the matter when a reply did not clarify the issue.

She was phoned towards the end of the month and asked to go for an interview. At the interview she was told it was a maternity leave position, and was given assurances it was a permanent position.

About December 2009 the directors became concerned they had too many staff. By April the directors were acting on an assumption they would make a loss for the financial year. That assumption later proved to be false.

Three people including a manager and a training accountant were picked for redundancy, with Judith's name included on the last-on first-off principle.

On April 19 Judith was informed she was going to be made redundant.

Judge Travis found Judith was given no financial or other information as to why she was likely to be dismissed, just six months after she had been employed and had left a secure job to start at GTA. Judith was given two days off work to work on an alternative.

'It did not give adequate information to the plaintiff at the time which would have enabled her to have seen the financial error on which Mr Lindsay Grace's calculations were based and would have allowed her to come up with more concrete proposals that could have avoided her redundancy,” says the Judge.

He says Grace Accounting did not adequately explain how Judith came to be included in the redundancy proposal, especially after two employees accepted the situation and agreed to leave. This would have provided GTA with sufficient saving to have rendered Judith's immediate redundancy unnecessary.

Had GTA analysed its own practice on the basis of correct information, it would not have offered Judith the job, and motivated her to leave her previous permanent employment, says the judge.

'Taking into account the characteristics of the defendant, its actions and how it acted, I find they were not what a fair and reasonable employer would have done in all the circumstances at the time the dismissal occurred. For all these reasons I find that the defendant has failed to discharge the burden of showing that the plaintiff's dismissal for redundancy was justified.”

Grace Team Accountancy director Lindsay Grace says the firm is considering appealing to the Court of Appeal as he says there are errors in fact and law.