An employee who worked as a finance
director was made redundant following a restructure. The employee’s individual
employment agreement contained a redundancy compensation clause entitling him
to receive $116,400. The employer discovered
that a mistake had been made in the contract and that if calculated correctly the
employee was only entitled to receive $13,430. The employer paid the employee $42,778
in redundancy compensation but refused to pay the balance.
The Employment Relations
Authority held that the employee was entitled to the full $116,400 redundancy
compensation.
The ERA held that there were no
grounds to change the contract signed by the parties. The employee was unaware
of the error when he signed the agreement in 2008 and again when a new contract
was signed in 2011 with the same error.
The ERA ordered the employer to
pay over the additional $73,600 redundancy compensation to the employee, being
the difference between the $116,400 he was owed and the $42,778 he had already
been paid.
All taxpayers will be delighted
to know that the employer in question was a government entity.
Alan Knowsley
Employment Lawyer Wellington
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