Employee unjustifiably dismissed after being made redundant…

An employee has been made redundant after being told by her employer that the business could no longer afford to keep her employed. The employee asked her employer to consider allowing her to work reduced hours or to work out her notice period but these options were both declined.

The Employment Relations Authority upheld the employee’s personal grievance claim for unjustified dismissal.

The ERA held that the employer failed to act as a fair and reasonable employer could in all of the circumstances when he decided to dismiss the employee on the grounds of redundancy.

The ERA found that the employee was not consulted about the prospect of her dismissal or given adequate notice and time to think about it. The employee was also not provided with the relevant information about the situation the employer faced so that she could comment on it and the proposal to dismiss her.

The ERA found that the employer had already made their decision to terminate the employee and did not genuinely consider the options she proposed which would allow her to stay employed.

The ERA also found that there was no detailed evidence about the financial reasons for her dismissal or why alternatives to her dismissal could not have been properly explored.

The ERA ordered the employer to pay the employee over $3,800 for lost wages and over $2,000 in wage and holiday pay arrears plus $4,000 in compensation for humiliation, loss of dignity and injury to feelings.

Alan Knowsley

Employment Lawyer Wellington

Changes to the Employment Relations Act …

Amendments have been made with an objective to “make workplaces fairer and more productive, for both employers and employees”. Major changes included a modernisation of parental leave, the banning of zero-hour contracts and the creation of the requirement for availability clauses within contracts where applicable, and compensation for shift workers whose shifts are cancelled without reasonable notice ensuring better financial security.

The reform banning zero-hour contracts gained attention as this form of contract had been used in large industries such as hospitality, where an employer may find themselves short-staffed at late notice. The contracts imposed no obligation on the employer to provide set hours of employment per week for the employee but required the employee to be available to work when requested. This created uncertain and unfair work conditions and as a result zero-hour contracts were widely criticised.

Availability clauses are now implemented where zero-hour contracts had been used. A contract including an availability clause will outline the hours the employee will need to be available to work if requested – this is over and above the hours both parties have agreed the employee will work each week. Reasonable compensation is to be provided for the employee for being available, even if they aren’t called in.

Other changes focus on the powers of the Employment Court. Judges will now have the power to restrict a person from continuing civil proceedings in the Employment Court. The restriction can be a limitation on the continuance of a current matter between the parties, or from the parties commencing any proceedings against each other in the Employment Court in the future. This is likely to occur where disputes between parties have been ongoing and it is necessary to prevent continued proceedings being filed or pursued.

Alan Knowsley

Employment Lawyer Wellington

$100,000 penalties for breaches of pay rates…

Two companies have been ordered to pay $100,000 in penalties after breaching minimum wage and holiday pay laws.

The two companies which were owned and operated by the same individuals have been paying 5 of their employees as little as $8 an hour. The employees would often work seven days a week, and were not paid holiday pay or statutory holiday pay rates.

The employees did not receive any pay during their trial periods, and some employees were refused leave to seek medical assistance.

The employers failed to keep adequate wage and time records for their employees, and in some cases no wage or time records were kept at all.

The labour inspector successfully challenged the $25,000 penalty awarded by the Employment Relations Authority in the Employment Court on the grounds that the penalty was disproportionate and inadequate given the seriousness of the breaches and the maximum penalties available.

The case demonstrates that employment law breaches will not be tolerated and taken lightly, and that severe penalties will be awarded in cases where minimum employment standards have been breached.

Alan Knowsley

Employment Lawyer Wellington

Small business penalised over $14,000 for employment law breaches…

Retail and small businesses should be prepared for a visit from a Labour Inspector to check that proper wage records are being kept, and that their employees’ minimum employment entitlements are being met.

In a recent case, successful action was taken by an Inspectorate which caught a local business breaching New Zealand’s employment laws. The business was paying its employees below the minimum wage, and failed to keep adequate wage and time records.

The Employment Relations Authority ordered the employer to pay almost $9,000 in wage arrears to its employees and over $5,600 in penalties.

Alan Knowsley

Employment Law Wellington

Employer penalised $9,600 after failing to communicate with employee…

An employee has been dismissed after he was caught using his phone at work. The employee left the workplace and drove home. The next day, the employee returned to work and found that his workstation had been cleared and his work equipment had been removed. The employee believed that he had been dismissed, and no attempt was made by his employer to advise him that this was not the case.

The Employment Relations Authority upheld the employee’s personal grievance claim for unjustified dismissal.

The employer argued that the employee had not been dismissed but that he had resigned from his position.

The ERA held that a fair and reasonable employer in the circumstances could have been expected to have directly communicated with the employee as soon as possible to advise him that he had not been dismissed.

The ERA noted that the employer had a duty of good faith to be active and constructive in maintaining the employment relationship. The ERA noted that had the employer communicated with the employee about his employment continuing, the employee would have returned to work and the employment relationship would have been successfully restored.

The ERA ordered the employer to pay the employee over $3,300 for lost wages plus $6,300 in compensation for humiliation, loss of dignity, and injury to feelings.

Alan Knowsley

Employment Lawyer Wellington

Employer penalised $30,000 for bullying employee…

An employee has been dismissed after falling victim to bullying in the workplace. The employer would tell the employee that she was too old and unwell to be working. On one occasion, the employee made an error which cost the business almost $500. The employer yelled at the employee in front of other staff and deducted her pay.

A week later, when the employee was told that the employer wanted to speak to her she began to hyperventilate and had an anxiety attack. The employee obtained a medical certificate stating that she was unfit to work due to stress, and while on leave the employer terminated her employment.

The Employment Relations Authority upheld the employee’s personal grievance claims for unjustified disadvantage and unjustified dismissal.

The ERA noted that the employee had been bullied in the workplace by her employer, and that his behaviour had increased stress for the employee and made her feel incompetent and disempowered. The employer tried to claim that the employee’s stress was not work-related but attributable to family issues.

The ERA held that the employer failed to act as a fair and reasonable employer could in all of the circumstances by failing to follow a fair process when dismissing the employee over performance concerns.

The ERA ordered the employer to pay the employee $18,000 in lost wages plus $12,000 in compensation.

Alan Knowsley

Employment Lawyer Wellington

Employer out of pocket after following flawed dismissal process

An employee has been dismissed for disobeying a lawful and reasonable instruction, and for walking off the job after the incident, without providing his employer with an explanation.

The Employment Relations Authority upheld the employee’s personal grievance claim for unjustified dismissal.

The ERA held that the employer’s dismissal process was procedurally flawed. The ERA noted that the employee was not aware prior to attending the disciplinary meeting that his employment was in jeopardy, and was dismissed without being given an opportunity to comment on the issues raised.

The employee was also not provided with all of the information relied on by the employer, and was therefore not in a position to be able to fully respond. The ERA noted that if the employee had been provided with all of the relevant information he could have advised the employer that another staff member was present during the incident. The employer could then have taken a statement from the witness which may have supported the employee’s account of events, however no investigation was undertaken prior to meeting.

The ERA further noted that the termination letter failed to provide the employee with any reasonable explanation for his dismissal.

The ERA ordered the employer to pay the employee over two months lost wages plus holiday pay and KiwiSaver contributions for that period. This amount was reduced by 25% for the employee’s contribution to the events. The employee was also awarded $5,250 ($7,000 reduced by 25% contribution) compensation for humiliation, loss of dignity and injury to feelings.

Alan Knowsley

Employment Lawyer Wellington

ERA declines to allow employee to raise personal grievance out of time…

An employee has resigned after suffering a workplace injury during the course of her employment. The employee claimed her employer lacked compassion and care after the incident which involved her sustaining a serious head trauma. The employee raised a personal grievance with her employee outside of the 90 day statutory timeframe.

The Employment Relations Authority refused to grant the employee leave to raise her personal grievance claim for constructive dismissal after the expiration of the 90 day period.

The ERA noted that the 90 day time frame starts from the day the action alleged to amount to a personal grievance occurred or came to the notice of the employee, rather than the date the employee resigned.

The ERA held that there were no exceptional circumstances which occasioned the delay in the employee raising the personal grievance.

The ERA held that the employee had not been so affected or traumatised by the incident giving rise to the grievance that she was unable to properly consider raising the grievance within the specified period.

The ERA found that the employee was able to undertake actions during the 90 day period that showed that she was able to process information and make rational decisions, including communicating with her employer regarding her absence and emailing her employer asking for a written reference, and could therefore have considered raising the grievance within the specified time.

Alan Knowsley

Employment Lawyer Wellington

Restraint of trade clause held to be invalid, unreasonable and unenforceable!

An employer has filed an application to stop a former employee from working for one of its competitors.

The employee had a restraint of trade clause in their individual employment agreement which prevented him from working for a competitor within a 20 kilometres radius, and for a period of 12 months after the termination of his employment, without the consent of his employer.

The Employment Relations Authority held that the restraint of trade clause in the employee’s employment agreement was invalid, unreasonable, and unenforceable.

The ERA noted that restrictive covenants are against public policy, and are on the face of it, unenforceable. Restrictive covenants may be enforceable if the employer has a legitimate proprietary interest to protect, and the restraint is no wider than is reasonably necessary.

The ERA noted that a restraint which seeks to limit or reduce competition is unenforceable, including restraints which try to prevent an employee from using their skills, experience, general knowledge and knowhow after their employment has ended.

The ERA found that the employee had no access to confidential information or trade secrets during his employment which needed protecting as the employee had a relatively simple job. The ERA also noted that the employee was paid less than other employees who had similar restrictive clauses in their employment agreements.

Employers need to ensure they are protecting a genuine business interest in relation to this particular employee, their wording is no wider than necessary and that good consideration is provided in return for inclusion of the clauses in an agreement.

Alan Knowsley

Employment Lawyer Wellington