Holiday pay should include commission payments...

The Employment Court has held that when an employer is making payments of holiday pay to a staff member whose pay is made up of a regular weekly pay plus commissions that holiday pay should be based both on the regular weekly pay and any commissions paid.

The two employees who brought the claim and worked for that company for 20 and 15 years respectively and their holiday pay had been incorrectly paid for almost all of that period.  The holiday pay had been based only on their weekly base earnings and had ignored the substantial commissions they had earned every month over those many years. 

Normally there would be a six year time limit on claiming back pay but in this case the company had through its actions agreed to pay the employees the incorrect pay dating back to when they commenced employment.  The company was therefore liable for 20 years and 15 years back pay on the incorrect holiday pay.

If you have been paying holiday pay based only on base salary then you will need to arrange to pay the back pay to employees. 

If you have been receiving holiday pay which has been incorrectly calculated only on your base salary and excluding commissions then you should talk to your employer about receiving the difference between what you were paid and the correct calculation.

Alan Knowsley

Employment Lawyer Wellington

Poor process costs employer $29,000…

The Employment Relations Authority has upheld a claim for unjustified dismissal following a personal grievance claim.  The employee had been dismissed for dishonesty after the employer found the employee at his own private workshop when he was supposed to be off sick and when he was supposed to meeting with clients.

The employer failed however to put the allegations to the employee at any stage or to give the employee any opportunity to explain their behaviour.  As a result the dismissal was unjustified and the ERA awarded $12,285 for lost income, $15,000 compensation for hurt and humiliation plus $1,946 costs.

If the employer had put the allegations to the employee it’s more than likely the employee would not have been able to justify their behaviour and so a dismissal might well have been justified.  It was the failure by the employer to even raise this matter with the employee that lead to the decision being held to be unjustified.

Alan Knowsley

Employment Lawyer Wellington

$11,500 costs award against employee…

The Employment Relations Authority has rejected three personal grievances brought by an employee against his employer claiming unjustified dismissal and unjustified disadvantage following his dismissal for failing to follow instructions in dealing with abusive customers. 

The ERA found that the employer had acted reasonably and that its decision was justified.  The costs award was almost three times the normal amount awarded because the employee had turned down several reasonable offers from the employer to settle the case.

Alan Knowsley            

Employment Lawyer Wellington

Insurance CEO dismissal justified...

The Employment Relations Authority has dismissed a claim for unjustified dismissal following the sacking of the CEO of one of New Zealand’s large insurance companies as a result of actions following the earthquakes in Canterbury and Wellington.

The employer decided that the CEO had been guilty of serious misconduct for breaching its rules around what properties it would insure in Wellington.  In particular this related to the quality and resilience of the buildings.  The CEO had failed to get a new portfolio of buildings signed off by two of the managers as required by the internal policy when more than a percentage of the buildings were located in Wellington.

The Employment Relations Authority found that the employer had followed a fair process because they had raised the allegations with the employee, given him an opportunity to respond and had advised him that he was entitled to be represented.  They had also warned him of the possible consequences including dismissal should serious misconduct be found.  The employer had fully investigated the allegations and considered the employee’s responses before reaching its conclusion of serious misconduct.  The ERA concluded that a reasonable employer could have reached that decision and therefore the dismissal was justified.

Alan Knowsley

Employment Lawyer Wellington

Employer gets everything wrong…

The Employment Relations Authority has upheld a personal grievance for unjustified dismissal after a worker was fired following a heated argument with his boss.  The employer felt threatened by the employee’s aggressive behaviour and fired him on the spot.

Unsurprisingly the ERA found that the employer had failed to follow a reasonable process in reaching its decision to dismiss.  No allegations were put to the employee and there was no opportunity for the employee to respond or have a support person present.

The ERA awarded $6,900.00 in unpaid wages and $6,000 compensation for hurt and humiliation.  Those awards would have been double but for the aggressive behaviour of the employee which put the employer in the position of feeling threatened and contributed to the dismissal.

In addition to the failure to carry out a fair process the employer also got most of its other dealings with the employee wrong.  It had characterised the employee as a contractor rather than an employee.  However, the ERA held that the employee was not a contractor as the employer had deducted PAYE and paid this to the IRD and had also paid the ACC levies.  In addition the employee did not provide any invoices or have any control over their own business and all tools were provided by the employer.  This meant that the employer had not paid for public holidays worked or for public holidays not worked.  It had also not provided an alternative holiday for the public holidays that were worked.

The employer had also been required to deduct fines from the employee’s wages and pay those to the Crown.  The employer had made the deductions but had not paid those over to the Crown in full and had delayed for about a year in making those payments.  The employer was fined $1,000 for the failure to make those payments with $750 of that going to the employee.

So the employer’s actions here cost them over $13,000 plus a likely award of costs to follow.

Alan Knowsley

Employment Lawyer Wellington

Dismissal for aggressive behaviour upheld...

The Employment Relations Authority has rejected a personal grievance claim for unjustified dismissal of an employee accused of aggressive behaviour towards other staff.

The ERA held that the allegations were clearly put to the employee, he was given a reasonable opportunity to respond to the allegations, to have a support person present and was made aware of the seriousness of the allegations.

The employer had recorded the disciplinary interview (which lasted about four hours) so there was a clear record of what had been said and it also showed the employee’s aggressive and belligerent attitude during the meeting as well.

The ERA held that a reasonable employer could reach the conclusion that the employer had done, which was that the allegations were correct and that the employee did not accept any fault and was unlikely to improve his behaviour.  The dismissal was therefore justified.

So by following a good and fair process the employer was able to deal with the employee’s behaviour and dismiss the employee for the protection of the business and its other staff.

Alan Knowsley

Employment Lawyer Wellington

Failure to reveal theft charge...

The Employment Relations Authority has upheld a personal grievance claim when a job seeker had their offer of employment withdrawn after it was accepted by them.

The employee failed to mention in the process that they had faced a charge of theft from a previous employer.  They had been found not guilty of the charge.  Their CV left out the employment which related to the allegation of theft.

The ERA held that the employer failed to properly investigate the allegation or give the employee a proper opportunity to explain the allegations.

The ERA held that the offer could not be withdrawn after acceptance but as the woman had deliberately left the relevant details out of her CV to avoid the theft allegation complications her remedies were reduced by 25%.

She was awarded $6,000 compensation plus $1,684 lost income.

Alan Knowsley

Employment Lawyer Wellington

Employee awarded $1.7 million harassment damages …

An employee in Australia has been awarded a huge AUD$1.7 million compensation payment for being repeatedly harassed, mistreated, devalued and undermined by her CEO over almost a year.  The employee was diagnosed with a variety of illnesses including anxiety and depression and retired unable to return to work.

The behaviour complained about included public humiliation of the employee, refusing requests for information, isolating her from her co-workers and undermining her.

The Court found that this behaviour should have been recognised for what it was and stopped.  The employer’s failure to do so made it responsible for the CEO’s actions.  An interesting aspect of this case is that as this involved the CEO as the perpetrator, it would have involved a whistleblower or someone to let the board know of the CEO’s behaviour.  Not an easy position for a co-worker to be put in but this did not save the employer from liability for its CEO’s actions.

In New Zealand the behaviour of the CEO would be taken to be the actions of the employer as the CEO manages the staff.  If the perpetrator was another manager or colleague (not the CEO) then the employer will only be responsible if the behaviour was brought to the employer’s attention and it failed to deal properly with it.

 

Alan Knowsley

Employment Lawyer Wellington

I resign effective immediately - Yeah right...

When does an employee saying they “resign, effective immediately” not mean they want their resignation to be “effective immediately”?

That was the question answered recently by the Employment Relations Authority when it upheld a personal grievance for unjustified disadvantage following an employee resigning “effective immediately”.  The employee was going to a competitor, so when they put in their resignation they expected to be marched out the door immediately and that was what happened.  The employer claimed that they understood the employee’s written resignation which said it was “effective immediately” to mean just that i.e. they were finishing there and then.  No mention was made of what date they would finish and the employer never asked the employee for clarification that they were finishing that day.

After being marched out the employee sought to be paid out their notice period.  The employer refused on the basis that they had resigned “effective immediately” and had not given the required four weeks’ notice.

The Employment Relations Authority held that the employee never intended to resign without giving the required four weeks’ notice and that if the employer had asked they would have discovered that.

The ERA awarded lost wages of $1,600 plus $3,500 for the hurt and humiliation suffered by the employee because the employer had misunderstood the “effective immediately” to be “effective immediately” and did not ask the employee if that is what they meant.  The employer is also liable to pay the employee costs as well for the hearing.

So the lesson to be learned is that, if an employee says something, it pays to check to confirm they actually mean what they say before taking it at face value.  A failure to do so can be expensive.

Alan Knowsley

Employment Lawyer Wellington