$37,000 for botched redundancy...

The Employment Relations Authority has upheld a claim for unjustified dismissal following a redundancy process.  The employer failed to consult with the employee before making them redundant.  The employee was only told of their redundancy without being given any opportunity to respond to the proposal.

In addition the employer tried to justify the redundancy on the basis of allegations of dishonesty and poor performance.  Those matters are not ones that support a redundancy but rather should have been raised as allegations of misconduct.

The ERA awarded the employee $19,000 in lost wages and $18,000 for hurt and humiliation for the failure to follow any proper process.

Alan Knowsley

Employment Lawyer Wellington

Fraud in the workplace...

New Zealand has experienced a very large increase in the value of frauds in recent years.  Fraud is a constant and serious threat to all sectors of New Zealand economy. Fraud is costing many organisations money and damaged reputations.

What risks does your organisation face from fraud?

Are your systems up to standard?  How can you try to avoid hiring fraudsters? How can you try to prevent fraud by good systems? What can you do if you suspect fraud?

Questions to ask yourself.  Does your organisation:

1. Require face to face interviews with all shortlisted potential employees?
2. Do reference checks by phone to referees?
3. Do Police checks on potential employees before you make an offer?
4. Have a policy/procedure manual for all staff?
5. Require two or more signatories for all payments?
6. Have policies for checking accounts receivable and payable?
7. Have cash-handling policies in place?
8. Require staff to take annual leave?
9. Have a policy on reporting fraud to the Police?
   If you are hiring, especially for a position where that employee is going to have access to your accounts, you need to follow good pre-employment guidelines:

1. Get a written CV.  Check it for gaps and inconsistencies.
2. Get an application form completed in advance of the interview and do background checks on the information provided.
3. Interview in person and use at least two people.  One to make good notes and the other to watch for body language and reactions.
4. Have a list of questions, so you cover all points and ask consistent questions of the applicants.
5. Drill down on answers to see if they really are telling the truth e.g. ask how they would handle a certain situation.  Then ask for more detail.
6. Talk to all referees.  Have a list of questions.  Ask if they would re-employ the applicant.  Be wary of even the slightest hesitation.  Be suspicious if applicants do not want you to talk to their current employer. Have they been pushed out?
7. Consider getting a Police vet done.  Get written permission (you will need ID such as their driver’s licence number).
8. Have written employment agreements… and you must keep a signed copy, plus a copy of any draft given to the employee to consider.
   During Employment
   Ensure you have policies in place to deter fraud – take away the opportunities, even if people have the inclination.
   Be aware that fraudsters are often highly trusted, long term employees, who no one would suspect, so make sure policies are followed by everyone, all the time.  The policies are there for a reason, so do not let them be ignored.
   Make sure your employees take annual leave.  Fraudsters often do not take leave.  While they are away discrepancies may be found.
   Cash handling, creditor payments etc. should be prepared and approved by at least two people.  Both people should sight the source material.  Check bank account numbers as invoices can be doctored to insert a different bank number.  Extra invoices can be created so the creditor gets paid, but so does the fraudster.
   Do random checks.  Call the creditor to check on the invoice.  Is it real?
   Suspected Fraud
   If you are suspicious, then do background checks to see what you can discover.  Act quickly but stealthily, so evidence does not disappear.
   If you think fraud has occurred, you must follow a full and fair investigation process.
   You do not want to be paying the fraudster damages for their hurt feelings because of a poor process.  For our free guide on investigating fraud click here. Dealing with suspected fraud.
   Alan Knowsley

          Employment Lawyer Wellington

Defective redundancy and dismissal processes...

The Employment Relations Authority has upheld claims for unjustified dismissal by two employees after they were made redundant and then dismissed during the notice period of the redundancy.

The ERA held that the dismissal occurred without any proper process as no allegations were put to the employees and there was no opportunity for them to respond and of course no consideration of any response by the employer. 

The ERA went on to look at the genuineness of the redundancy that had been put into place and it found that this failed both for procedural reasons and substantively.  The procedural failure was that the employees were given no opportunity to comment on a proposed redundancy before they were advised that they were being made redundant.  It is a requirement that employees are consulted before any final decision is made.

In addition the ERA found that the redundancy was not genuine because the reason given of the poor financial performance of the company was not borne out by the company’s financial records.  Those records showed that the returns of the company were good and that the company was advertising for further staff at the time it was making these other employees redundant.

The ERA ordered each employee be paid $5,000 compensation for the hurt and humiliation suffered plus lost wages for the periods they were out of employment following their dismissals.

Alan Knowsley

Employment Lawyer Wellington

Unlawful deductions from wages...

The Employment Relations Authority has held an employer’s deductions from wages and final holiday pay to be unlawful and has ordered the amounts withheld to be paid to the employee.

The employee resigned without giving the required period of notice and the employer withheld money in accordance with clauses in the Employment Agreement permitting the withholding of money if the required notice period was not given. 

The Employment Relations Authority held that a general withholding clause, such as in this agreement, could be lawful but, before any deduction is made there has to be consultation with the employee and the amount of any deduction has to be reasonable.  In this case there was neither consultation, nor a reasonable deduction.

The ERA also held that an employer cannot use a general deduction clause to withhold money for claims related to lack of notice and any loss caused by that lack of notice.  It held that such clauses can only be used for claims where the amount is clear, for example, if there had been a loan to the employee or an advance of wages or similar.

The ERA also held that a clause that sets the amount of damage for the no notice period as equivalent to wages for that notice period, is a penalty clause, rather than a genuine pre-estimate of damage, and is therefore unenforceable.

If an employer wants to withhold wages for money owing or damage caused by lack of notice, it needs to consult with the employee and obtain a specific agreement to the withholding of those wages (unless there has been a clear agreement by the employee for repayment of an advance of wages or similar).

Alan Knowsley

Employment Lawyer Wellington

Unjustified dismissal for poor process...

The Employment Relations Authority has upheld an employee’s claim that he was unjustifiably dismissed following a redundancy process.  The ERA concluded that the redundancy was genuine, however the employer failed to follow a proper process as it did not give the employee an opportunity to comment on the proposed redundancy before a decision was made.

The ERA awarded compensation of $12,000 for the hurt and humiliation suffered by the employee as a result of the poor process.  It refused to grant any lost wages.  This was firstly because the redundancy was genuine and therefore even if a proper process had been followed the employee would have been made redundant and therefore had not lost any wages.  Secondly, the employee had made no efforts to obtain other employment and therefore failed to mitigate his losses.

Alan Knowsley

Employment Lawyer Wellington

Constructive dismissal claim rejected...

The Employment Relations Authority has not upheld a claim for constructive dismissal of an employee who resigned during a disciplinary process relating to a conflict of interest.

The employer had concerns over an employee’s conduct and had asked him to attend a disciplinary meeting to look at those allegations.  During the disciplinary process the employee put in his resignation.  The Employment Relations Authority decided that resignation was completely voluntary and therefore there was no claim against the employer.

The employee also raised numerous other allegations against the employer but the ERA held that they did not amount to personal grievances and therefore the ERA had no jurisdiction to consider them.

Alan Knowsley

Employment Lawyer Wellington

Unjustified dismissal but no compensation...

The Employment Relations Authority has found that an employer unjustifiably dismissed two workers without following a fair process.  However, the ERA concluded that the employees had lied on their CVs and that their disgraceful conduct meant they should not get any damages for the unjustified dismissal.

The employer had raised concerns over the employees’ conduct and in relation to their CVs but dismissed the employees under a 90 day trial clause without a proper process.  Unfortunately the trial clause in the Employment Agreement had not been signed when the employees started work and therefore was unenforceable.

But for the false CVs the employees would have been entitled to compensation for the poor process followed and any lost wages.  However, their lies were of such a nature that they would never have been employed in the first place because they did not have the skills for the job.  The ERA decided that it would be unconscionable for them to be rewarded for their conduct by any award of damages.

Alan Knowsley

Employment Lawyer Wellington

Unjustified suspension and unjustified dismissal...

The Employment Relations Authority has upheld a claim for unjustified suspension and unjustified dismissal by an employee against her employer.  The employee applied for leave and this was granted by the employer, but upon her return from leave she was told she was suspended.

When the employee asked why she was suspended, she was told that she had offered her resignation and her resignation had been accepted.

The ERA concluded that there was no explanation for the suspension and that there was no resignation.  It found that both the suspension and dismissal were made without any justification and awarded the employee $12,000 compensation for humiliation plus $4,000 for lost wages and $2,250 for legal costs.

Before an employer suspends an employee, it must tell the employee why it is considering suspension and give the employee an opportunity to comment on the suspension.  In addition the suspension must be one that a reasonable employer could impose, while it investigates misconduct allegations.  In this case there was no proper procedure followed for the suspension nor any factual justification for the suspension.

Alan Knowsley

Employment Lawyer Wellington

Constructive dismissal for non-payment of wages…

The Employment Relations Authority has upheld a claim for constructive dismissal from an employee after the employer short paid her wages for three months in a row.  The ERA held that any reasonable employer would have foreseen that short payment of wages would lead to a resignation and this was therefore a constructive dismissal.

The ERA ordered payment of $4,300 in unpaid wages, plus $5,000 compensation for hurt and humiliation together with interest and costs.

Alan Knowsley

Employment Lawyer Wellington

Employment status: employees not contractors…

The Employment Relations Authority has held that several drivers for a taxi company were employees, not independent contractors, and has ordered payment of holiday pay and minimum wages of $97,000 plus other expenses and interest.

The ERA had to determine whether certain taxi drivers were employees or contractors because these drivers did not have Contractor Agreements with the taxi company and also did not have Employee Agreements either.  Other drivers with the company did hold Contractor Agreements.

The ERA looked at the four tests to determine whether the drivers were employees or not.  The first test is the intention of the parties but there was no written agreement, so it had to look at the conduct of the parties and the context of the agreement.  In this case the company did have agreements with its independent contractors, other than these drivers.  It also deducted PAYE from these drivers’ income, issued pay slips, paid some Kiwisaver contributions and provided vehicles for these drivers (but not the contractors).

The second test is control.  The ERA found that there was a roster that the drivers had to adhere to, there was close scrutiny of their work and they got their jobs from a central dispatch system.

The third test is integration into the business. The ERA found that there was significant integration because of the roster and because they were provided with fully maintained vehicles, which they were not able to let out to other drivers, or use for any work outside of the company.

The last test is the economic reality test.  This means: Were the drivers in business on their own account?  The ERA found that the drivers did not invest any capital and had no possibility of making a capital gain or loss or creating any goodwill.  The company deducted PAYE and paid some Kiwisaver contributions and the drivers did not fill in any tax returns.  They also only worked for the taxi company and did not have any other customers.

Taking all these factors into account the ERA found that they were employees and therefore the company had to pay $61,500 in unpaid minimum wages and $35,800 in holiday pay, plus other expenses and interest.

Two major issues are still to be decided in the case.  The first of those is any penalties to be imposed for non-payment of minimum wages and holiday pay and not having Employment Agreements for employees.

The second major issue is whether the Directors of the company should be personally liable for the unpaid wages and holiday pay, as they have stopped operating the company and it has no assets to pay any of the awards made.

Any company contemplating taking on contractors (versus employees) should be very careful to ensure that they are true contractors, because getting that status wrong can result in very large back payments and penalties.

Alan Knowsley

Employment Lawyer Wellington

$3,500 penalty for staff underpayment...

An employer has been fined by the Employment Relations Authority after it failed to pay one of its manager’s the minimum wage on three occasions during her employment.

The manager was on a salary, but worked more hours than she was contracted to and therefore the minimum hourly rate was not paid on three occasions she worked over her contracted hours.

The employer had difficulty countering the employee’s claims because it failed to keep accurate records of the hours she worked.  This was because it did not require its managers to clock in.

The $3,500 fine was ordered to be paid directly to the employee and will come as a salutary lesson, that even staff who are on a salary must be paid the minimum wage (at least) for the hours they actually work, not just those they are contracted to work. It is also a reminder of the need to keep accurate records of hours worked for all employees (including management level staff).

Alan Knowsley

Employment Lawyer Wellington

Domestic Violence Leave...

From April 2019, if an employee is a person affected by domestic violence they will be able to take up to 10 days domestic violence leave each 12 months (after six months employment).  They will be entitled to this domestic violence leave regardless of how long ago the domestic violence occurred and even if the domestic violence occurred before the person became an employee.

An employer may require an employee to provide proof of the domestic violence and if they have required such proof, they are not required to pay for the domestic violence leave taken if that proof has not yet been supplied (without a reasonable excuse).

As with other types of leave, an employee wishing to take domestic violence leave must notify the employer of their intention to take that leave as early as possible before work on the day they intended to take the leave, or if that is not practicable, as early as possible after that time.

The employee will be required to be paid their normal pay, at the time they would normally be paid, when they are taking domestic violence leave.

The purpose of the leave is to enable the person affected by domestic violence to recover from that domestic violence.

An employee may take up to 10 days domestic violence leave every 12 months, but any untaken leave is not carried forward to the next 12 month period.

Alan Knowsley

Employment Lawyer Wellington

Fired over "flirting"...

The Employment Relations Authority has upheld a claim for unjustified dismissal after a roofing worker was dismissed for flirting with a customer.

The employer held an investigation meeting and alleged that a complaint had been received from a women client about the behaviour of the worker.  In reality the complaint had been received from the woman’s husband, who was upset at the attention his wife was paying to the worker while the worker was working with his shirt off. The ERA held there were no grounds to dismiss the employee.

The ERA awarded the employee $22,875 compensation for injury to feelings and the unjustified dismissal.

Alan Knowsley

Employment Lawyer Wellington

Poor redundancy process costs $21,000…

The Employment Relations Authority has upheld an unjustified dismissal claim following a restructure by the employer.

The ERA found that the process followed by the employer was defective, especially around the offering of alternative roles and the failure to understand the pressure placed on the employee, who had to take leave during the process, as a result of the stress she was suffering from.  The ERA decided that no fair and reasonable employer could have decided to have dismissed the employee in the circumstances at the time, without first meeting with her following her recovery from her illness.

The ERA also decided that the employer should have given the employee more time to think things through calmly, after the initial shock she suffered, because of the proposed redundancy, had had a chance to subside.  If that further time had been given, the employee would more than likely have taken one of the alternative roles offered.

The employee was awarded $15,000 compensation, plus $6,000 wages.

Alan Knowsley

Employment Lawyer Wellington

$80,000 penalty for underpaid wages…

A company has been fined in the District Court for not paying the minimum wage entitlements to 18 of its workers.  In addition to the fine of $80,000 the company also has to pay over $97,000 in unpaid wages.

An investigation by the Labour Inspectorate discovered the company short paid its 18 workers over a two month period.

Alan Knowsley

Employment Lawyer Wellington

Companies fined for poor employment records…

The Employment Relations Authority has fined two related companies, which operated fast food franchises, $16,200 per company for failing to provide their employees with compliant employment agreements, failing to keep wage and time records and failing to keep holiday pay and leave records.

Both companies have ceased to operate the franchises and have ceased trading and no longer have any employees.  All of those circumstances were taken into account in setting the fines for each company, along with their previous lack of convictions.

Each of the three offences faced by the companies carries a maximum fine of $20,000 but that fine can be imposed for each employee involved, so the potential fines for each company were over $4 million per company, due to the large number of employees involved in the fast food franchise operations.  If the companies had still been operating then it is likely that much larger fines would have been imposed, to deter the companies from similar breaches of the law in future. 

It pays to have your employment agreements and wage and time records all compliant with the legislation.

Alan Knowsley

Employment Lawyer Wellington

Second hand information not reliable…

The Employment Relations Authority has upheld an unjustified dismissal claim because the information relied upon by the employer was unreliable.

A client of the employer was seriously injured while in the employer’s care, such as they had to be hospitalised.  However, an independent investigation could not conclude that the injury occurred while the client was under the care of the particular employee. 

Several months later a manager decided to enquire further into the incident and talked to the Police who had originally investigated the injuries.  The Police provided verbal information to the manager, but would not release the pathologist’s report as to the timing of the injuries.  Although the pathologist gave a likely time of the injuries, they could not be sure as to when the injuries had occurred.  The manager of the employer carried out a further investigation and relied on the second hand Police information, incorrectly attributing an exact time of injury to the pathologist.

The ERA held that the manager should not have relied on second hand information, but should have obtained and read the pathologist’s report themselves.  Given the serious consequences of an employee losing their livelihood, it was necessary that the information be very reliable and that was not the case here.

The ERA awarded $15,000 compensation to the employee.

Alan Knowsley

Employment Lawyer Wellington

Workplace sexual misconduct register…

The Ministry of Business, Innovation & Employment has established a centralised register of allegations of workplace sexual misconduct. 

Data will be collected from calls made to MBIE or its Mediation Services but all personal identifying information will be removed, so that names of the parties will not be kept in the register.

Complaints about sexual harassment must be raised with the employer within 90 days if the employee wishes to bring a personal grievance in the Employment Relations Authority.  However, complaints can still be lodged with the Human Rights Commission within 12 months of the offending behaviour and damages awarded by the Human Rights Commission tend to be greater than those awarded by the Employment Relations Authority.

It pays to take advice from a professional experienced in this area as soon as possible if you believe you have been subjected to sexual harassment in the workplace.

Alan Knowsley

Employment Lawyer Wellington

Blameworthy employee awarded over $8,000 after unfair dismissal

An employer has been ordered to pay an employee over $8,000 after not following a proper process when suspending an employee and for unfair dismissal.

The employee, a baker, was seen by a manager throwing a ball of dough at another employee. The employee said it was a joke and that the behaviour occurred on a daily basis by other staff.

The employer considered that the behaviour amounted to serious misconduct because of the risk of contamination of the bakery’s products and the risk that an employee operating machinery would become distracted by the behaviour and cause an accident.

A meeting took place moments after the incident between the employee and the owner/director. The employee did not offer any explanation at the meeting. The employer suspended the employee, giving the employee 30 seconds to leave the building.

The meeting was rushed and was undertaken without an opportunity for any of the parties to ‘cool off’. The meeting was not held at an appropriate location. Instead it occurred outside the break room where other staff could overhear what was going on.

The ERA said that although the employer had reason to suspend the employee, the process taken in doing so was unfair to the employee.

The employee was invited by email to attend a disciplinary meeting. The employee, however, was not expecting any correspondence from the employer and did not check his emails. This misunderstanding may have been caused by a lack of clear communication between the parties, particularly as the employee’s first language was not English. When the employer had not heard from the employee for some time, the employee’s employment was terminated.

The ERA said while the dismissal process was fair because the employee did not respond in time, the employee’s behaviour did not amount to serious misconduct. As a result, the dismissal of the employee was deemed to be unfair.

The ERA said the employee’s actions were blameworthy and contributed to the situation giving rise to the dismissal. The ERA awarded a reduced sum of $4,191 for lost wages and $4,000 for hurt and humiliation suffered by the employee.

Serious misconduct is behaviour which undermines the trust and confidence between the employer and the employee. Serious misconduct typically includes behaviour such as violent behaviour, dishonesty, theft, fraud, and actions endangering the health and safety of the employee or others.

Alan Knowsley

Employment lawyer

Wellington

Employer fined for breaching Record of Settlement

An employee applied to the Employment Relations Authority (“the ERA”) after her former employer breached the terms contained in a Record of Settlement agreed between the employer and the employee.

The employer had agreed to pay the employee $10,140.00, but it failed to make the payment due to constrained finances. The employer said that there would be increased business over the approaching summer period and asked the ERA to allow payments to be made by monthly instalments. The ERA agreed and cautioned the employer of the consequences of failing to comply with the ERA’s orders.

The employee had to make a second application to the ERA after the employer failed to make the payments agreed to. The ERA said that the employer was quick to enter an agreement to avoid sanctions but then became careless once the consequences were avoided. The employer should not have agreed to make monthly instalments if it was unwilling or unable to adhere to the agreement. The ERA said the breach was serious and the penalty should be proportionate to the level of seriousness of the breach and the harm caused.

The employer was penalised $4,000.00 plus costs and was still required to pay the employee the outstanding balance of the sum agreed in the Record of Settlement.

The maximum fine for breaching a Record of Settlement is $20,000.00 per breach so it pays to adhere to the terms of settlement to avoid further financial troubles.

Alan Knowsley

Employment Lawyer

Wellington

Spiteful text causes $119,000 loss…

An employee has been convicted in the District Court of causing loss by deception and has been ordered to pay $19,000 in reparation to his former employer.

The employee had been fired and as he was leaving the premises sent a text to his employer saying “left a little present in the last production”. 

The employer was obliged by its contamination procedures to immediately shut down production and a large export shipment was cancelled and the product was destroyed.  The employee sent a second text 30 minutes later retracting his first message, but by then it was too late and the company’s losses for the missed shipment and lost production were $190,000.

The employee’s parents have re-mortgaged their house to help him pay the reparation ordered.

Alan Knowsley

Employment Lawyer Wellington

PIP leads to health & safety concerns…

The Employment Court has found that an employer’s performance improvement plan, which extended over seven months, resulted in harm to an employee and therefore an unjustified disadvantage.

The employer was trying to manage the employee’s behaviour, but knew of an underlying mental condition that the employee had which resulted in extreme anxiety. This was made worse by the process, without the employer seeking to obtain medical advice on the effects of the PIP on the employee.  The Court held that that was not what a fair and reasonable employer could do in the circumstances.

This became a health and safety issue as the employer failed to ensure a safe work place for its employee, as it did not keep them free from harm.

In addition the employer was also at fault because the manager who was advancing the disciplinary process had been closely involved in the performance improvement process, which had become increasingly fraught, and having that manager involved was also not a step of a fair and reasonable lawyer could have taken.

The damages that the employer will be liable to pay are yet to be determined in a further hearing.

Alan Knowsley

Employment Lawyer Wellington

Employer fined for crash after work…

The District Court has imposed a fine and reparation on a contracting company after one of its employees crashed a work vehicle on the way home from work.  The exact cause of the accident has not been determined, but it is assumed that the employee fell asleep while driving at about 2.45 am.  The employee had been working long hours in the two weeks preceding the accident and had worked for more than 16 hours on the day of the accident.

The Court found the company had failed to put in place a fatigue management system to identify specific factors that can result in fatigue, it also failed to put in place maximum work hours and minimum breaks and to monitor them.  It also failed to train its workers in recognising and understanding fatigue.  The District Court said that a starting position for a fine would have been $650,000 but for discounts for remorse, the company’s prior safety record, cooperation and its guilty plea.

In addition to the fine the company was also ordered to pay $80,000 reparation plus $9,300 financial costs to the deceased’s family.

It is worth noting that the employee was offered a lift home after the work shift, but declined because he wished to take the work vehicle to his home.  He was therefore not under instruction to drive the work vehicle after his shift, but that did not alter the company’s liability for his death.

 

Alan Knowsley

Employment Lawyer

Wellington

Failure to investigate bullying results in $68,000 damages…

The Employment Relations Authority has upheld a claim for unjustified dismissal after an employee complained of bullying by management.

The Employment Relations Authority held that the employer failed to provide a safe workplace because it did not provide support to the employee who complained of bullying and failed to properly investigate the allegations.  Instead it sacked the worker for taking excessive time off following the allegations.

The employee was called to attend a meeting to investigate the time he had taken off, allegedly ill due to the bullying, but was only given 24 hours’ notice of the meeting.  When the employee advised that he could not attend the meeting the employer’s response was to accuse the employee of multiple failures to attend meetings, but the ERA found that no other meetings had been arranged or offered.

The ERA ordered compensation for hurt and humiliation of $35,000 and payment of $32,900 in lost wages.

If an employee raises a complaint of bullying, then the employer must fully and fairly investigate the allegations and provide support to the worker during and after the investigation, so the employer has done all practical steps to provide a safe work place.

Employees need to raise matters with their employer as soon as possible to give the employer a reasonable opportunity to deal with the alleged bullying. The employee did so here, but the employer did not deal with the allegations properly.

 

Alan Knowsley

Employment Lawyer

Wellington

Employers fined for lack of records…

The Employment Relations Authority has fined two employers $7,500 for failing to keep proper employment records and to ensure that their workers were paid the correct holiday pay.

The Labour Inspectorate had sent Improvement Notices to the companies, but they failed to improve their records or to make the correct payments.

Alan Knowsley

Employment Lawyer

Wellington

Employee breaches confidential settlement…

The Employment Relations Authority has found an employee breached the terms of a confidential settlement by telling other employees that she had “won” her personal grievance.  The employee had apparently returned to work and told several other employees of her “win”.

The Employment Relations Authority made an order that the employee comply with the Settlement Agreement and ensure the confidentiality of its terms are maintained and also ordered her to pay costs to the employer.

Alan Knowsley

Employment Lawyer

Wellington

Employee lie bites back...

The Employment Court has rejected an appeal for unjustified dismissal and unjustified disadvantage of a worker accused of sending a threatening text about their manager.  The text intimated physical violence towards the manager.

The employer became aware of the text and started a disciplinary investigation.  During the investigation the employee denied having sent the text and provided evidence pointing towards the text being fabricated to set him up.

The employer then embarked on a longer investigation into the text to try and establish who had set up the employee by faking the text.  Eventually the employee admitted that he had actually sent the text and that his evidence about being set up was untrue.

The employer’s view was that they would have taken the employee back, if the only issue had been the threatening text sent, because they could have redeployed him to a different area of the workplace.  However, once they knew that the employee had lied during the investigation they were not prepared to take the employee back. This was because they had lost trust and confidence that they could rely on his honesty going forward.

The Employment Court agreed with the employer that the lie amounted to a serious breach of trust which justified not reinstating the employee. The Court held that, even if the employee had been successful in establishing an unjustified dismissal or personal grievance for unjustified disadvantage, no damages would have been awarded because of the employee’s lie.

The employee would have been much better off had they just accepted that they sent the text and they would then have been able to have returned to work.  Their lies to cover up resulted in them being out of work totally.

Alan Knowsley

Employment Lawyer

Wellington

$6,000 fine for illegal worker...

An employer has been fined $6,000 in the District Court after being found guilty of illegally employing a migrant worker for three and half years.

The Court held that the defendant’s actions have undermined the foundation and integrity of New Zealand’s immigration system and the offending is regarded as serious.

Employers must accept responsibility to ensure that their employees are legally entitled to work in New Zealand.

Alan Knowsley

Employment Lawyer

Wellington

Employer to pay employee 6 years’ wages…

The Employment Relations Authority has ordered an employer to pay an employee 6341 hours of unpaid wages at the minimum wage rate as well as 8% for holiday pay after the ERA found there was an employment relationship between two friends.

The employee’s claim for unjustified dismissal was not upheld, the ERA decided that the direction from the company that the employee should stop working until the dispute over unpaid wages was resolved, did not amount to a dismissal.

The ERA also awarded penalties against the employer of $20,000 for failing to maintain proper wage and time records, no provision of an employment agreement, and failure to comply with the Holidays Act and the Minimum Wage Act. This sum was paid straight to the employee.

This relationship was unique because there was no agreed employment contract, hours of work or remuneration. Rather, it began from a kind act of providing lodging for a friend following a breakdown in the friend’s marriage. The employer believed that free lodging was sufficient compensation for the work performed.

Employers must be aware that even if there is no intention to create an employment relationship, it can be formed inadvertently. Once formed, the employer must comply with all the legal requirements.

Under New Zealand law, all employers must keep written employment agreements, and accurate time and wage records for all employees. They must also comply with annual leave and holiday payments, and pay at the rate of at least $16.50 an hour (which is the minimum wage as at 1 April 2018).

Alan Knowsley

Employment Lawyer Wellington

Employer penalised nearly $1.4 million following employee’s death…

An employer must protect the health and safety of its workers, so far as reasonably practicable.

An employee of a mining company died after the loader he was driving tipped over in an underground mine. The employer, that had only purchased the mine weeks prior, had identified the risk and a solution, however it failed to effectively mitigate the risks in implementing the solution.

The employer has since developed innovative safety measures to prevent a further accident.

The employer took appropriate steps to reduce the financial stress upon those affected by the employee’s death. The employer paid voluntary reparations, co-operated with the Worksafe inspection, and pleaded guilty promptly.

While the employer had already paid voluntary reparations of $660,000, the Court imposed a fine of $378,000, further reparations of $350,000 and legal costs of $3,672.

In this case the employer’s culpability was assessed as moderate. The maximum potential fine was $1.5 million.


Alan Knowsley
Employment Lawyer Wellington

Employer to pay $50,000 following unfair process after keeping complainants anonymous…

The Employment Relations Authority has ordered an Auckland College to pay a teacher $50,000 following two personal grievances, one for unjustified disadvantage and one for her unjustified dismissal.

The teacher was dismissed after an investigation into allegations that lasted over a year. The investigation was the result of complaints about the teacher’s performance made by students in one of her classes. The complaints focused on the teacher being grumpy and unapproachable, being late for class, and generally not assisting the students to learn properly.

The Employment Relations Authority said that the College failed to treat the teacher fairly because it refused to provide the names of the complainants and refused to provide a sufficient degree of detail regarding the complaints, which meant the teacher could not properly respond. The College only provided the teacher with generalised complaints about her performance.

In order to give an employee the ability to respond appropriately, an employer should provide dates, times, and sufficient detail about the allegations. In this case, the College failed to do so.

There are circumstances where an employer can withhold the identity of a complainant, however it must only be in exceptional circumstances.

The Employment Relations Authority said that it is a basic right that one may confront one’s accuser, know that person’s name, hear them openly make their allegation, and have a proper opportunity to respond.

Alan Knowsley

Employment Lawyer Wellington

$70,000 penalties for incorrect pay…

The Employment Relations Authority has fined an employer $70,000 in respect of breaches of correct payments for 25 of its employees.  The company had not correctly paid annual leave, alternative holiday pay and public holidays pay and also did not pay employees the hourly rate in their contracts.

The defence put forward by the company was that the Director did not agree with New Zealand employment law and ran his business “how it is in Japan”.

Unsurprisingly, the Employment Relations Authority was not impressed with that defence.  The employer has paid $23,927 to its employees being the incorrect pay shortfalls.  The ERA said that the penalty to be imposed would have been almost $229,000 but after taking into account the employer’s cooperation with the Labour Inspectors and the payment back to employees plus the financial circumstances of the employer it reduced the fines to a total of $70,000.

The company has also been banned from sponsoring visas for migrant workers for two years.

Alan Knowsley

Employment Lawyer Wellington

Penalty for breach of confidentiality agreement...

The Employment Relations Authority has upheld an employer’s claim that a former employee breached a confidentiality clause in an employment settlement when he went on Facebook bragging about the pay-out he had received.  The employee’s defence that he was not talking about this employer but another employer was not believed by the Authority because the Facebook post was only five days after the settlement agreement was reached with this employer.

The ERA penalised the employee $1,500 and that money is to be paid to his former employer.

The employee had bragged in the Facebook page that he beat another employer in the Employment Court thanks to the $20,000 donation.  In reality the employer had only made a $1,000 payment.  Therefore the $1,500 penalty has wiped out all of the gains the former employee made at mediation.

Alan Knowsley    

Employment Lawyer Wellington

Cheque in the mail no defence...

The Employment Relations Authority has rejected the defence raised by a law firm that it had paid its former employee with a cheque that had been sent and not returned.  The payment was supposed to pay the orders made by the Employment Relations Authority against the law firm.

The ERA held that payment had not been made just because a cheque had been posted.  In this case the cheque was sent to an address where the plaintiff had never resided and it was supposedly sent after the law firm had claimed that it had made a direct debit to the plaintiff of the amount owed.  That payment was never received either.

Orders were made by the Authority for payment of the sums within 14 days.

The Authority advised the defendant law firm that should payment not be made within that time frame that it had the power to order imprisonment for up to three months and a fine for up to $40,000.  Perhaps the defendant will take legal advice (other than from itself) before failing to pay again.

Alan Knowsley

Employment Lawyer Wellington

$12,000 penalties for arranging gang intimidation...

The Employment Court has awarded penalties of $12,000 against the director of an employer that has gone into liquidation.  The Labour Inspector was bringing a claim against the employer for unpaid wages and shortly before the hearing two employee witnesses were visited by apparent gang members with threats that they should withdraw their accusations and not attend the Employment Relations Authority hearings.

The Employment Court was satisfied that the director of the company arranged for the threats to be made by the gang members and imposed the penalties on the director personally to deter them and others from such behaviour which was an obstruction of justice.  The Police in this case had declined to prosecute due to the difficulty of proving that the employer was behind the threats beyond reasonable doubt.  However, in the Employment Court the standard required was only on the balance of probabilities and was therefore easier for the Labour Inspector to prove.

Alan Knowsley

Employment Lawyer Wellington

Awards of costs in the Employment Relations Authority...

An employer brought an action in the Employment Relations Authority against two employees for breaches of their employment contract.  The employees had set up in opposition to the employer while still employed.  The employer was successful in the Employment Relations Authority and penalties were imposed on the employees for their breaches of contract.

Normally in such situations the successful party, in this case the employer, would receive an award of costs against the other party.  However, in this case the defending employees had offered to pay the employer a sum of money in settlement of the claim before the hearing.  That offer was rejected.  The ERA held that because the employer had unreasonably rejected the settlement offer, which was for more than the employer received from the decision of the ERA, that the employees were entitled to costs from the employer.  That award of costs seriously eroded the award of penalties made against the employees.

The employer appealed to the Employment Court against the costs order.  The Employment Court held that the employer did not have to pay costs to the employees because the employer had not unreasonably rejected the settlement offer.  This was because the employees made no acknowledgment in the settlement offer of their wrongdoing for breaches of their employment agreements and the ERA had imposed penalties on the employees which were not part of any settlement offer made.

Instead of awarding costs against the employer, the Employment Court ordered that each side should bear its own costs in the Employment Relations Authority.

As a side note because the employer was successful in the Employment Court it will be entitled to an order for costs against the employees in the Employment Court.

Alan Knowsley

Employment Lawyer Wellington

Labour Inspectors powers...

Labour Inspectors have wide powers to investigate, inspect and issue enforcement notices under many laws on things such as holidays, equal pay, employment relations, minimum wages, wages protection, parental leave etc.

At a reasonable hour a Labour Inspector can enter any place where a person is employed, except a home.  To enter a home an Inspector needs a warrant. 

They have the power to interview anyone at the place of work including any employer or employee.

They can also require employers to produce all wage and time records and holiday/leave records plus any other documents deemed reasonably necessary to check compliance with labour laws.

They are allowed to take copies of any of the records and can require an employer to provide copies including of any employment agreements and draft agreements.

Anyone who obstructs or deceives an inspector can be liable to a fine of up to $10,000.

If an Inspector enters premises they must show their identification as a Labour Inspector and comply with all health and safety requirements of the workplace including staying out of parts of the premises with restricted access due to health and safety.

Inspectors can issue improvement notices to require compliance with the labour laws.  This needs to specify the relevant section to be complied with, the reasons for believing they are not being followed, the steps the employer could take to ensure compliance and the date they must be done by.

Employers have 28 days to object to the notice with the Employment Relations Authority.  Labour Inspectors can also ask the ERA to issue a compliance order to enforce the improvement notice.

Demand notices can also be issued for unpaid wages, holiday pay or other money due.  Employers have seven days to comment on the demand notice.  Once again an employer has 28 days to object to the notice to the ERA.

Inspectors can also issue infringement notices for failure to keep records of up to $1,000 per offence.

If Inspectors find further breaches after an initial visit then they prosecute employers for any later offices so it pays to get your paper work in order.

Alan Knowsley

Employment Lawyer Wellington

Protected Disclosures...

An employee of an organisation may disclose information to an appropriate authority if the employee believes the information relates to serious wrongdoing and is true or likely to be true.  The purpose of the disclosure must be for the purposes of investigating the serious wrongdoing.  Employees also covers contractors, board members and volunteers.

If an employee makes a disclosure under the Protected Disclosures Act the employee is protected from civil, criminal or disciplinary actions and this applies even if the employee was mistaken as to the serious wrong doing.

The employee should first use any established internal procedures to report the serious wrongdoing within the organisation but can go straight to an appropriate authority if they believe on reasonable grounds that the head of the organisation is involved in the serious wrongdoing or the immediate referral to the authority is warranted due to the urgency or exceptional circumstances or there has been no action on the internal referral within 20 working days.

The appropriate authority receiving the information must take all care to not disclose the identity of the employee making the disclosure unless limited exceptions apply.

Employees who volunteer supporting information are also protected under the Act so long as they did so prior to being approached by the investigators.

The act does not permit the disclosure of legally privileged information and any such disclosure is not protected.

No one can agree that the act does not apply so employees cannot contract out of their protections.

The most common appropriate authorities for employees to make the disclosure to are the Police, Auditor-General, Serious Fraud Office, Inspector General of Intelligence and Security, Ombudsman, Commissioner for the Environment, Police Conduct Authority, Solicitor-General, State Services Commissioner and Health & Disability Commissioner, heads of Public Service organisations, and professional disciplinary bodies but does not include Members of Parliament.

Alan Knowsley

Employment Lawyer Wellington

Employer fined for no employment agreement...

The Employment Relations Authority has upheld a claim for unjustified disadvantage of an employee who was not given an employment agreement despite asking the employer.  The law requires all employees to be given an employment agreement in writing.  The Employment Relations Authority held that the starting point for a fine (maximum $20,000) was in this case $10,000 but reduced the fine to $2,000 because the breach was not a deliberate one by the employer and because of the poor financial state of the employer.

The employee was also entitled to compensation for the employer holding back their final pay upon resignation.  The starting point for compensation here was $7,000 but this was reduced by 50% to $3,500 because the employee retained property belonging to the employer and said they would only return it when they were paid their outstanding wages.  The ERA was clear that the employer could not withhold payment of the final pay on the basis that the employee was refusing to return company property and equally clear that the employee could not retain company property on the basis that the employer was withholding final pay.

Any retention of monies owed to an employee by an employer can only be with consent of the employee and a general consent in an employment agreement is not sufficient.  Consent must be given in each particular circumstance at the time of withholding the funds.

Alan Knowsley

Employment Lawyer Wellington

Full pay for all hours on call...

The Court of Appeal has rejected an appeal by a District Health Board against decisions of the Employment Court and the Employment Relations Authority over how much should be paid to anaesthetic technicians for the time they are on call but not called into work.

The District Health Board was paying the technicians only for the time spent at the hospital during the time they were on call.  The Court decisions mean that they will now be paid for all hours on call irrespective of the time that they spend actually at work.  The technicians were required by their employment agreements to live within 10 minutes of the hospital while they were on call and this meant that many had to live away from their families during their on call periods and this was a significant hardship which must be compensated for in full.

Alan Knowsley

Employment Lawyer Wellington

What is a Constructive Dismissal?

Constructive dismissal claims often follow a resignation where the employee claims they were forced to resign or had no option but to resign.  If an employee claims that they were constructively dismissed, the onus is on them to establish they have been dismissed.

There are various kinds of pressure that can turn a resignation into a dismissal.  These can include the classic “resign or you will be fired” ultimatum, deliberate conduct to force a resignation and a breach of duty leading to a resignation.

Deliberate conduct might include such things as asking an employee to look for other employment or setting out to make the employee so uncomfortable in the role, with the aim of getting them to resign.

A breach of duty leading to a resignation could include failing to pay the employee, failing to provide a safe workplace, failing to provide appropriate work for the employee, changing the hours of work in breach of the terms of employment or insisting on a new agreement being signed which disadvantages the employee (these are only examples and the possible causes will be many and varied).

The causes of resignation can be built up over time until there is a “final straw” which triggers the resignation.  The final straw does not have to be as serious as the earlier steps, but it does have to be a breach of duty and not be of a trivial nature.

The test is “but for” the employer’s conduct the employee would not have resigned.  If the employer conducts itself in a way that is designed or likely to damage or destroy the trust and confidence between the employee and employer, that will amount to constructive dismissal, if it causes the resignation and it is reasonably foreseeable the employee would likely resign.

If the actions that lead to the resignation come from other employees and not the employer, it will not be a constructive dismissal e.g. if an employee resigns due to bullying by co-workers that is not the employer’s behaviour.  However, if the employee complained to the employer about the bullying and the employer failed to deal with the situation or was dismissive of the employee’s concerns without a proper investigation, that could amount to a constructive dismissal.

If the resignation is held to be a constructive dismissal, the dismissal will be unjustified as the employer will have failed to carry out a fair process to dismiss.

An employee who resigns during a disciplinary process might be able to claim constructive dismissal if the necessary behaviour of the employer exists e.g. an ultimatum to resign, deliberate conduct to force a resignation or a breach of process that leads the employee to resign.

An employer can take the heat out of a threatened constructive dismissal by addressing the employee’s concerns through a fair investigation of the employee’s allegations and reaching a conclusion a reasonable employer could make in the circumstances.

Alan Knowsley

Employment Lawyer Wellington