The Employment Relations Authority has rejected an employee’s personal grievance claim for unjustified dismissal.

The Employment Relations Authority has rejected an employee’s personal grievance claim for unjustified dismissal.

The employee was dismissed during his first 90 days of employment.

The employee’s employment agreement included a 90-day trial period which was found to be a valid clause by the ERA.

In order for a trial period to be valid it must:

• be included in writing in the employment agreement;
• be for a specified period of time (90 days or less);
• start at the beginning of the employee’s employment;
• state that during the trial period the employer may dismiss the employee; and
• state that if the employer does dismiss the employee during the trial period, the employee is not entitled to bring a personal grievance claim or other legal proceedings against the employer in respect of the dismissal.

The employee must also not have been previously employed by the employer.

Accordingly, the ERA held that the employer could rely on the trial period in the employment agreement, so the employee could not pursue his personal grievance for unjustifiable dismissal.

It is important that you ensure that your trial period provision meets the legal requirements otherwise an employee may be able to raise a personal grievance claim against you if you have not followed fair process when terminating the employee.

Alan Knowsley

Employment Lawyer Wellington

Employer reprimanded by the ERA for failing to take into account the employee’s mental health…

In a recent Employment Relations Authority decision, a tertiary education provider was reprimanded after unjustifiably dismissing one of its lecturers. The university was ordered to pay $20,000 to the employee for humiliation, loss of dignity, and injury to the feelings. The lecturer had been suffering from depression during the events leading to the dismissal, the authority said the university failed to take this into account.

The terms of the lecturer’s employment contract had been in dispute, the employee had been seeking clarification with no substantive response from his employer. Following several failed attempts for clarification, an email was sent from the employee to his supervisor asking to be dismissed – the email had threatening content and the university took the email as the lecturer’s resignation.

The authority deemed this action by the university to be an unjustified dismissal. The authority said the university’s actions seemed ‘opportunistic in the circumstances’. The authority also noted that the email was ‘at best requiring investigation into whether he intended to resign without notice or not’, followed by a disciplinary process.

Employers have a good faith obligation to be active and constructive in maintaining the employment relationship, the university was found to have failed in this respect.

The university had information regarding the employee’s mental health as he had been receiving subsidised psychological care through the employment relationship (EAP). He had also talked to his supervisor about the effect his role was having on his mental health. The authority expected this information to have been considered by the university had it conducted an investigation into the employee’s conduct.

The lecturer received $20,000 compensation for emotional harm.

Alan Knowsley

Employment Lawyer Wellington

Minimum Wage Change

From 1 April 2018 the minimum wage will rise to $16.50 per hour (from $15.75). The Government has indicated that it intends to increase the minimum wage in stages up to $20 over the next few years. This will bring the minimum wage close to the “living wage” being promoted by some as the appropriate minimum.

Alan Knowsley

Employment Lawyer Wellington

$90,000 fine following potential electrocution...

The District Court has fined a contracting company $90,000 after an incident with electricity lines during building works.

The Defendant Company was engaged to carry out some digging work on a construction site.  At a meeting the electricity line was noted, but it was believed that the work would be carried out well away from the line and therefore the electricity company was not contacted to disconnect the line.  Unfortunately, during the work the digger skewed around, getting its boom entangled in the line and snapping a power pole and bringing it to the ground.

No one was injured during the incident luckily, but after the accident one of the manager’s instructed a worker to cut the wire away from the digger.  This was despite being told that the electricity company had been notified and was sending a technician out.  The worker proceeded to cut away the wire to free the digger and again was very luckily not injured in the process.  When the technician arrived and tested the wire he found it to be live and so it was amazing that neither the digger driver nor the worker, who cut the wire after the accident, were seriously injured or killed.

The company involved was in some financial difficulties and that was taken into account in setting the amount of the fine.  Also taken into account was the fact that the company had been in business for 25 years without any prior incidents involving health and safety.  Unfortunately for the company the incident occurred on the day the new health and safety at work penalties came into effect which increased the maximum fine for the company from $250,000 to $1.5 million.  The $90,000 fine therefore was mainly to reflect the inability of the company to pay a large fine even over time.  WorkSafe agreed that the company’s prior blameless record of 25 years indicated that the fine should not be set at such a rate as to put the company into liquidation.

When working near potential power lines the power should always be disconnected before work is commenced. If an accident has occurred, the site should be secured and everyone kept well away from potentially contacting the lines, until the electricity company has been able to attend and disconnect the power.  Having a worker cut away the line before that happened could have been a fatal error of judgment.

Alan Knowsley

Employment Lawyer Wellington

$34,000 for failure to put allegations...

The Employment Relations Authority has upheld a personal grievance claim for unjustified dismissal after an employee was dismissed by text without any proper process.

The employee had been taken on by her cousin to act as an Administrative Assistant and was living in accommodation provided by the employer.  She was entitled to seek reimbursement of business expenses but did not put in a reconciliation or claim for expenses for many months.  When the claim was put in, it included items which she was not entitled to claim for.  The employer considered this to be fraudulent and fired her cousin by text saying “there is no point in coming back to work and if I were you I would find somewhere else to live immediately”.  

The employee took this as a dismissal and therefore did not attend the disciplinary meeting which the employer then organised after the text.  The ERA had no difficulty finding that the text was a dismissal and could not be read any other way.  This meant that no proper process had once again been followed before the dismissal was made and the ERA awarded $15,000 compensation, $14,500 lost wages and a $3,000 bonus and $1,679 in unpaid expenses.

The company has indicated that it intends to appeal the decision and also to file a claim for unpaid rent against the employee.

The two main lessons from this case are firstly, to make sure you follow a proper disciplinary process before you dismiss and secondly, to take care when hiring family members as often arrangements are done in a less formal way which can come back to bite the employer when family members fall out.

Alan Knowsley

Employment Lawyer Wellington

$35 loan leads to unjustified dismissal...

The Employment Relations Authority has upheld a personal grievance claim for unjustified dismissal.

An employee had borrowed $35 from his boss and an altercation followed the boss asking to be repaid.  The altercation occurred in front of other employees and resulted in the employee going home feeling stressed.  The employer then dismissed the employee by text message.

The ERA found that no proper process had been followed in relation to the non-repayment of the loan.  If a disciplinary process had been followed it might have resulted in justified disciplinary action against the employee which could have included dismissal, however as no process was followed the employer was not justified in dismissing the employee by text in the way it did.

The employer was ordered to pay the employee three months wages plus $7,000 compensation and other costs.  There was a deduction made of 30% for the employee’s contributory conduct in relation to non-payment of the loan.

Alan Knowsley

Employment Lawyer Wellington

Employer pays annual leave twice…

The Employment Relations Authority has upheld an employee’s claim for unpaid annual leave despite the annual leave having been already paid by the employer.  This situation of an employer having to pay annual leave twice arises because the employer did not comply with the correct legal requirements for paying annual leave and providing annual.  The employer paid for the employee’s annual leave on an “as you go” basis so they were paid with each pay. 

This is only allowed if an employee is on a fixed term of less than 12 months or is employed on a so intermittent or irregular basis that it is impractical to provide four weeks annual holidays.  If those situations apply then the employee must agree in writing in their employment agreement to be paid on an “as you go” basis and the holiday pay must be separately identified as an element of their pay and paid at no less than 8%.

The Employment Relations Authority found that the employee was not engaged on an intermittent or irregular basis such as to make it impractical to provide four weeks holidays and therefore the employee was entitled to those annual holidays and for them to be paid.  Payment of those holidays according to the law must be made without any deduction for any prior payment of annual leave.

In this case the annual leave owing amounted to $8,000 because the employee had been employed for only just over a year, but other employers may find themselves paying out far greater sums if employees had been employed on a longer term basis or there are several employees being paid their annual leave in that way when they do not fall within the requirements of the Act.

The requirement to pay annual leave at the time annual leave is taken is so that employees can have a paid break, which is quite different to being paid for having the break but the pay being paid in advance.

Alan Knowsley

Employment Lawyer Wellington

Calculating Annual Leave Payments

Employees are entitled to at least 4 weeks of paid annual leave after each 12 months of continuous employment for their employer. There are two methods to calculate the rate at which an employee gets paid for annual leave. The correct rate is at least the greater amount of:

• ordinary weekly pay as at the beginning of the annual leave; or
• the employee’s average weekly earnings in the 12 months before the end of the last pay period before the annual leave. 

Both of these calculations need to be done each time an employee takes annual leave to determine which method produces the higher total. If an employee takes a period of annual holidays that covers more than one pay period, the calculation for the entire time on annual holidays is still done at the start of the annual holiday.

Ordinary Weekly Pay

Ordinary weekly pay is the amount an employee receives under his or her Employment Agreement for an ordinary working week, including:

• salary or wages;
• regular allowances;
• regular productivity or incentive-based payments; and
• regular overtime.

 

Intermittent, one-off, and discretionary payments, as well as employer contributions to superannuation schemes are not included in this calculation.

This means the ordinary weekly pay includes everything an employee is normally paid for a week’s work, such as their salary or wages, but can include other payments as well if they are a regular part of the employee’s pay and relate to the work done each week.

Average Weekly Earnings

Average weekly earnings are worked out by calculating the employee’s gross earnings over the 12 months prior to the end of the last payroll period before the annual holiday is taken, and dividing that figure by 52. Gross earnings includes all payments that the employer is bound to make under the Employment Agreement or legislation.

The following payments make up gross earnings and should be included in the calculation:

• salary and wages;
• allowances;
• all overtime;
• commission;
• payment for annual holidays and public holidays;
• payment for bereavement leave and sick leave; and
• any other payments that are required to be made under the terms of the Employment Agreement.

Reimbursement payments, ex gratia payments, and discretionary payments are not included in the gross earnings calculations. 

Summary

Therefore an employee’s annual leave payments may be more than the rate of salary or wage contained in their Employment Agreement. An employer must take into account other payments such as allowances, commission, or overtime when determining an employee’s annual leave payments.


Alan Knowsley
Employment Lawyer Wellington