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