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