$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