Work before commencing employment invalidates 90 day trial…

The Employment Court has upheld a claim for unjustified dismissal when a mechanic was fired under a 90 day trial clause.

The mechanic had been given a contract to commence employment, but could not start until his visa was granted.  In the period between signing the agreement and the intended start date (which was when the visa was to be granted) he attended the workplace and carried out some tasks.

The employer claimed that the tasks were either an unpaid assessment or were as a volunteer.  However, the Court found that the tasks undertaken meant that the worker was an employee, despite the fact that it was unlawful for them to be employed prior to their visa being granted.  As they had undertaken tasks as an employee (not as a volunteer or part of an assessment) they were previously employed by the employer before the 90 day trial period started.  This meant the employer could not rely on the 90 day trial period and the dismissal under it was unjustified.

The Court confirmed a $10,000 award for compensation plus lost wages.

It is very important when relying on a 90 day trial period that the employee has not been employed in any capacity previously by the employer.  If there is a true assessment or volunteer situation, then they should be clearly recorded in writing, so that both parties understand that there is no employment relationship prior to the actual employment commencing.

Alan Knowsley

Employment Lawyer Wellington

Poor redundancy process costs $15,000…

The Employment Relations Authority has found that a redundancy process resulted in an unjustified dismissal.  The landscaping company had no work and the owner decided to close the business.  However, he did not go through any process with his employees or follow the requirements in their Employment Agreements.  As a result of the failure of following the proper process the employer breached his obligations of good faith and the dismissals were unjustified.

The employer was ordered to pay $15,000 compensation for hurt and humiliation for the lack of any proper process in the redundancy even though the redundancy itself was genuine.

Alan Knowsley

Employment Lawyer Wellington

Unjustified dismissal due to payment in lieu of notice...

The Employment Court has found a dismissal under a 90 trial period to be an unjustified dismissal because the employer failed to give the notice period required.

The employer was required to give one week’s notice, but instead made a payment in lieu without any clause in the agreement allowing payment in lieu.

As the employer had not raised any concerns with the employee, it had not followed a proper process and was liable for lost wages for 12 months and had to pay compensation for hurt and humiliation.

It pays to follow the terms of the employment agreement and a proper process when dismissing an employee.

Alan Knowsley

Employment Lawyer Wellington

90 day trial period ok but $140,000 penalty...

The Employment Court has upheld a 90 day trial clause for an employee who unusually had a previous employment agreement with the employer.

The employee was hired in one position and signed an employment agreement, but before they commenced work they were offered a more senior role and signed another agreement with another 90 day trial period.

They were then dismissed during the 90 days and claimed the clause was invalid because they were already an employee, as they had been offered and accepted work.

The Court held this was not employment as they had not commenced carrying out any duties for the employer under the first agreement.  The employer, however, shot themselves in the foot by not giving the proper notice period, so the dismissal was unjustified and cost them over $140,000 for lost wages and compensation.

Alan Knowsley

Employment Lawyer Wellington

Employment rights & obligations...

Many disputes arise because people do not know their rights and obligations.

All employees are entitled to:

1. Written employment agreements.
2. Time to get advice on the agreement before they sign.
3. An agreement that sets out:
   1. who your employer is
   2. what your role is
   3. where you will work
   4. what you will be paid
   5. what will happen if you work on a public holiday
   6. what will happen in a redundancy situation
   7. how to resolve disputes.
4. Four weeks paid annual leave per year after you have been employed 12 months.
5. Five days sick leave per year after six months.
6. Three days bereavement leave after six months (for immediate family).
7. The minimum wage (or training wage).
8. 11 public holiday days per year and time and a half if you work on a public holiday (a normal working day for you).  You also get another day off.
9. Two 10 minutes paid rest breaks each eight hour shift (more or less for other hours).
10. An unpaid meal break of at least half an hour for an eight hour shift.
11. Paid parental leave up to 12 months (if you qualify).
12. Request flexible working arrangements.  Can be refused on some reasons.
13. Be paid in cash (unless you agree).

Employees must:

• Perform the work with care and skill.
• Be open and communicative with the employer.
• Comply with the terms of the employment agreement.
• Comply with lawful and reasonable instructions from the employer (including policies and procedures).
• Keep the employer’s information and business confidential.
• Not do anything to undermine the employer’s business.

If you are having problems with an employer or employee who is not keeping their side of the agreement (and laws) you can enforce those rights.

Try talking to your employer or employee first to resolve matters at a low level.

If you are not successful then advice from an employment professional can tell you your options for moving forward and sorting the issue.

Alan Knowsley

Employment Lawyer Wellington

Employee awarded over $10,000 after employer reduces employee's salary

The Employment Relations Authority has ordered an employer to pay $10,500 after the employer failed to follow proper process in addressing performance issues.

The parties had agreed that the employee would be paid a salary that was higher than similar level employees, and also agreed that the employee was not to disclose this to his colleagues.

The employer became concerned about the employee’s performance. Rather than raising the performance issues with the employee and taking steps to improve the employee’s performance, the employer reduced the employee’s salary by $10,000 with the reluctant agreement of the employee.

Despite agreeing not to, the employee disclosed his salary to a colleague.

The ERA found that while the employee agreed to the reduction in salary, the employer acted upon the performance concerns without following a fair process, which includes:

• raising the concerns with the employee;
• considering the employee’s explanation (if any);
• allowing the employee reasonable time to improve;
• making clear to the employee the consequences of failing to improve;
• providing the employee with any support reasonably necessary;
• reviewing the employee’s performance at the end of a reasonable time period; and
• if necessary, considering the employee’s explanation (if any) if there had not been an acceptable improvement.

The employer was ordered to reimburse the employee for the loss suffered by the reduction in salary and pay a further $10,000 in compensation.

This was an expensive outcome for the employer, who acted hastily. It could have been avoided if the employer had followed a proper process.

Ben Ruback

Employment Lawyer Wellington

Employee awarded over $18,000 after 'cooling off' period deemed to be dimissal ...

The Employment Relations Authority has ordered an employer to pay over $18,000 to an employee who was unjustifiably dismissed.

Following an incident at work, the employer sent the employee away from the premises. The employer intended to create some space so that the parties could ‘cool off’. However, the employee believed that he had been dismissed because he was told to complete his timesheet and return his SIM card.

The following day, the employer attempted to contact the employee to offer an opportunity to explain his actions. However, at that time the employer did not make clear that the employee had not been dismissed. The ERA said that the employee would not have necessarily known that an employer cannot seek to investigate a matter after dismissal.

It was not until the employee responded some 5 days later that the employer realised that the employee believed he had been dismissed.

The ERA found that the employee had been unjustifiably dismissed because the employer had not followed proper process. The employee was awarded $7,600 in lost wages and $10,500 in compensation.

While the employer was aware of the proper process to follow when taking disciplinary steps, in the heat of the moment a failure to follow the proper process proved costly for the employer.

Alan Knowsley
Employment Lawyer Wellington

Poor dismissal process costs employer again…

The Employment Relations Authority has found that an employee was unjustifiably dismissed because the employer failed to follow a proper process in dealing with a disciplinary matter.

The employee had been paid a salary higher than other staff on the basis that he did not discuss his salary level with any other staff.  The employee then told one of the other staff of his salary level.  This caused the other staff member to challenge the employer about the discrepancy and to resign.

The employer then confronted the employee and dismissed him without any process.  The Employment Relations Authority awarded over $28,000 damages for the unjustified dismissal.  That was after reducing the damages by 30% due to the employee breaching good faith by revealing his salary.

As the employee had breached good faith the employer would have been entitled to dismiss him had a proper disciplinary process had been followed.  The allegation of breach of confidentiality by discussing his salary with another employee should have been put to the employee and his response sought before any decisions were made as to whether he was guilty of breaching his agreement.  If that had been done the employer would not have been liable for any damages for dismissing the employee as the dismissal would be justified and a fair process followed.

 

 

Alan Knowsley

Employment Lawyer Wellington

Personal liability for breaches of minimum employment standards...

In a recent case, an employer was ordered to pay a significant sum to an employee after the company breached the employee’s minimum employment entitlements. The employer did not pay the employee the appropriate minimum wage for all hours worked, and failed to provide the correct annual leave and holiday pay.

The employer was ordered to pay the employee over $103,000 and the employer was also fined over $61,000.

In addition, the Director of the company was personally fined $12,000 for her part in the breach of the employment standards.

Under the Employment Relations Act, a person may be considered to be involved in the breach of employment standards if that person:

• has aided, abetted, counselled, or procured the breach; or
• has induced, whether by threats or promises or otherwise, the breach; or
• has been in any way, directly or indirectly, knowingly concerned in, or party to, the breach; or
• has conspired with others to effect the breach.

The penalties did not stop there for the employer, as the Director’s husband was also fined $12,000 because, while he was not a Director, he was in a position to exercise significant influence over the management or administration of the company.

In order to be liable, a person must be an officer of the company or entity. Officers can include Directors, partners, or those in comparable positions.

However, it is unclear how wide the definition of an officer extends, other than, that person must be in a position to exercise a substantial or considerable influence over the management or administration of the company or entity.

In order to avoid the significant penalties, the employer should have paid the employee at the appropriate hourly rate and ensured the employee received all other minimum employment entitlements.

The initial ‘savings’ made by the employer not paying the employee correctly were well and truly lost by the time the Authority made its orders, not to mention the damage done to the reputations of the company, its officers, and the Director’s husband.

Jaenine Badenhorst

Employment Lawyer Wellington

Company owner fined for aiding company’s breach…

The Employment Court has fined a company owner and director for aiding and abetting breaches of an employment agreement by the employing company.  The company itself was put into liquidation by the owner prior to the proceedings in an attempt to avoid liability.

The Court held that the director had personally been involved in the unfair processes by the company in breach of the employee’s employment agreement and that the actions taken were deliberate and serious.

A penalty of $7,500 was imposed on the director personally for aiding and abetting the breaches by the employing company.

This case highlights that employers can’t hide behind the shell of a company to avoid their responsibilities under the Employment Relations Act and other provisions such as the proper payment of wages.         

Alan Knowsley

Employment Lawyer Wellington