Redundancy held to be genuine…

The Employment Relations Authority has dismissed a claim for unjustified dismissal on the basis of redundancy.  The ERA decided that the employer had raised the possibility of redundancy with the employee on at least two occasions and given him the opportunity to give feedback.  Although the employee denied redundancy had been raised with him it was clear from his actions that he was aware of the potential redundancy and indeed had started purchasing equipment to set up his own business in opposition.  He had also tried to entice away employees to his new company.

The ERA rejected the claim for unjustified dismissal based on redundancy because the employer had followed a proper process for raising this with the employee and giving him an opportunity to respond and the reasons for the redundancy were genuine.

Alan Knowsley

Employment Lawyer Wellington

$15,000 fine for underpayment of wages…

The Employment Relations Authority has ordered a retailer and its director to pay penalties for the failure to pay the minimum wage, holiday pay, public holiday pay, sick leave and to provide an alternate holiday for public holidays worked.

In addition to $26,000 of wages and holiday pay owed the retailer was penalised $12,600 and the director ordered to pay a penalty of $2,400 for the breaches.

The worker was required to work a 12 hour shift, but was not provided with a written employment agreement.  Their hours of work were not properly recorded and they were not paid the minimum hourly rate or proper holiday pay.

The penalties imposed would have been substantially more except for the guilty pleas by both the company and the director.  A 50% reduction in penalties was granted.

Alan Knowsley

Employment Lawyer Wellington

Doctor held to be employee of medical practice, not contractor…

The Employment Relations Authority has decided that a medical doctor engaged as a contractor is in fact an employee.

The doctor had come from overseas and was on an immigration visa that required them to be an employee, but was offered and agreed to a contractor position at a medical practice.  He signed an agreement saying he was a contractor and registered for GST and collected and paid GST as well as paying his own tax.

The ERA held that he was an employee, as although the contract said he was a contractor, he was under immigration requirements obliged to be an employee and he had no intention to be a contractor because that would have invalidated his visa.  He also had no ability to increase his business and take on any financial risk.  He was not paid per patient and had no opportunity to work elsewhere.  The economic reality test takes all this into account and also that he had no freedom to advertise or to market himself or to do any business development activities.  He could also not take on any extra work or work elsewhere or decide to do any less work.

The ERA held that his tax status and paying his own tax and collecting GST was a flow on effect and was not his choice.

This finding that he was an employee will have a significant impact on the doctor’s position because he has claimed unjustified dismissal and unjustified disadvantage.  If he was a contractor he could not bring a claim in the Employment Relations Authority.

If you have engaged staff on a contractor basis, then you need to make sure they qualify as contractors under various tests imposed and that they are genuinely a contractor and not really an employee.  Failure to do so, as in this case, will have significant impacts and cause significant problems for your business.

Alan Knowsley

Employment Lawyer Wellington

Failure to provide wage and time records…

The Employment Relations Authority has upheld a claim for unpaid holiday pay, unpaid public holiday pay and unpaid sick leave.

The employee brought a claim and sought records to confirm their wages and time worked.  The employer claimed to have sent those records to the Community Law Centre (which was assisting the employee), but no such records were ever received. In addition the records provided to the Employment Relations Authority were incomplete and incorrect.

A failure to provide complete and correct records to the employee in advance and to the ERA meant that the ERA accepted the employee’s claims and the employer was ordered to pay over $8,000 in unpaid holiday pay, public holiday pay and sick leave.

It is important for employers to keep correct records of days and hours worked and payments made to the employee.  The failure to be able to provide those records means that the ERA can automatically accept employee’s claims for underpayments or non-payment.

Alan Knowsley

Employment Lawyer Wellington

$73,000 in penalties after injury to employee…

An employer was ordered to pay $33,000 by way of a fine and $40,000 in reparation by the Dunedin District Court after an employee was hit on the head by a piece of machinery.

The Court found that the handle of the winch shaft could be dislodged and that there was no automatic brake system to stop the ramp from being lowered accidentally.

The ramp came down hitting a truck driver on the head and resulted in him being off work for nine months and suffering a fractured skull plus lifelong vision and hearing difficulties.

Worksafe’s prosecution was on the basis that the winch should have been fitted with an automatic brake to prevent unwinding.  This would have prevented the ramp falling and hitting the truck driver.

It is important that all machinery is safe and that all reasonable precautions are taken to ensure the machinery cannot injure anyone else.  Employers should assess all machinery and obtain expert assistance, for example from an engineer to assess the machinery and to put in place safety measures so that people are not injured.

Alan Knowsley

Employment Lawyer

Wellington

Unjustified dismissal after four days…

The Employment Relations Authority has upheld a claim for unjustified dismissal of an employee who was employed for a total of four days.

The employer tried to rely on a 90 day trial clause but the ERA held that the clause was not valid. 

The employee started work on 12 March but was not given and did not sign an employment agreement incorporating the 90 day trial until 15 March.  He was then dismissed on the following day.  The ERA held that because he was an employee before he signed his employment agreement incorporating the trial provision, the trial provision was therefore invalid.

The employee was awarded $10,500 lost wages and $8,000 compensation for hurt and humiliation.

From 6 May 2019 only employers with less than 20 employees can rely on a 90 day trial provision.  It pays to take advice before you act on any provision to ensure that it was valid before you rely upon it.

Alan Knowsley

Employment Lawyer Wellington

Disrespectful behaviour leads to constructive dismissal…

The Employment Relations Authority has upheld a claim for constructive dismissal after an employee resigned following disrespectful behaviour by her employer.  The employee alleged that it included sexual harassment and other rude behaviour.  The ERA did not accept the claims of sexual harassment, but upheld the allegations of rude and disrespectful conduct towards the employee.

The Employment Relations Authority held that this behaviour was unacceptable and in breach of the duty of good faith, because the comments made to the employee were derogatory and abusive and were done in front of others.  The ERA found that although the employee tolerated this unacceptable and distasteful behaviour at first, she should not have had to endure such behaviour.

The ERA awarded $4,800 in lost wages and $15,000 compensation for hurt and humiliation.

In addition the employer was fined $2,000 for failure to provide an employment agreement and failing to provide wage and time records when requested.  $1,000 of that penalty was to be paid to the employee.

Alan Knowsley

Employment Lawyer Wellington

Altercation leads to unjustified dismissal…

The Employment Relations Authority has upheld a claim for unjustified dismissal from an employee who the employer claimed resigned, but the employee believed they had been fired after being told to go from the workplace after an altercation.

The employee made it clear to the employer that they had not resigned, but the employer sought to rely on the employee’s actions of leaving the workplace after telling the employer that he did not need to put up with their behaviour and he was “outa here”.  The actual language used by the employee was somewhat more colourful.  The employer responded with similarly colourful language.

The Employment Relations Authority held that the employer should not have tried to rely on an ambiguous statement from the employee and should have clarified with him the position.  Telling the employee to go and sending him away from the workplace was an unjustified dismissal.

The employee was awarded three months wages and $10,000 compensation for hurt and humiliation.

If an employee, in the heat of the moment, does resign or says they are leaving the workplace, then the employer should, after a cooling down period, make enquiries with the employee to ascertain whether they have really intended to resign. They should give them an opportunity to return if the resignation was just made in the heat of the moment with no real intent to resign.

Alan Knowsley

Employment Lawyer Wellington

Employee awarded $9,000 for one day’s work …

In a recent case the Employment Relations Authority ordered an employer to pay $9,000 to a woman who worked for one day as a trial period, without pay.

Following an interview, the woman was invited to undergo a trial period. However, after completing the work she was told that all of her work was part of an unpaid trial. The employer said that it did not consider her an employee as she had only completed one day of work, and that they did not pay for people to undertake trial days.

The ERA considered the woman to be an employee, even though the parties had not yet signed an employment agreement. The woman was awarded $9,000 which included payment of a four week notice period.

Employers may ask prospective employees to undertake a workplace trial. However, if an employee undertakes a full day’s work, or contributes to the commercial activities of the business, then he or she may be considered an employee, regardless of whether or not the parties have signed an employment agreement or have reached an agreement about performing an unpaid work trial.

Ben Ruback

Employment Lawyer

Employees must be paid for their availability if they may be required to work any additional hours...

A recent Employment Court case considered whether an employer could require its employees to be available for work, over and above their usual hours of work.  The answer was, “Yes”, but only if the employees are paid to make themselves available. 

In this case the employee’s contract specified the employee’s usual hours of work, and also stated that employee may be required to work reasonable overtime.  The clause did not mention that employee would be paid for the additional hours. 

The Employment Relations Act makes it clear that employees may refuse any additional hours of work, without being treated adversely, if their contract does not contain a valid availability clause.  A valid availability clause must specify (amongst other things) how the employee will be paid for being available. 

One of the arguments that the employer made was that the employee’s salary already incorporated reasonable compensation for availability.

The Court disagreed, and said that the contract did not provide reasonable compensation for availability, merely because the employee was already being paid a salary.  Employees are therefore able to refuse additional hours of work.

Employers would be wise to ensure that if they require employees to be available, over and above their usual hours of work, the employment contact in place complies with the law. 

Employees who are required by their employers to work extra hours should check that there is a valid availability clause in their contract, or they may refuse to work extra hours, without being treated adversely. 

Jaenine Badenhorst

Employment Lawyer