The Employment Relations Authority has upheld a personal grievance for unjustified dismissal following the redundancy of the business owner’s wife.  There were two owners of the business and the wife of one of them also worked in the business.  A meeting was held between all three at which the other owner alleged that a settlement had been reached with a payment of $30,000 to the other owner and his wife for all pay, holiday pay and redundancy notice.  No record was kept of that meeting, nor any settlement agreement signed by the parties.

The other owner and his wife both deny that the $30,000 payment (which was made) was in relation to the wife. 

The Employment Relations Authority held that as there was no signed agreement and no proof that the wife had agreed to receive such a payment in settlement of her claims, she was entitled to compensation as no proper redundancy process was carried out.  She was awarded $11,781 lost wages and $5,437 for unpaid notice.  She was also awarded $7,140 holiday pay.  Interest on the holiday pay and unpaid notice was also ordered to be paid.

The ERA declined to award her any unpaid wages for the period she was employed.  The wife had alleged that, although the books showed she had been paid in each pay period, she had in fact never received any pay.  The ERA said that she had failed to prove that claim as the books clearly showed payments to her.  She was also not entitled to any compensation for hurt and humiliation in relation to the poor redundancy process as she was intimately involved in the running of the business and was well aware that it was in financial trouble and likely to close.

As the settlement agreement between the two owners involved the transfer of all shares from one owner to the other, the owner who bought the shares is responsible for payment of all of these payments to the other former owner’s wife.

A failure to document the settlement agreement reached has cost the second owner dearly in this case.

Alan Knowsley
Employment Lawyer