Trust ordered to pay $33,027 for unjustified dismissal of employee…

A Trust that undertook large social, conservation, education, and health projects was found to have unjustifiably dismissed its interim general manager.

For over two years the work of the Trust’s general manager was contracted out to a project manager under a contract for services. Due to limited capacity the project manager advised the Trustees that he could not continue doing the work.

The Trust decided to take onboard one of its volunteers as an interim general manager for three months. The Trust assigned him tasks, but did not immediately provide a contract.

The interim general manager (the claimant) worked on the agreed tasks for two weeks but refused to proceed unless he had a contract. He sent the Trustees a draft employment agreement for them to consider. During this time a complaint was made against the claimant for unsatisfactory conduct at a board meeting.

The Trust responded by stating that the earlier motion appointing him as an interim general manager was not valid as the previous project manager had not formally resigned at the time, so no interim general manager position was available.

The claimant brought a claim to the Employment Relations Authority for unjustified dismissal, lost wages, and compensation for hurt and humiliation.

The Trust argued that no employment relationship was created because the previous general manager was working as an independent contractor.

The Authority disagreed. Under employment law, when determining the nature of a relationship, all matters, including the parties’ intentions, their conduct, and any written terms, will be taken into account.

Here, there was no written agreement. But the Authority determined that because the claimant had sent the Trust his own proposed employment agreement, this indicated his understanding of the nature of the relationship. At that time he had not seen the written terms between the Trust and the project manager.

Furthermore, the discussions between the claimant and the Trust indicated that they intended for the claimant to be in a paid role with a set period, and with assigned tasks and objectives.

This indicated a mutual understanding between the claimant and the Trustees that the claimant was carrying out duties as the interim general manager. Therefore, the claimant was an employee of the Trust.

The Authority stated that the Trust did not act as a fair and reasonable employer when faced with the complaint against the claimant. Instead of addressing the concerns through a disciplinary process, the Trust created a technical argument to reverse the decision of hiring the claimant.

The technical argument was based on the incorrect assumption that appointment to an interim role was invalid if the project manager had not formally resigned.

The Trust was ordered by the Authority to pay the claimant $19,527 for wage arrears and lost wages, and $13,500 as compensation for humiliation, loss of dignity and mana.

This decision highlights the importance of not-for-profit organisations to always record the terms of engagement when engaging an individual to carry out tasks for a fee, as well as taking legal advice on the nature of the arrangement to avoid inadvertently being classified as an employer and being liable under employment law.

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