Employer ordered to pay $153,300 after yet another avoidable unjustified dismissal of an employee...

The Employment Relations Authority has ordered an employer to pay $153,300 after the unjustified dismissal of one of its employees.

The employee had been working for the company for four months when it announced that it was entering into a joint venture with an Australian company.

The new employer sent a revised employment agreement to the employee, restating all the terms of his existing employment agreement, with just two changes.

The first change was a title change that was not an issue. The second change was a change in his fixed-term end date from 2025 to 2026. The employee believed this to be a typo by the employer, changed the date to 2025, and left an amended version of the employment agreement with his supervisor. This date was of great importance to the employee as he planned to retire in 2025.

After receiving this amended version of the employment agreement, the employer called the employee into his office. He informed the employee that “the professional relationship wasn’t working out” and that he was being dismissed.

The employee was offered a Record of Settlement to sign and was given a day to accept it. In response, the employee raised a personal grievance of unjustified dismissal against the employer.

The Authority first had to determine who the employer of the employee was at time of the dismissal.

It was determined that most of the steps to transfer the employment of the employee to the new employer had been taken, other than the signing of the new employment agreement.

This included transferring his annual leave to the new employer, and the employee continuing to perform his role immediately after the commencement of the joint venture.

It was determined that the employee was employed by the new joint venture at the time of the dismissal, and that the dismissal was unjustified because no fair and reasonable process was followed, and no chance to respond to the dismissal was given.

The employer was ordered to pay:

• more than $104,600 as compensation for lost remuneration,
• $15,000 for his lost car allowance,
• $600 for his loss of phone, laptop, and internet usage,
• $3,100 for lost KiwiSaver contributions,
• $25,000 as compensation for the hurt and humiliation caused by the dismissal and
• $5,000 as a penalty for their breach of employment standards, as their actions were seen to be intentional with a high level of culpability. This penalty was to be paid to the Crown.

If there is confusion around the correct dismissal process of an employee, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.