Employer ordered to pay $200,000 redundancy…

The Employment Relations Authority has ordered an employer to pay an ex-employee their agreed $200,000 redundancy payment.

The employer and employee agreed on a $200,000 redundancy payment as part of a settlement. In the settlement, the employee agreed not to make any disparaging remarks about the employer.

The employee was holidaying when he encountered the company’s Financial Controller. The employee made a comment to the Controller about how it was a shame that litigation was currently in progress. When the Controller asked for details, the employee referred them to their manager.

When the comment was raised with the employer, the employer decided it was disparaging, and would not pay out the redundancy payment because of the alleged breach of the non-disparagement clause in the settlement.

The Authority disagreed with the employer and held that no breach had occurred. Although it considered making the comment was a poor choice, it was factual and did not meet the definition of being disparaging.

It was also made to the person responsible for providing payments under the settlement and he was aware that the employee had left the company. The Authority ordered the employer to adhere to the settlement.

The employer will also face a costs award for the employee’s cost, on top of the costs paid to defend itself.

It is important to understand what your rights are under a settlement agreement and when to enforce them, otherwise costly mistakes can occur.

If you think that either your employer or employee has failed to comply with the terms of a settlement, it pays to consult a professional experienced in the area.




Alan Knowsley
Employment Lawyer
Wellington