Simple Errors in Dealing with Staff can Result in Huge Fines and Awards

Employers continue to get themselves into avoidable difficulties by not following good systems when it comes to employee records and handling disciplinary matters.

Alan Knowsley from Rainey Collins Lawyers has identified three recent cases that serve as good examples of regular employer mistakes.

In the first example the Employment Relations Authority has ordered an employer to pay an employee over $31,000 after unjustifiably disadvantaging and dismissing him. The employer asked the employee to come into his office. During the meeting, the employer said he had been watching the employee through security cameras. The employer was concerned about the employee’s conduct and performance. The employer suspended the employee, telling him to sort himself out. The same evening, the employer sent the employee an email stating that he should think about his future and role in the company.  The employee called the employer to discuss the email, but was told to look for another job.

The Authority held that the employee was unjustifiably disadvantaged by the suspension. There were no grounds raised by the employer at the meeting that warranted suspension.  Additionally, the employer was held to have unjustifiably dismissed the employee over the phone by telling him to search for a new job. The Authority explained that there was no attempt at a fair procedure, so the dismissal was unjustified.

The Authority ordered the employer to pay the employee $16,806 in lost wages and $15,000 in compensation for humiliation, loss of dignity, and injury to feelings.

In the second case the Employment Relations Authority has ordered an employer to pay an employee over $21,000 for unjustified dismissal. The employee took leave to attend a family gathering. She requested a further week of leave, but that request was declined. However she did not return to work when expected. A later date was agreed, but the employee did not return on that day either.  The employee returned to work several days later and requested to speak with the employer. After the meeting, the employee sent the employer an email detailing her understanding of what had been discussed. This included that new staff were hired to replace her, and that she had abandoned her employment. The employer never replied to the email.  The employee assumed she no longer had a job, and immediately began searching for new employment to try and secure an income. The employee found work doing odd jobs, but did not find secure employment for several months.  A month after leaving the employer, and having received no response to her email or follow up message, the employee raised a personal grievance for unjustified dismissal.

The Authority held that despite the employer arguing that the employee had not been dismissed at the meeting, failing to reply to the employee’s email had that effect. It explained that by failing to reply to the email in a reasonable time, the employer allowed the employee to believe she had been dismissed.

It is important for employers to be open and responsive to all communications with their employees and follow the correct processes for addressing performance, disciplinary, or redundancy matters. A failure to do so may result in misunderstandings and potentially expensive grievances.

In the third example the Employment Relations Authority has ordered an employer to pay over $99,000 following a labour inspector’s investigation that found several breaches to employee’s minimum entitlements.

During the investigation, the labour inspector found that the employer failed to pay the minimum wage, holiday pay, keep appropriate wage, time, holiday, and leave records, and made unlawful deductions from an employee’s wages.  The employer accepted the breaches and repaid the employees over $55,000. However, the Authority explained a penalty was necessary in order to punish the employer and deter other employers from breaching minimum employment entitlements.  The Authority ordered the business to pay a penalty of $66,150. Additionally, the director of the company was ordered to personally pay a penalty of $33,075.  The employer attributed the breaches to not having adequate systems in place to manage wages and records. If the employer had invested in the appropriate systems up front, it could have avoided the entire incident.

Failure to meet minimum employment standards is taken seriously by labour inspectors, and may result in expensive penalties.

All of these examples and most of the cases we deal with or are reported from the ERA could be avoided by employers adopting good systems to deal with employment issues. If you would like a copy of our free guides on handling discipline, performance, long term sickness or redundancy please email me on aknowsley@raineycollins.co.nz

Alan Knowsley
Rainey Collins Lawyers
0800 733 424

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