Cases of interest: October 2023

AJY v The Chief Executive of the Department of Corrections [2023] NZEmpC 168

Employment Court – Personal grievance – Unjustified disadvantage – Remedies

Employment Court – Personal grievance – Unjustified dismissal – Serious misconduct – Remedies

At issue was whether the employer:

• unjustifiably disadvantaged the employee
• unjustifiably dismissed the employee for serious misconduct.

If so, what remedies should the Employment Court (Court) award to the employee.

The employee was employed as a Corrections Officer based in the prosecutions team at a prison (Prosecutions). The employee filed a formal complaint against a co-worker’s bullying behaviour. The employer did not follow up the complaint. The employee went onto sick leave after raising the issue of their high stress level.

The employer removed the employee’s access to Prosecutions’ office and computer systems. When the employee returned to work, the employer moved the employee to the Gatehouse. This resulted in a substantial change of the employee’s job description. The employer scheduled meetings to discuss the employee’s return to Prosecutions, but they never took place. Meanwhile, the employee raised a personal grievance because the complaint was not progressed.

Following a period of illness, the employee returned to work, and the employment relationship further deteriorated. The employer alleged the employee was accessing prisoners’ private records without legitimate reasons. CCTV footage also captured the employee photocopying prisoners’ information. Later, a Visiting Justice complained the employee gave her documents containing photocopied pages of prisoners’ information at the Gatehouse.

The employer launched an employment investigation. During the investigation, the employee’s lawyer provided medical evidence, including a psychiatric report. The lawyer asked the employer to consider the employee’s mental health as part of the investigation. The employer did not consider this relevant and found the employee’s actions were serious misconduct. The employee was ultimately dismissed after 18 years of service.

The Court held:

• the employer unjustifiably disadvantaged the employee (see paragraphs 96, 111)
• the dismissal of the employee was “both procedurally and substantively unjustified” (see paragraph 219).

The Court found:

• The employer did not comply with the procedures prescribed by its policy when handling the employee’s complaint (see paragraphs 87–91, 93–96).
• The employer failed to consult with the employee before relocating them to the Gatehouse. This breached section 4(1A)(c)(external link) of the Employment Relations Act 2000 (Act) (see paragraphs 104–107).
• The employee felt distressed and humiliated because the employer removed their access to Prosecutions’ office and computer systems (see paragraphs 109–111).
• There were numerous defects during the employer’s investigation. When considering these defects together, they were “not minor” and the employee was “treated unfairly” (see paragraphs 216, 219).
• The employer’s decision was “not one that a fair and reasonable employer could have made in the circumstances” (see paragraph 219).

The Court awarded the employee the following monetary remedies without any reduction for contribution (see paragraphs 226, 241, 244, 267):

• 9 months of lost remuneration
• $40,000 compensation
• additional compensation for lost benefits.

The Court declined to reinstate the employee because the employment relationship had been “too significantly damaged” (see paragraph 231).

AJY v The Chief Executive of the Department of Corrections [2023] NZEmpC 168(external link)

Pyne v Invacare New Zealand Ltd [2023] NZEmpC 179

Employment Court – Non-de novo challenge – Quantum of Remedies

Employment Court – Breach of good faith – Penalty – Compensation

At issue was:

• What quantum of the remedies the Court should award for unjustified dismissal.
• Should the Court impose a penalty on the employer for breach of good faith, in circumstances where the employee was awarded compensation for personal grievance in relation to the same facts. If so, what should the amount of the penalty be.

The employee commenced his role as rentals business operations manager with the employer on a fixed-term agreement. The employee made political comments during a social occasion, which led to a complaint against him. The complaint was resolved after the employee apologised to his manager (Manager) and the complaining staff member (Complainant). The employee’s role was later made permanent.

The General Manager of the employer (General Manager) received a workplace culture report (Report) based on an earlier investigation of the employee’s workplace. The Report raised issues about the employee. The content of the Report was based on interviews with the Manager, the Complainant, and the HR manager. The investigator never sought the employee’s input.

The employer undertook a restructure amid dissatisfaction among other managers with the employee’s performance. The General Manager informed the employee about the proposal to disestablish the employee’s role and the concerns raised in the Report. Once the employee’s role was disestablished, the General Manager asked the employee to apply for an alternative role. The General Manager did not attend the employee’s interview. The other interviewer simply engaged in small talk with the employee before closing the meeting. The General Manager later dismissed the employee for redundancy, based on the interviewer’s feedback.

The Employment Relations Authority (Authority) found the dismissal was unjustified as a result of the flawed process. It awarded 3 months of lost remuneration and $8,500 compensation, after a 15% reduction for contribution (see paragraph 49). The Authority said no penalty was necessary for the breach of good faith because the employer’s shortcomings were addressed by the compensation award (see paragraph 53).

The employee then lodged a non-de novo challenge in the Court on the quantum of the remedies awarded. He also sought a penalty for the employer’s breach of good faith.

The Court explained the different purposes that compensation and penalties served. It said:

• The purpose of compensation was to compensate an employee for harm, whereas penalties were to penalise the defaulting party. Penalties were, “by default, paid to the Crown” (see paragraph 54).
• “Blurring” penalties into compensation risked "obfuscation and a dilution of the penalty provisions which Parliament notably strengthened in 2004" (see paragraph 54).
• Where a breach of good faith was “deliberate, serious and sustained” or otherwise met the statutory test in section 4A(b)(external link) of the Act, a penalty should be awarded (see paragraph 55).

The Court:

• awarded the employee $18,000 in compensation and 6 months of lost remuneration without reduction for contribution (see paragraphs 47, 68–70)
• imposed a penalty of $6,000 on the employer for breaching good faith obligations (see paragraphs 62, 71).

The Court stated the reasons for supporting a higher quantum of remedies:

• The Court’s banding approach supported a higher award for the compensation. Recent compensatory awards showed similar types of consequences suffered by the employee fell “within the lower portion of band 2”. Therefore, the Court would place the employee’s case for compensation at $18,000 (see paragraphs 40, 47).
• The basis of the deduction for contribution fell away because the employee had resolved the issue by apologising to the Complainant. The complaint played no part in the subsequent redundancy process that led to the employee’s dismissal (see paragraphs 50–51).
• The Court awarded more than 3 months lost remuneration because the redundancy was “disruptive personally to [the employee]”. As a result of the dismissal, the employee attended “around 70 interviews” and ultimately moved overseas to secure a new job (see paragraphs 32–34).
• The employer’s conduct had met the statutory threshold for imposing a penalty for breaching the good faith obligations. The breaches were “deliberate”, “occurred over time” and “designed to undermine the employment relationship with [the employee] by bringing it to an end” (see paragraph 61).

The Court also found the employer breached a term of the employment agreement by not making genuine attempts to redeploy the employee. It, however, declined to impose a penalty for this breach (see paragraphs 63–64).

Pyne v Invacare New Zealand Ltd [2023] NZEmpC 179(external link)

Tepania v Haven Falls Funeral Home Ltd [2023] NZERA 587

Employment Relations Authority – 90-day trial period 

Employment Relations Authority – Personal grievance – Unjustified dismissal – Remedies

At issue was:

• Whether the 90-day trial period provision was valid.
• If not, whether the employer’s dismissal of the employee was justified.

The employer operated a funeral home. The employee attended an interview with the employer for the role of funeral director/embalmer. The next day, the employer emailed the employee an unsigned employment agreement with a reference to the trial period provision in the email. The employment agreement (EA) showed the starting date of the employment as being 2 weeks after the date of the email (Starting Date). The employer then went overseas.

The employee attended the employer’s premises on the following Monday and Tuesday to observe the funeral directors team. On the Wednesday morning, the employee asked the employer’s daughter (T) for permission to attend the premises all week. Following a telephone conversation with the employer, T and the employee agreed to backdate the Starting Date to the Monday. T referred to the trial period provision as the pair went over the EA. T double checked that the employee was happy with the terms of the EA. After the employee signed the EA, she dated the signature with the Wednesday’s date at T’s instruction. The employee was subsequently paid for that week.

2 months later, the employer met with the employee to discuss 2 customer complaints. After the meeting, the employer dismissed the employee under the 90-day trial provision.

The Authority determined the 90-day trial provision contained in the IEA was invalid (see paragraph 80) because:

• The employer had employed the employee for “more than 2 days” before signing the EA. Therefore, she was “not an employee who had not previously been employed by [the employer]” as required by s 67A(external link) of the Act (see paragraphs 77–79).
• The point at which the employee communicated her acceptance of all the terms of EA (including the 90-day trial provision) was on the Wednesday, when she signed the EA (see paragraph 79).

The Authority concluded the employee’s dismissal was unjustified (see paragraph 118). It found “a number of significant procedural defects” in the employer’s process (see paragraphs 113–115). The Authority explained that those defects were “more than minor” and caused the employee to be “treated unfairly” (see paragraph 117).

The Authority awarded the employee $18,000 in compensation, 6 weeks of lost remuneration and holiday pay calculated at the 8% of the 6-week lost remuneration (see paragraphs 122–125, 129, 136).

Tepania v Haven Falls Funeral Hom Ltd [2023] NZERA 587(external link)