Employment Relations Authority Finds Employer Acted Unlawfully by Ceasing Employee’s Pay Over Lockdown and Attempting to Impose a Casual Employment on a Permanent Employee

 

The Employment Relations Authority has awarded $25,000 in compensation, lost wages and costs to an employee of a Nelson moving company for being unjustifiably dismissed from, and disadvantaged in, his employment.

The company without notice or agreement ceased the employee’s wages during lockdown, despite the fact it had obtained the COVID-19 wage subsidy in respect of the employee. The company then attempted to impose a casual employment agreement on the employee 6 months after employment had commenced stating the employee was unable to return to work unless he signed it. The employer cited insurance reasons for this position but the Authority found that to be misleading.

The company was found to have dismissed the employee, which was unjustified because the casual agreement contradicted the real nature of the relationship (one of permanent employment) and its actions irreparably breached the implied obligation of trust and confidence. The Authority found the employer should have considered the real nature of the relationship before insisting on a casual agreement and could have suggested the parties attend a mediation given the impasse.

In finding that the employee was a permanent, rather than casual, employee the Authority was influenced by the fact the payslips demonstrated a pattern of regular work, the company had declared the employee a “full time” worker when it applied for the wage subsidy and there was no agreed written employment agreement in place. That the employee was paid holiday pay on a “pay as you go” basis (as fixed term and casual employees can be) was not enough to establish a casual employment relationship. That the employer attempted to impose and backdate a casual employment also did little assist its position. Notably the company failed to engage in the Authority’s process.

The case contains a number of important reminder for employers:

  1. It is unlawful to unilaterally cease an employee’s pay without prior agreement if the employee is capable of working and not on unpaid leave.
  2. It is crucial that a written employment agreement is in place from the outset of the employment relationship.
  3. It is unlawful to exclude an employee from the workplace if they do not sign an employment agreement when that agreement is not reflective of the relationship in practice and is imposed well after its commencement.
  4. It is critical that an employer understands the difference between casual, fixed and permanent employment relationships and ensures that how the employment relationship operates in practice aligns with the intended nature of the relationship.
  5. As a respondent to proceedings in the Employment Relations Authority it is vital that the employer engages in the process and preferably obtains legal representation. Arguably the company could have been much better off if it had done so.