Refrigerator Engineer Awarded $15,000 and 3 months wages by Employment Relations Authority

 

The employer unsuccessfully argued the employee had abandoned his employment following a meeting within which the employee says he was dismissed. In finding that he had not abandoned his employment and was in fact was dismissed during the meeting, the Authority noted the employer had made no arrangements with the employee about when he was expected back to work. Influential to the Authority’s decision was also that when a personal grievance was raised for dismissal, the employer’s response did not object to the claim there had been a dismissal. It is important for employers to know that abandonment is often not a strong argument unless it can show it contacted the employee to clarify whether they have abandoned employment their employment and if not when they will be returning to work. Reasonable steps must be taken by the employer before justifiably reaching the view that employment was abandoned.

The dismissal was found to have been unjustified, primarily because employer failed to consult with the employee before it dismissed him. The company failed to place the employee on notice of the financial issues it was experiencing (meaning it could no longer afford to pay him) and failed to give him an opportunity to seek advice or support, both of which are fundamental to a lawful process.

The Authority awarded the employee three months lost wages and $15,000 in compensation. In declining to award the employee more than 3 months lost wages, the Authority reasoned that the employer might have justifiably dismissed the employee, given its financial situation, if it had followed a fair process and if it had done so the employment would not have continued beyond 3 months. In this situation all the employee needed to do was put the employee on notice of the financial issues, provide evidence to support and give the employee an opportunity to comment and obtain representation before it decided to dismiss for reasons of redundancy.

There is another interesting feature to the case. The employer claimed damages against the employee for breach of contract in relation to damage to the work vehicle and mobile phone caused by the employee’s fault. The requirement to cover any cost of repair was contained within the employer’s “handbook” (its policies and procedures) however the Authority determined the requirement was not enforceable as a breach of contract. This was because the employment agreement contained a completeness clause (that the employment agreement constitutes the entire agreement between the parties) and expressly stated the handbook provisions did not constitute contractual terms of employment. The Authority’s finding highlights the importance of understanding the difference between contractual terms and an employer’s policies. A breach of the later may not be able to be enforced as a breach of contract, but may be used during the employment relationship to pursue for example misconduct and performance issues. If an employer wants to ensure it can seek recovery from one of its employees for deliberate or negligent damage to work property, it ought to that provision in the employment agreement.

If you are interested to read the case for yourself, the reference is Barrett v NRS Refrigeration Ltd [2021] NZERA 56.