26.09.2019

Ending Employment – Process is Key!

Even when employment has lasted for a very short time, an employer is still required to follow the law, and the consequences of failing to comply can end up being very significant.  So it was for a Christchurch employer which found itself on the wrong side of an Employment Relations Authority award of $26,500, after dismissing an employee after just a week of employment.

In May 2018, Adam Baxter offered Jerome Holwood a job, paying him $25 per hour to help across Mr Baxter’s various business ventures.  Mr Holwood was initially reluctant as he already had a job and was about to go on holiday.  However, he eventually decided to take the job.  The employment relationship didn’t start well (from a legal perspective) as Mr Holwood was not given a written employment agreement.  Mr Holwood worked for two days, then took a pre-arranged holiday that Mr Baxter had agreed to, before working for another five days.

Mr Holwood then texted Mr Baxter to say he was sick, and would not be coming to work the next day.  Mr Baxter replied by text “Okay mate.  I am going to take over your position mate sorry it’s not worked out the place is on its last legs and I need to get involved full-time now I will sort your pay out on Wednesday”.  He duly paid Mr Holwood his final pay, and the employment relationship was over, a mere seven working days after it had begun.

Mr Holwood raised a personal grievance, alleging that he had been unjustifiability dismissed, and filed a claim with the Employment Relations Authority.  While Mr Baxter initially indicated that he would defend the grievance, he didn’t turn up to the Authority investigation.  In his absence, the Authority member considered whether Mr Baxter’s actions were what a fair and reasonable employer could have done in all the circumstances, and found that:

“… there is no evidence of any process being undertaken by Mr Baxter before effecting his dismissal, let alone one that would satisfy the requirements of s 103A of the Act.

 I further agree with Mr Holwood that he: 

  • was not put on notice by Mr Baxter that his job was in jeopardy;
  • was not provided with any allegations (assuming such existed and there is no evidence to suggest they did) warranting his dismissal;
  • was not provided with any tangible information about Mr Baxter’s business ventures being on their “last legs” (other than, perhaps, a perfunctory and grammatically bereft text message); the effect that such “last legs”, whatever this actually means, might have on the future of his employment; and
  • was not given an opportunity to answer or comment on any of the forgoing.”

In other words, the employer failed at every hurdle, and there had been no process whatsoever.  It was not even clear why exactly Mr Holwood had been dismissed, except for the vague explanation of the business being on ‘its last legs’.  As a result, the dismissal was unjustified.

Mr Holwood gave evidence that he had been “degraded, demeaned and diminished” as a result of his unjustified dismissal, and found it particularly humiliating to have to go back to his previous employer and beg for his job back.  The Authority awarded $15,000 compensation for injury to feelings, together with $5,000 lost wages (the wages that Mr Holwood lost before he was able to get his previous job back) and a contribution to Mr Holwood’s costs in the sum of $4,500.  The Authority also awarded a penalty of $2,000 for the failure to provide a written employment agreement, and ordered the penalty to be paid to Mr Holwood.

What have we learned?

The case illustrates the significant damages that an employer can face when it neglects its basic employment law obligations.  In this case, the employer failed on just about every aspect of its duty, and the consequences were significant.  It is trite but true that a little advice early on can save a whole lot of time and cost down the track.

If you need help with employment processes, please get in touch early – we can steer you in the right direction, and help you avoid a costly employment disaster.

If you want to improve your skills and learn real-world techniques to deal with difficult employees, Hesketh Henry is running its final workshop of the year, on the Disciplinary Process.  Click here to register.

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Contact the expert team at Hesketh Henry.
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