Issue 149
Leevey v Newmarket Guard Services Ltd—Employment Relations Authority, Auckland, January 2010. Claim for unjustified dismissal—unsuccessful.
When an employee threatens a supervisor, even if provoked, dismissal may well be justifiable, according to this Employment Relations Authority determination. The employee was a security officer. He fell out with his supervisor when, after asking what he would be doing at a particular client’s site, the supervisor replied that the employee would do whatever he “f**king” told him to do.
There followed a conversation, which was recorded on a mobile CCTV device worn by the supervisor. The employee said “don’t talk to f**king people like that or you will get a f**ken hit, got it?” When asked by the supervisor whether he was threatening him, the employee replied “Did I f**king stutter? You have to apologise mate. I want a written apology”. The incident ended with the employee’s refusal to work at the client’s premises.
The supervisor made a complaint and the employee was suspended without consultation while an investigation was carried out. At the end of the process, he was dismissed for serious misconduct for failing to comply with a reasonable instruction, using threatening language, and using foul and abusive language.
The Employment Relations Authority noted that the question was what allowance, if any, a fair and reasonable employer should make when a more senior employee has possibly provoked misconduct by swearing, in breach of the company’s rules. It determined that, in this case, it was fair and reasonable for the employer to see the unmistakable threat to physically strike the supervisor as a distinctly higher level of misconduct than the supervisor’s swearing.
The Authority concluded that the dismissal was justified, as was the decision to suspend the employee (on pay) without consultation, given the allegation he had threatened his supervisor and disobeyed instructions. Even if the employee had had a sustainable personal grievance, his contribution would most likely have resulted in minimal or nil remedies.
Harrod v BP (NZ) Ltd—Employment Relations Authority, Wellington, February 2010. Claim of unjustified disadvantage—successful.
Following the policy manual rather than the collective agreement meant the employer’s actions in issuing an employee with a warning for not reporting a work-related injury were an unjustified action.
The employee had been employed as a service station attendant for several years when she consulted her doctor about back pain. The consultation took place while she was on a period of annual leave. The employee told her doctor that she had initially experienced back problems at work some weeks previously, after she had lifted some boxes. The doctor diagnosed the injury as work-related and signed the employee off work for a period of days.
The collective agreement contained a clause that stated if an the employer had concerns about an employee’s ability to do their job safely, the employer could request the employee to see a medical professional nominated by the employer. If the employee did not agree, the employee’s medical professional would be used.
The employer instructed the employee to see the company doctor, and tried to insist by using the sick leave clause in the collective agreement, that stated “… sick leave may be used for a non-work accident… The employer may require an additional medical certificate at the employer’s expense from a doctor nominated by the employer.”
The union challenged the legitimacy of the employer’s approach, given that the employee’s back injury had been diagnosed as being work-related. The employer then allowed her to return to work.
However, the matter didn’t end there. The employer took disciplinary action against the employee for failing to report her injury at the time. In relation to reporting injuries, the collective agreement stated that “Employees shall ensure that all accidents, injuries and incidents are reported to either their immediate superior or a designated person as soon as practicable but no later than the end of the employee’s working day”.
The employee explained that she thought that she was only required to report an injury if it affected her ability to do her job, and her back injury had not done so for about five weeks. The manager stated that for an injury to be work-related, it required an event that happened at a specific time. The outcome was that the employee was issued with a first written warning, to remain on her file for a year. She refused to accept the warning and raised a personal grievance of unjustified disadvantage.
The Employment Relations Authority observed that the employer had not acted in line with the collective agreement, which provided that the employee’s medical practitioner was to be used if the employee did not agree to the use of the company doctor. The most likely reason for this was that the company was working off its own internal policy manuals, which required clearance from the company doctor. The Authority stated that there was no doubt that the collective agreement must be followed in preference to any of the employer’s policy manuals.
In relation to the manager’s opinion that for an injury to be work-related it must arise from a single event, the Authority stated that this approach was not correct, given the ability for ACC coverage for gradual process injuries.
The Authority said that an important factor for a fair and reasonable employer to take into account if an employee refuses to follow the terms of the employment agreement is the employee’s intent. It was clear that the employee had misunderstood what she was required to do under the agreement. If the employer wished to conduct its business so that employees were required to fill in the accident register every time they felt a back twinge, then it was within its rights to do so. However, it would need to make it very clear to employees that this was the case before issuing disciplinary proceedings.
The Authority determined that the warning was unjustified in the circumstances, and the employee was entitled to $2000 compensation.
McClutchie v Parore t/a The Thirsty Dog Bar and Café—Employment Relations Authority, Wellington, January 2010. Claim for unjustified dismissal—successful.
The terms ‘trial period’ and ‘probationary period’ are synonymous, according to the Employment Relations Authority, but either way, they start on the first day of the employee’s employment.
The employee started working at the bar on 6 April 2009. On 12 May 2009, the parties signed an employment agreement that included a probationary period clause. The clause stated that her employment would be reviewed within one month, that she would be given the opportunity to respond if her performance was unsatisfactory, and that she would be given one week’s notice before the performance review of any improvements that were needed.
On 1 June 2009, the employee phoned the owner of the bar to discuss her hours of work and was told that she was being let go. The owner made reference to the “National Government’s 90-day trial period” and later relied on this to deny the employee’s right to raise a personal grievance claim for unjustified dismissal.
The Employment Relations Authority noted that while the employee’s employment agreement referred to a “probationary period” and section 67A of the Employment Relations Act 2000 refers to a “trial period”, nothing swings on the different terms “as the two terms are clearly synonymous”.
The Authority determined, however, that the trial period began on the day when the employee first started working for the employer, not when the employment agreement was signed over a month later. Section 67A provides for employment agreements to contain a written provision for a trial period of up to 90-days “starting at the beginning of the employee’s employment”.
The Authority stated that it would be unfair to permit a breach of the Act (the employer failed to provide a copy of the intended employment agreement before employment commenced, in breach of section 63), while allowing the employer the benefit in another area. The employee was not barred from bringing a personal grievance.
The Authority concluded that the dismissal was unjustified because the employee was given neither warning nor any opportunity to respond, in breach of her employment agreement. She was entitled to lost wages and $2000 compensation for hurt and humiliation.
Wagg and Harcombe Ltd v Pike—Employment Relations Authority, Wellington, February 2010. Claim for damages—unsuccessful
The Employment Relations Authority rejected the employer’s claim for damages in this case because the employee had not been sufficiently informed about procedures.
The employee managed a service station. A regular customer to the service station, Mr L, often used his BP fuel card. The card stated “Fuel and oil only”, but the manager and two of her colleagues allowed him to use it to purchase other items, such as fuel vouchers. The terms of the fuel card were confidential between Mr L and BP. Neither the employee nor the company were aware of them.
It turned out that the use of the fuel card attracted a 25% discount from BP and its use for purchases other than fuel and oil was against the terms and conditions of the card. BP required the company to repay the shortfall, around $14,000, for the purchases that Mr L had made outside the terms and conditions of his fuel card.
The company tried to recover the money from the employee and her colleagues, claiming that they had acted in bad faith and in breach of their employment agreements by allowing Mr L to make non-fuel or oil purchases on his BP card.
The Authority noted that for an employer to successfully claim damages from an employee, case law dictated that the loss must be a consequence of a breach and be reasonably foreseeable as a serious possibility. It stated:
“Because errors and inefficiencies in workplaces are common place, and because of the good faith obligations set out at section 4 of the Employment Relations Act 2000 (in particular sub-section (1A) (b)), it follows that the application of this test must be in circumstances where duties, and the recoverability of loss, are fairly and reasonably spelt out and accepted by parties to an employment relationship.”
In this case, the employees had not been sufficiently informed about the proper use of fuel cards. The employment agreement, position description and employee handbook were silent on the use of fuel cards. The company had not issued written guidelines or requirements about the use of fuel cards, and there were no meetings where staff were instructed in the use of fuel cards.
The Authority did not accept the company’s claim that the words “Fuel and oil only” on the card amounted to an instruction or duty. It was the company’s responsibility to clearly address, and communicate its requirements in respect of, the issue of non-fuel and oil purchases.
Even if the employee had breached her duty to the company, the Authority determined that the loss was not reasonably foreseeable as a serious possibility. This incident was unprecedented for both the employee and the company. The Authority concluded that although the experience had proven “understandably bitter” for the company’s director, it was not fair or reasonable for the company to recover its loss from the employee.
ANZ National Bank Ltd v Hussain—Employment Relations Authority, Auckland, January 2010. Claim for damages—successful.
The Employment Relations Authority has accepted an employer’s substantial claim for losses suffered as a result of an employee not doing his job properly.
The employee in question was a mobile mortgage manager who worked for the bank. A routine audit identified some discrepancies in his paperwork. When the bank initiated a disciplinary investigation, the employee resigned and did not participate.
Further investigation revealed that a number of transactions that the employee had brokered had been subject to “property price hydraulic fraud”. The fraud would only come to light when the borrower defaulted on the mortgage, and the bank had to sell the property at a much lower market value than the (false or altered) valuation report. By this time, the perpetrators would have disappeared with the money.
The investigation found significant inadequacies in the documentation handled by the employee. He had gone against the bank’s credit policy by failing to verify valuation reports, even those that had obviously been altered, or verify customers’ employment details.
The bank applied to the Employment Relations Authority for an order for the employee to pay penalties for breaching his terms of employment and to declare him liable to pay damages for the losses incurred.
At the time of the determination, the bank’s losses stood at around $3.5 million, although this figure was liable to change pending the result of legal action and a claim through the bank’s insurance, which had a $1 million excess.
The Authority accepted that the employee had repeatedly breached the requirements of the bank’s credit policy. A mobile mortgage manager diligently carrying out his or her duties would have checked with the named registered valuer that they had provided the report for the property, and would have contacted the named employers.
The Authority accepted that the employee’s breaches had caused the losses and that it was clear that failing to check documentation properly created a real risk of loss to the bank. The prospect of the losses was “readily apparent to any person of reasonable intelligence”.
The claim of damages was put aside for further inquiry. In terms of penalties, the bank had established breaches in respect of 18 transactions. As the employee’s conduct was repeated, it was appropriate to award a penalty for each transaction. He was ordered to pay the bank $3,000 for each breach, totalling $54,000.
—Selected and written
by Louisa Clery
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