No Compensation for Unjustifiably Dismissed Employees

About the Author:

John Shingleton

Managing Director at First Law Limited
John is managing director of First Law Limited, a firm that advises clients nationwide, and an expert in all facets of business law. He regularly contributes to a number of publications.

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In a case just come to light, a couple by the name of Daniel and Loretta Smith were successful in proving that their employer, Stuart Muir, had unjustifiably dismissed them due to relying on a defective 90- day trial clause and conducting an unfair process, but were awarded no damages pursuant to Section 124 of the Employment Relations Act 2000, due to “disgraceful and egregious conduct”.

S 124 of the Employment Relations Act 2000 is a great piece of legislation as it directs the Employment Relations Authority to reduce any remedy to an employee who has successfully proven a personal grievance, if their contribution to the situation that has given rise to their personal grievance warrants such a reduction.

In this case, the Authority member concluded that amongst other things, the employees must have delayed signing their employment agreement to ensure the 90 days trial period was invalid. What also interested me was the comment by the Authority member that even if she was wrong with this conclusion, under the obligations of good faith, the employees had an obligation to communicate to the employer that he was wrongly assuming the 90-trial period was valid. By intentionally not telling him the 90-trial period was invalid, they induced the employer into believing that he could terminate their employment in reliance of the 90-day clause.

These employees also lied about their CV. The Authority determined that this enabled them to obtain a job they would have otherwise not been employed to undertake. That the Authority considered was disgraceful behaviour.

This is an unusual case in that the Employment Relations Authority rarely reduces remedies by 100%. More often, we will see reductions ranging from 20% to 80 or 90%.

John Shingleton
Barrister & Solicitor 
Managing Director 
First Law Limited 
Ph 03 354 8224
www.firstlaw.co.nz

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