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How employers can avoid personal grievance claims

Sunday 16 June 2013, 1:36PM

By Employment Law Experts Limited

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A recent Weekend Herald article entitled, “You’re fired…but wait, there’s more,” quoted Employment Law Experts extensively.

The article discussed cases like Gostmann v Independent Refrigeration and Electrical Ltd where a bogus refrigeration engineer falsified his work history, wrecked customer equipment, and nearly killed a fellow worker. The employer sacked Mr. Gostmann. Despite the very significant issues with the employee, the Employment Relations Authority awarded a large payment to the employee and it even criticised the employer for failing to reference check the employee.

In the case of Mr. X v Independent Liquor, the employee was dismissed for drunken, abusive behaviour at a function attend by Prime Minister John Key. Not only did the employee succeed in obtaining a large payout at the Employment Relations Authority, he had his name suppressed.

To most people these results seem unfair.

Why did the employees win? In both cases there were major procedural errors with the way that the employer handled the employee.

In the Gostmann case, the employee was given the choice to resign or be dismissed. He was dismissed that day. There was a gross procedural failure on the part of the employer and the employer admitted this. The employer failed to consider any of the four factors under section 103A(3): a proper investigation of the issues, raising the concerns with the employee, giving the employee an opportunity to respond, and, considering any explanations made by the employee – before making the decision to dismiss.

In the Mr. X case, the employee was initially suspended, however, the company failed to give the employee details or to consult with him. Even in very serious cases an employee has the right to know what they are being accused of and to have their views considered (even if the views of the employee are then rejected by the employer). When it came to the dismissal, the employee was not given the opportunity to put his case to the decision maker.

What these cases demonstrate is that, even in the most serious black and white instances of bad employee behaviour, the employer must follow the required procedure. If the employer fails to do so, the employee is likely to win a personal grievance claim. Following the correct procedure doesn’t need to be difficult or take long. We believe that if the correct procedure had been followed in the Gostmann and Mr. X cases that the employees could still have been dismissed the same day, but without the risk to the employer.

If we were representing employer clients with employees like Gostmann or Mr. X, we would have taken a different approach. We would have argued that the substantive failings of the employee justified an immediate dismissal as the failures were so serious that the employee had broken the relationship of trust and confidence. In both cases we would also have argued for a much larger contribution to be taken into account. Contribution can be found to be as much as 100% which would mean that, even if the employee won the case on the grounds of the correct procedure not being followed, because their behaviour was sufficiently bad, the amount awarded to them is reduced. If it is reduced by 100% they get nothing. As an example, in the case of Tai v Robinson t/a Coronation Lodge Rest Home 17/3/04, false pre employment declarations were a factor in a contribution of 100% being applied, resulting in the award being reduced to zero. This case had some similarities to the Gostmann case.

We can understand employers’ feelings of frustration when they hear of decisions like this; however, it is important that there are ground rules for the correct procedure that must be followed. If we didn’t have these ground rules many good employees would be dismissed or disadvantaged by bad employers, and they might then have no ability to challenge that decision.

If you are an employee in a situation like Mr. Gostmann, where really bad things have happened, we believe that your best outcome is likely to be a resolution at mediation or by prior direct negotiation. That way the outcome and your actions can be kept confidential. You may also be able to have your dismissal redefined as a resignation, achieve some compensation, and walk away so you can start afresh. Even though Mr. Gostmann took his case to the ERA and won a financial payout, the nature of his actions has caused a large amount of negative  publicity for him. While Mr. Gostmann may have been temporarily better off, it is likely to be difficult for him to find new employment and in that situation it wouldn’t be long before the value of the payout was eaten up by a prolonged period of unemployment. We doubt if Mr. Gostmann is really the winner from having taken his case to the public forum that is the Employment Relations Authority.

If you are an employee who has been dismissed or disadvantaged through little, or no, fault of your own, our comments about the ERA don’t apply and you should not need to fear publicity, however, what is important is that your case is fully analysed at the start so that the overall tactics and strategy adopted are directed at achieving an optimal outcome for you, based on the facts of the case and the legal realities.

Please don’t hesitate to contact us if you are an employer or an employee and you have a case or any questions.