Cases of interest: July 2021

A summary of interesting or topical employment cases.

Crossen v Yangs House Ltd [2021] NZEmpC 102

Employment Court – Record of settlement – Meaning of “full and final settlement” – Discretion to impose penalty 

At issue was:

  • Whether an employee who signed a record of settlement could still make a claim for unpaid wages and holiday pay.
  • Whether the Authority has discretion over whether to award a penalty for a failure to provide wage and time records forthwith. 

The employee raised a personal grievance with the employer, as well as a claim for unpaid wages and holiday pay.  The parties signed a record of settlement under s 149 (external link) of the Employment Relations Act 2000 (Act). The agreement stated, among other things, that:

  • the employee would receive compensation
  • the parties confirmed that they had not agreed to forego minimum entitlements
  • the record of settlement was a full and final settlement of all matters between the parties arising out of their employment relationship. 

After being paid the agreed compensation, the employee lodged a claim in the Employment Relations Authority (Authority) for unpaid wages and holiday pay. The employee also sought that a penalty be imposed upon the employer for failure to provide wage and time records under s 130 (external link) of the Act. The Authority dismissed the claim and declined to impose a penalty. The employee challenged the Authority’s determination. 

The Employment Court (Court) found that the employee could not bring a claim for unpaid wages and holiday pay (see para 49). The employee argued that minimum standards do not arise from the employment relationship itself (see paras 19–22). The Court found this distinction was artificial (see para 25). The term “all matters” should be given an expansive interpretation (see para 27). The Court observed that Parliament intended for settlements under s 149 to produce finality for parties (see paras 43–45). 

The employee submitted that the Authority was obliged to impose a penalty on an employer who delayed providing wage and time records (see para 58). The Court disagreed.  It found that the word “liable” in s 130(4) means that “an employer in default is exposed to the risk of a penalty”, but the Authority has discretion over whether to impose one (see para 61). 

Crossen v Yangs House Ltd [2021] NZEmpC 102 [PDF, 280KB] (external link)  

Smithson v Wellington College Board of Trustees [2021] NZEmpC 114

Employment Court – Personal grievance – Unjustified actions causing disadvantage – Reinstatement 

At issue was whether the employee was disadvantaged by the unjustifiable actions of her employer.  Also at issue was whether she should be reinstated to her position. 

The employee was a Head of Department at a high school. She had a strained relationship with a staff member in her department. In March 2015, the teachers argued over which of their classes could use the department laptops.   Following the incident, the employee took stress-related sick leave. 

The employer undertook its own investigation into the incident with a view to arranging mediation.  However, the teachers did not attend mediation. The employer then engaged an independent investigator. The investigator made recommendations for the department going forward, but found that “massive change was not necessary” (see para 63). The employee was not happy with the investigator’s recommendations. She remained on long term sick leave.  Over the years, the parties tried to agree to a return-to-work plan. Subsequently the employer questioned whether the parties were incompatible. At the time of the hearing the employee had not returned to the school.

The employee raised three personal grievances with the school on the grounds of unjustifiable actions that caused her disadvantage. The Court assessed what had occurred under the test of justification in s 103A (external link) of the Act (see para 152). The Court dismissed the challenge, finding that:

  • The employer investigated the matter so as to re-establish “a productive and harmonious environment within the department” rather than discipline either teacher (see para 176).
  • The investigator’s report was thorough and independent (see paras 197 and 221).
  • The investigator had given the employee opportunities to give her point of view (see para 204).
  • The employer did not sanction the behaviour of either teacher (see para 209).
  • The employer had not slavishly adhered to the report (see para 210).
  • The employee raised a grievance on the grounds of bullying, but did not provide any particulars other than what had already been said about the incident. It was open to the school to conclude there were “no fresh matters requiring inquiry” (see para 233).
  • The employer was not imposing roadblocks to the employee’s return that amounted to an unjustified suspension, as alleged (see para 239). The school wanted to hold preliminary discussions to agree to a plan before her return, which was “within the range of options which a fair and reasonable employer could take” (see para 263).
  • The employer had acted in good faith and gone to considerable lengths to facilitate a return-to-work (see para 273).
  • Although communications between the parties had at times become legalistic, this was largely due to adversarial communications sent on behalf of the employee (see para 325).
  • Justified terminations on the grounds of incompatibility are rare (see para 291). However, the Court found that in this case allegations of incompatibility were among the steps a fair and reasonable employer could have taken in the circumstances (see para 298). 

The Court had no jurisdiction to order reinstatement as the grievances were not established. The Court advised the parties to proceed in good faith (see para 329). 

Smithson v Wellington College Board of Trustees [2021] NZEmpC 114 [PDF, 580KB] (external link)  

Scott v Vice-Chancellor of the University of Canterbury [2021] NZERA 311

Employment Relations Authority – Personal grievance – Unjustified dismissal – Unjustified actions causing disadvantage – Serious misconduct – Medical incapacity 

At issue was whether the employee was unjustifiably dismissed when her employment ended on the grounds of both serious misconduct and medical incapacity, as well as disadvantaged by the unjustifiable actions of the employer. 

The employee was a lecturer at a university for 18 years, most recently a senior lecturer. She had previously suffered bouts of poor mental health, but had been stable for several years. In 2014 the employee was hospitalised and did not work for several months. The parties agreed to and executed a return-to-work plan. In that plan the employee stated she was willing for the employer to place her on sick leave at their discretion. 

In early 2018 the employee’s husband informed the employer that the employee was experiencing psychotic episodes. The employee denied she was unwell. Although there had been no concerns with her work, the employer placed her on sick leave in reliance on the historic work plan. The employer removed her IT access. Consequently, the employee was unable to work on her courses or research papers. The employer later restored partial IT access, but her previous contacts were never recovered. The employee was medically cleared to gradually return to work but the employer did not allow her to return at that time. The employer issued the employee with a written warning for serious misconduct on the grounds that she had been dishonest about her medication, had hindered a psychiatrist in reporting on her health and breached the work plan. 

The employee was cleared to return to work in early 2019 but was shortly thereafter issued with a final written warning on the grounds of “aggressive and uncooperative” communication with a colleague. As a result of this communication, the employee had discovered the employer was keeping a secret log of her behaviour.  She was removed from teaching. The employer dismissed the employee in May 2019, on the grounds of serious misconduct, medical incapacity and general trust and confidence issues. The employer considered there was a high likelihood of mental health relapse. 

The Authority determined the employee was successful with four personal grievances on the grounds of unjustifiable actions by her employer, and was unjustifiably dismissed. The Authority found that:

  • Employers cannot contract out of the requirement for procedural fairness in s 103A(3) (external link) of the Act. Therefore a fair and reasonable employer should have listened to the employee’s responses and investigated further if necessary before deciding she would be placed on sick leave (see para 52–54).
  • The employer’s failure to adhere to procedural fairness disadvantaged the employee because it made her feel unheard and powerless (see para 57).
  • The employer restricted the employee’s IT access because it was concerned about reputational risk, but offered no evidence of inappropriate email or IT use by the employee (see para 78). The employee was disadvantaged by losing contact details of a network compiled over 18 years, being unable to maintain contact with her research group and losing professional opportunities (see paras 82–83).
  • The employer could not justify its decision to keep the employee on involuntary sick leave once medically cleared to return (see para 104).
  • For a period of less than two weeks the employee misled the employer regarding her use of medication. The Authority found this was an isolated incident during a time when the employee was not having her views taken into account and she apologised for it (see paras 121–124). 
  • The employee was entitled to advise the employer that her then ex-husband was no longer her contact person as her circumstances changed (see para 150). Also, she was not culpably hindering the psychiatrist when she asked him not to speak to her ex-husband (see para 135).
  • In the circumstances, the employee’s sharp email to a colleague did not justify a final warning (see para 176).
  • The employee was entitled to decline to authorise the potential release of all of her medical records to her employer (see para 206).
  • At the time the employer dismissed the employee on the basis of medical incapacity there was medical information available to it that the employee was not mentally unwell (see para 245).
  • The employee was unjustifiably dismissed (see para 264). 

The Authority awarded the employee $54,650 in compensation and exercised its discretion under s 128(3) (external link) of the Act to award lost wages for a period of 65 weeks, totalling $141,921 (see paras 285–286). 

Scott v Vice-Chancellor of the University of Canterbury [2021] NZERA 311 [PDF, 200KB] (external link)

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Page last revised: 12 August 2021

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