Cases of Interest: March 2025

Mutonhori v Wairoa District Council [2025] NZEmpC 44

Employment Court – Personal grievance – Unjustified dismissal – Unjustified disadvantage – Serious misconduct

At issue was whether the employee was unjustifiably disadvantaged and dismissed by the employer.

The employee was a Group Manager with a district council. He had access to a pool car. The council accountant asked the employee to provide details of his pool car use for Fringe Benefit Tax purposes. The employee did not provide the details. He said he was not obliged by his employment agreement to do so. The matter was escalated to the Chief Executive, but the employee continued to refuse. The council was concerned about complying with its taxation and accreditation requirements. The council wrote to the employee raising issues of potential serious misconduct. The employee shared the letter with 12 staff with passages highlighted. The Chief Executive met with the employee and proposed to suspend him. The employee did not give any response. The employer then suspended the employee by email. The employee forwarded that email to staff members, elected council members and the Mayor saying the process had been vexatious and he had been blackmailed and bullied by the Chief Executive. The employee and the Chief Executive met a further time before the employer dismissed the employee on the grounds of serious misconduct.

The Employment Court (Court) found the employee’s suspension, the removal of his responsibility and his dismissal were justifiable in all of the circumstances (see paragraphs 75, 85 and 93). The Court did not accept the employee’s allegations of bias or predeterminism due to a lack of supporting evidence (see paragraphs 90–91). It found that the employee had failed to respond to the employer during the disciplinary process. The Court described his behaviour as “defiant and inappropriate” which “culminated in a loss of trust and confidence in him” (see paragraph 92).

Mutonhori v Wairoa District Council [2025] NZEmpC 44(external link)

Brown v Clinician Holdings Ltd [2025] NZEmpC 48

Employment Court – Employment status – Employee or contractor – Section 6 declaration

At issue was whether the plaintiff was an employee or contractor when the business engaged him on a full-time basis.

The plaintiff was an accountant. He operated a consultancy business. Through that business he provided services to the defendant, a medical information technologies company, as a contractor. For 15 months, he provided Chief Financial Officer (CFO) services for the defendant around 20 hours a month at the rate of $300 per hour. The defendant asked the plaintiff to become its full-time CFO at a lower rate. The parties made a verbal agreement about his package and remuneration.

The parties disagreed over whether the plaintiff became an employee when he started working for the defendant on a full-time basis. The plaintiff understood he had become an employee and emailed the Chief Executive Officer (CEO) with the terms he wanted in his written employment agreement. The CEO did not respond to that email but said he had told the plaintiff verbally that he would remain a contractor. After 10 months the defendant became dissatisfied with the plaintiff’s work and terminated their agreement. The plaintiff sought a declaration under section 6(external link) of the Employment Relations Act 2000 that he was an employee rather than a contractor.

The Court found the plaintiff did become an employee when he worked full-time because:

• There was a “clear break” between the contractor agreement and the plaintiff working for the employer full-time (see paragraph 53).
• Although the plaintiff continued to invoice the defendant during his employment, it was a placeholder arrangement until the verbal agreement between the parties was formalised in writing (see paragraph 55).
• The plaintiff claimed the parties had agreed he would receive a 2 per cent shareholding as part of his package. The defendant denied it had agreed to a shareholding, but also acknowledged it was aware the plaintiff believed that had been agreed and did nothing to dissuade him from that view (see paragraph 62).
• The Court found it was not a credible argument that the plaintiff would close down his consulting business for a significant reduction in income without expecting the security of employment (see paragraph 64).
• There were changes in control between the parties when he began working full-time, such as (see paragraph 79):
  • The plaintiff’s hours of work increased from 5 hours to 50 hours per week.
  • He was expected to be available to attend meetings outside of business hours.
  • He could no longer delegate tasks.
• The plaintiff was largely integrated into the defendant’s business. He was held out as its CFO in its business plan and pitch deck (see paragraphs 85–87).
• Other than the temporary invoicing arrangements, the plaintiff was no longer engaged as a person in business on his own account (see paragraph 99).

The Court declared the plaintiff was an employee (see paragraph 101).(external link)

NZME Publishing Ltd v Ankus [2025] NZERA 145

Employment Relations Authority – Interim injunction – Restraint of trade

At issue was whether the Employment Relations Authority (Authority) would issue an urgent interim injunction preventing the employee from working for a competitor due to the restraint of trade in his employment agreement.

The employee was a Sales Director in online real estate advertising. He had worked for the employer for 12 years. He received an offer of employment from a competitor. He met with his manager and the CEO to discuss whether he would accept the offer. The next day he resigned from his employment. He understood he would be placed on garden leave for the duration of his 2-month notice period. The employee indicated he would start his employment with the competitor 3 months from the date of his resignation. The employer proposed to provide him with work during the garden leave period, but the parties disagreed and the employee never completed any of the proposed work.

The employer asked the Authority to enforce the restraint provisions in his employment agreement which restricted the employee from working for a competitor for a period of 3 months. The employer said the 3-month period should start at the end of the employee’s notice period, and therefore 5 months after he resigned.

The Authority declined to issue the sought interim injunction (see paragraph 51). In making its decision, the Authority considered:

• The employer had raised an arguable question to be tried because the employment agreement did contain a 3-month restraint (see paragraph 28).
• Much of the employer’s general business information was already publicly available. The employer claimed the employee had knowledge of confidential information at a more detailed level, but the Authority agreed with the employee that such information would be considerable and changeable. The employee had already been out of the workplace for 4 months (see paragraph 43).
• The employee was not part of the senior leadership team of the employer and therefore was not likely to have been privy to strategic and planning information (see paragraph 50).
• The question of what the parties had discussed at their meeting would need investigation (see paragraph 45).

The Authority indicated it would further investigate the employer’s claims before making its substantive determination (see paragraph 52).

NZME Publishing Ltd v Ankus [2025] NZERA 145(external link)