Cases of Interest: September 2025

DBM Medical Ltd (formerly Orthomed New Zealand Ltd) v Gaarkeuken [2025] NZEmpC 209

Employment Court – Personal Grievance– Unjustifiable constructive dismissal – Unjustifiable disadvantage

This case involved a challenge to a determination made by the Employment Relations Authority (the Authority). At issue was whether the actions of the employer meant that the employee’s resignation amounted to a constructive dismissal.

The employee was formerly employed by the employer as a supplier of medical products which they sold to hospitals. The employer raised concerns to the employee regarding the employee’s performance as the employee rarely achieved 50 per cent of their budgeted sales. Hospitals had also raised concerns to the employer regarding the employee’s failure to follow hospital protocols and their knowledge surrounding these protocols.

The employee was invited to a meeting to discuss their performance and the possibility of putting the employee on a performance improvement plan (PIP). The employee took a period of medical leave which led to a further breakdown in communication between the employee and the employer. The employee’s solicitor then notified the employer that the employee tended his resignation effective immediately. The employer sent out an email to the South Island staff advising them of the employee’s resignation and did not directly contact the employee prior to this email. The Authority found that the employee had been unjustifiably constructively dismissed.

The employer submitted that they had understandable concerns regarding the employee’s sales performance which were also shared by the employee. The employer submitted that they were taking steps to work with the employee with the aim of improving their sales performance, and that their actions were not contrary to their aims. The director and the national sales manager of the employer were surprised when the employee resigned and submitted that the employee’s resignation put the employer in a difficult position due to the time it took to find a replacement.

The employee submitted that the following were all unjustifiable actions that caused them disadvantage:

• They were subject to an unsafe work environment.
• The procedure adopted by the employer regarding the potential implementation of the PIP.
• The employer’s lack of response to their resignation.
• The email sent to staff regarding the employee’s resignation.

The challenge to the determination was successful, the Employment Court (Court) set aside the Authority’s determination. The Court found that:

• There was no breach of duty that foreseeably compelled the employee to resign (see paragraph 68).
• The employee’s unhappiness about the prospect of engaging in a PIP and their stress regarding the employer’s unhappiness about their poor sales results did not make the resignation a constructive dismissal (see paragraph 68).
• An employer is entitled to carry out a genuine, frank, and robust performance appraisal of an employee without that being a constructive dismissal (see paragraph 68).
• The actions of the employer did not amount to an unjustifiable disadvantage as the support given to the employee by the employer was appropriate for an employee with the seniority and experience of the employee (see paragraph 71).

DBM Medical Ltd (formerly Orthomed New Zealand Ltd) v Gaarkeuken [2025] NZEmpC 209(external link)

Rural Practice Ltd v Labour Inspector of the Ministry of Business, Innovation and Employment [2025] NZEmpC 198

Employment Court – Challenge to quantum of penalties – Penalties for minimum employment standards breaches

At issue was:

• whether the Employment Relations Authority (the Authority) had made errors of fact or law in imposing penalties on the employer
• whether the penalties imposed by the Authority were excessive.

The employer was found by the Authority to have breached minimum employment standards by: 

• not paying the employees minimum wage
• not paying for certain holiday and leave pay appropriately
• unlawfully deducting money from their wages
• forcing the employees to pay premiums
• not keeping accurate wage and time records.

The Authority ordered the employer to pay penalties of $145,000, and ordered the director and owner of the employer (the second plaintiff) to pay penalties of $70,000.

The employer submitted a claim for a reduction of penalties. The employer submitted that the Authority made errors as:

• The starting point of 85 per cent of the maximum penalty for breaches was too high.
• Reducing the starting point by 10 per cent to recognise the employer’s limited financial capacity was inadequate.
• No further reduction was made to recognise the extenuating and mitigating factors of the employer.
• The penalties imposed did not take into account claims where the employees did not suffer actual financial loss.
• The vulnerability of the employees was overstated by the Authority.
• The employer also submitted that the Authority Member ought to have recused themself due to an apprehension of bias as the Member had previously acted for the Labour Inspectorate.

The Labour Inspector submitted that:

• The issue of recusal was procedural in nature and therefore the Court, under section 179(5)(external link) of the Employment Relations Act 2000, would be prevented from hearing a challenge to the Authority Member’s decision not to recuse themself.
• If the employer was unhappy with the penalties imposed due to a suspicion of bias, the correct remedy would be to file a de novo challenge to the substantive decision to enable the entire matter to be considered by the Court.
• As this was not a de novo challenge, the only question before the Court was whether the Authority made any error of fact or law.
• The factual findings of the Authority supported the level of penalties imposed.

The challenge to penalties was unsuccessful. The Court found:

• The employer had not established that the Authority Member made any error of fact or law in fixing penalties (see paragraph 59).
• The penalties imposed were within the range that were available to the Authority Member (see paragraph 59).
• The level of penalties was proportionate, having regard to the nature of the breaches found by the Authority as well as the financial impact of those breaches on the employees (see paragraph 58).

Rural Practice Ltd v Labour Inspector of the Ministry of Business, Innovation and Employment [2025] NZEmpC 198(external link)

Soapi v Pick Hawke’s Bay Inc [2025] NZEmpC 208

Employment Court – Employees in Recognised Seasonal Employer scheme – Minimum employment standards breaches – Arrears

At issue was:

• whether deductions from the wages of three employees were lawful
• if the deductions were unlawful, whether the employer could instead claim outstanding amounts via a claim for unjust enrichment
• whether the employer breached section 11B of the Minimum Wage Act 1983(external link) by not fixing the maximum number of hours of work in any week.

The 3 applicants (the employees) came to New Zealand from the Solomon Islands to do seasonal work in orchards, under the Recognised Seasonal Employer (RSE) scheme. The employer was a not-for-profit organisation “incorporated … to advance the interests of the horticulture and viticulture industries and to benefit from the RSE scheme” (see paragraph 5). To participate in the RSE scheme, the employer needed to:

• be accredited by Immigration New Zealand (INZ)
• provide employment agreements that complied with the “Employment Relations Act 2000(external link), holiday and leave requirements, statutory health and safety obligations and other “minimum statutory requirements” (see paragraph 11).
• make deductions from employee wages only if all the following applied:
  • The employer submitted the deductions to INZ for approval.
  • The employees freely gave written consent to the deductions.
  • The employer informed the employees that they could withdraw consent to the deduction at any time.
  • The deductions were for a specified purpose and for actual, reasonable, verifiable expenses in relation to that purpose.
  • The amount deducted was no greater than what would be deducted, in comparable circumstances, from the pay of New Zealand citizens or residents.

The employees’ employment agreements stated that deductions would only be made from their pay where INZ’s instructions were complied with.

The employer participated in the RSE scheme every year from 2008. The 3 employees participated in the scheme for 11 years (1 employee) and 2 years (the 2 other employees), respectively.

The employer charged the employees $115 or $120 a week for accommodation. The amount was specified either in the individual employment agreement or in a consent deduction form.

In addition to making deductions for the accommodation, the employer made deductions for:

• costs incurred prior to the employees starting work, for things such as airfares and visas
• damage to the facility or to things in it (for instance, 10 employees were charged $3.50 each for unspecified kitchenware; the item in question was not described and no reason was given for everyone being charged)
• the cost of personal protective gear
• transport to work.

The employer paid employees a $100 “wage allowance” which was ring-fenced from deductions.

The employees claimed:

• For several weeks at the start of the season, they received no pay after deductions were made; at other times they received less than the minimum wage.
• The employer made unlawful deductions from their pay in breach of the Wages Protection Act 1983(external link) and the Minimum Wage Act 1983(external link).

Two of the employees also claimed that, for two seasons, the employer breached section 11B of the Minimum Wage Act(external link) by not fixing the maximum number of hours of work in any week. The employees also sought penalties.

The employer made a counterclaim against the employees for recovery of the value of payments that were found to be unlawful. It made the counterclaim on the basis:

• It made payments to airlines, the health insurance provider and the accommodation owners as the employee’s agents.
• The employees received the benefit of those payments and would be unjustly enriched if the amounts are not able to be reclaimed.
• It had mistakenly relied on the deduction consent forms to recover the payments when it should have paid the wages in full and demanded the outstanding sums.

The Employment Court (the Court) found:

• It was a breach of section 6 of the Minimum Wage Act(external link) for the employer to make deductions under the Wages Protection Act 1983 from the employees’ pay that reduced the employees’ wages below the minimum rate of pay under the Minimum Wage Act (see paragraph 125).
• Deductions for personal protective gear were unlawful under the Health and Safety at Work Act 2015(external link), section 27 and the Health and Safety at Work (General Risk and Workplace Management) Regulations 2016, reg 15(external link) (see paragraphs 57–59). 
• The amounts deducted for accommodation did not comply with section 7 of the Minimum Wage Act(external link) because:
  • The employment agreements did not fix the cash value of the accommodation; meaning the deductions could not exceed 5 per cent of the employees’ minimum rate of pay (see paragraph 171).
  • Even if the cash value of the accommodation was found to be fixed, the amounts deducted were not reasonable, as the deductions covered the full year when the employees were only there for part of the year (see paragraph 172).
• The employer was potentially liable for a penalty under section 11B of the Minimum Wage Act for not specifying a maximum number of hours in the employment agreement (it adjourned making a decision on the matter; see paragraph 80).
• The employer was able to bring a counterclaim but it failed on the facts except in relation to reclaiming wage advances (totalling $ 1,180; see paragraph 225).
• Claims for flights, visas, health insurance and transport to work had insufficient evidence as to what was paid (see paragraphs 221, 222). 
• Claims for accommodation were sufficiently covered by the default 5 per cent deduction specified in the Minimum Wage Act (see paragraph 224).

After allowing a deduction from the employees’ wages of 5 per cent for accommodation, and the amount owing under the counterclaim, the Court found the employer owed the employees a total of $34,948.60 (see paragraph 230). The Court ordered the employer to pay the amount owing, with interest (see paragraphs 230, 231).

The Court adjourned the issue of penalties pending further submissions from the parties (see paragraph 232).

The Court made a final comment that it would forward the decision to INZ, based on the Court’s concerns that:

• The employer retained the employees’ passports, contrary to advice of the Ministry of Business, Innovation and Employment that migrants should not hand over their passports (see paragraph 235).
• The employer left the employees with only $100 per week to live on until their debts to the employer were paid (see paragraph 236).
• There was a lack of transparency about the connection between the accommodation owners and the employer, which itself raised concerns about how accommodation charges were set (see paragraph 237).

Soapi v Pick Hawke’s Bay Inc [2025] NZEmpC 208(external link)

Wilson Parking New Zealand Ltd v Turner [2025] NZEmpC 214

Employment Court – Breach of contractual obligations – Breach of fiduciary obligations – Misuse of confidential information – Injunction – Freezing orders

At issue was:

• whether the Employment Court (the Court) should issue interim injunctions to prevent a former employee and his company from:
  • using, disclosing, or dealing with the employer’s confidential information
  • soliciting or entering into any business arrangements with the listed landlord parties.
• whether the Court should issue freezing orders:
  • requiring the defendants to pay 30 per cent of all revenue derived to date and to be derived from the landlord parties
  • restraining the defendants from selling, transferring, pledging, or disposing of the portfolio of leases and management contracts obtained through use of the employer's confidential information.

The employee was employed as a regional manager for the employer, a car park operator. While employed, the employee had access to confidential information regarding the employer’s financial circumstances, growth strategy, and client base. The employee resigned from the employer and then set up a competing company (the second defendant) just over 5 months later.

The employer submitted that, while employed and during their post-employment restraint period, the employee breached the terms of his individual employment agreement and deliberately undermined its competitive position for personal gain in establishing the second defendant. The employer submitted that the threshold requirements were met, establishing that there was a serious question to be tried. It submitted that there was a compelling case that the employee acted unlawfully and in breach of their obligations.

The employee submitted that:

• There was no serious question for trial that they had used or were using confidential information obtained during their employment.
• There was therefore no arguable case of a breach of fiduciary duty, and therefore no basis for a permanent injunction restraining them from working with the second defendant.
• Also, the restraint of trade clause in the individual employment agreement was unenforceable due to unreasonableness.

The Court declined to grant the interim injunctions and the first freezing order. The Court granted the second freezing order. The Court took into account that:

• The confidential information the employer identified was found in the execution of a search order originating from 2023. The confidential information was therefore arguably stale, and, having considered the passage of time and the nature of the confidential information, the Court was not satisfied that the interim injunction sought should be made (see paragraph 122).
• The first freezing order sought did not have the usual features of a freezing order (see paragraph 142). There were concerns that the defendants’ revenue could be dissipated, meaning any future judgment would be inconsequential. However, this was also balanced against the fact that the defendants could continue to trade profitably between the date of the judgment and the substantive trial (see paragraph 148).
• If the defendants sold, transferred, pledged, or disposed of the portfolio of leases and management contracts, that could cause a substantial risk to Wilson Parking and any subsequent judgment it obtained (see paragraph 151).
• The balance of convenience and overall justice favoured making the second freezing order but not the first freezing order (see paragraph 153).

Wilson Parking New Zealand Ltd v Turner [2025] NZEmpC 214(external link)

Lo v Health New Zealand [2025] NZERA 604

Employment Relations Authority – Calculation of annual leave and holiday pay – Employee working two roles for same employer

At issue was whether the employer was correctly calculating the annual leave of a senior doctor who worked for the employer in two separate roles.

The employer was an entity that came into being as the result of the amalgamation of 20 District Health Boards and 7 shared service entities into one organisation. Prior to the amalgamation the 27 separate entities operated 27 separate payrolls. After the amalgamation 21 separate payrolls remained. The dispute between the employee and employer arose within the context of this history.

The employee was a medical specialist who worked for the employer in two separate roles at the same hospital, namely:

• one role in Department of Critical Care Medicine
• one role in the Anaesthesia – Surgical Department.

The employee was covered by the same collective employment agreement for each role, but had different letters of offer and different terms and conditions of employment for each role. The employer calculated the employee’s annual leave for each role:

• within two separate payroll systems
• as if there were two separate employment relationships.

The employee claimed:

• The employer’s approach was incorrect as he only had the one employer.
• Because of the employer’s approach it was miscalculating his annual leave.
• The employer was in breach of the Holidays Act 2003 and the collective employment agreement.

The employer claimed:

• It was entitled to treat the employee’s two roles as separate employment relationships.
• Its current payroll system could not manage two different pay rates for one set of annual leave entitlements.

Across its work force, the employer estimated it had more than 3,300 employees who worked multiple roles that may contain different terms and conditions, including leave entitlements.

The Authority found that treating the employee’s annual leave for the two roles separately resulted in the employee, on occasion, being on leave from one role, while working in the other role. It said that requiring a “multi-jobber” employee to continue working for the employer in one role/position while they are on annual leave from another position was contrary to the object and purpose of the Holidays Act 2003 (see paragraphs 105–108).

The Authority concluded treating the employee’s annual leave for the two roles separately was in breach of both the Holidays Act and the collective agreement and was not permitted (see paragraph 115, 116). The Authority acknowledged the practical difficulties the employer was faced with as a consequence of its findings. It said it was “widely recognised” that the Holidays Act created issues for employees, employers and payroll providers, however it was the applicable law and the Authority was required to apply it (see paragraph 114).

The Authority ordered the employer to (see paragraphs 117–119):

• recalculate and, if necessary, rectify the employee’s annual holiday entitlements
• pay the employee any annual holiday pay arrears he was owed for annual leave which he took but for which he was not correctly paid
• correct the employee’s current annual leave balance
• in future, calculate the employee’s annual holiday entitlements in accordance with sections 21 and 22 of the Holidays Act(external link), or in accordance with the employer’s previous methods if that would result in a higher payment.

Lo v Health New Zealand [2025] NZERA 604(external link)