A decision of the Employment Court in late July is the latest decision that confirms that the cost of unjustifiably dismissing an employee is getting higher. It follows a decision of the Employment Court last year that raised the “bands” used for assessing the level of compensation an employee may be entitled to.
An employment relationship is fundamentally governed by the common law of contract. Under the common law, the parties to an employment agreement have mutual obligations of trust and confidence in their dealings with each other. But the special nature of the employment relationship means that an extensive body of additional rules and procedures also governs it. In New Zealand, most of these are found in the Employment Relations Act (the Act) and through decisions made through our courts.
When dismissing an employee, employers need to be able to show that the dismissal was justified; that means the employer will need to have a good reason to dismiss the employee, and that the employer followed a fair and reasonable process. Failure to meet either of these requirements is likely to establish that the dismissal was unjustified. If the dismissal was unjustified, the employee will be entitled to remedies proscribed by the Act. While reinstatement remains the primary remedy (although not in practice) the most common remedies awarded are lost wages and compensation for humiliation, loss of dignity, and injury to the feelings of the employee.
In the recent case of Gumbeze v The Chief Executive of Oranga Tamariki, Judge Smith in the Employment Court found that Mr Gumbeze was unjustifiably dismissed. Oranga Tamariki had dismissed Mr Gumbeze summarily for serious misconduct. The decision was made after an investigation of Gumbeze by an external investigator into complaints about him by his supervisor, some other supervisors, and following a review of three cases where he was the assigned social worker. Oranga Tamariki concluded that his behaviour, actions and social work practice amounted to serious and persistent misconduct.
Judge Smith noted that Oranga Tamariki could have concluded that some of Mr Gumbeze’s work fell below its expectations and required remediation. But Judge Smith concluded that Oranga Tamariki had not shown that either individually or together the concerns about Mr Gumbeze amounted to serious misconduct. The Judge also concluded that there were also problems with the investigative process.
Mr Gumbeze requested that he be awarded lost remuneration for one year. His evidence was that he did not receive any income during that period following his dismissal. Under the Act, the Court may order reimbursement of all or any part of the remuneration lost by an employee. Where a successful grievant has lost remuneration, the Act directs that the minimum amount that must be awarded is the lesser of the actual lost remuneration or to three months’ remuneration. The Act provides a discretion to award a greater sum. Judge Smith was satisfied that it was appropriate to exercise the Court’s discretion and to order more than three months’ remuneration and awarded Mr Gumbeze one year’s salary. Mr Gumbeze was also awarded $35,000 compensation.
GF v Comptroller of the New Zealand Customs Services was an Employment Court decision last year dealing with the mandate for all government front-line employees to be vaccinated for Covid-19. Chief Judge Inglis found that GF was unjustifiably disadvantage and dismissed for refusing to be vaccinated.
In dealing with the remedy for compensation for humiliation, loss of dignity, and injury to feelings the Chief Judge concluded that the “bands” for assessing quantum should be adjusted for future cases. In noting that the bands needed to remain current, the Chief Judge referenced that a similar view had very recently been taken by the Court of Appeal in the United Kingdom. Applying the Reserve Bank's inflation calculator the Chief Judge increased Band 1 to $0-$12,000; Band 2 to $12,000-$50,000; and Band 3 over $50,000.
The job market in New Zealand is much tighter than it was a year ago. Wellington is the hardest hit with the slashing of the public service. This means that a lot of highly skilled and highly paid public servants will be looking for roles in the private sector. But it will not be easy given that business confidence is the lowest it has been for a long time. Even in the private sector, consultancy firms around the world are making cuts. Redundant workers may be out of work for significant periods of time.
Both the Gumbeze and Customs cases involved public service organisations that are well supported by Human Resource departments and legal services. Both organisations were held to account and faced significant monetary awards, even without taking into account the legal cost of defending the claims. Big public sector employers such as the Ministry of Education are being held to account by the unions. If such employers get it wrong, the cost could be huge with a clear trend of increasing remedies for successful grievants. Read more....