Behaviour reduces award

01:25, Jul 07 2014
Mary-Jane Thomas
Southland Times Work to Rule employment law columnist Mary-Jane Thomas

One of the matters employers and employees have to consider when settling personal grievances is the effect, if any, of the section in the Employment Relations Act that refers to contribution by an employee to the situation that gave rise to the personal grievance.

In short, if the decision-maker determines that an employee has a personal grievance the decision-maker when deciding the nature and extent of the remedies (i.e. how much the employee will be awarded) must consider the extent to which the actions of the employee contributed to the situation that gave rise to the personal grievance.

This case is a good example of this.

In early 2013, the owner of Western Mailing Limited (WML) Mr G approached Mr S to be CEO. S started in early August, after relocating from the UK.

By August 14, S had already authorised $46,000 capital expenditure over and above his authority. That same day he was called to a board meeting, which included two independent advisers and G. During the meeting S called the board "embarrassing"; he accused them of creating "nonsense" issues; and told the board it was not going "micro-manage" him. He then left the meeting.

The next day G told S his behaviour towards the board was unacceptable. S apologised to G and said he would think about apologising to the board. He never did.


On August 18, S sent G a shareholders' report. This again attacked the board stating that they were "incompetent, dysfunctional". S also attacked G's family members, stating that "the main shareholder's son ... rarely articulates anything that makes sense; sounding like he knows what he's talking about being his main priority". By return email, G asked S to refrain from criticising his family and advisers.

Between August 25 and September 16 G went overseas on vacation. Emails continued between himself and S.

On G's return he took advice and decided to hold a disciplinary meeting. On September 17, WML invited S to a meeting. S received a letter setting out the issues and was asked to comment on a proposal to suspend him until a full disciplinary meeting was held.

The meeting was adjourned and S took advice. He returned and asked to remain working. WML further adjourned the meeting, but returned to suspend S. S immediately left the meeting, telling other staff he had been suspended.

The full disciplinary meeting took place two days later. S gave feedback on the issues raised in the letter. G considered this overnight. G dismissed S the following day for the excess capital expenditure and for the continued unprofessional behaviours that followed, paying him three month's salary and $25,000 for costs and expenses for moving from the UK.

In the Employment Relations Authority (ERA), S claimed that he was unjustifiably disadvantaged by his suspension and that his dismissal was unjustified. He claimed $376,000 in lost wages and $50,000 in compensation for hurt and humiliation.

In deciding whether S was unjustifiably disadvantaged by suspension, the ERA had to consider whether the employer, when it suspended, had grounds to be concerned that having S remain at work may potentially lead to further significant issues.

The ERA found that G was justified in his concern about S's continued resentful behaviour and the harm he could do as CEO. This was confirmed immediately after the suspension when S told other staff about it. The ERA determined that S was not unjustifiably disadvantaged by being suspended.

The next question was whether or not the dismissal was justified.

The ERA considered that the authorisation of $46,000 capital expenditure was over and above the authority S had and it could justify dismissal. However the ERA considered S's behaviour towards the board and the shareholders after this was less serious misconduct, which could have resulted in a warning.

The ERA found the dismissal was unjustified.

There had been time delays in addressing the issues (the over expenditure occurred between August 1-14 August and the disciplinary process did not start until September 17) all the while S remained CEO.

Because there was no disciplinary action immediately after he authorised the expenditure, the ERA considered that the employer lost the opportunity to deal with it in a fair and reasonable manner.

The trust and confidence between S and WML may have been recovered had the over- expenditure been dealt with immediately.

The ERA considered that G did not take advantage of all the outside advisers before making the decision to dismiss. There also appeared to be no consideration of other options, like performance management or warnings. Given these reflections, the ERA determined WML did not sufficiently consider S's responses.

In any claim for lost wages an employee must show that they have been actively looking for other work. S did not provide any evidence of this and therefore the ERA made no award for lost wages.

S claimed that he suffered reputational damage and the dismissal had affected his future employment.

The ERA found that there was little evidence of this, and in fact S had told employees of his suspension.

Therefore any damage was partly his own fault. The ERA considered that S's actions were causative of his dismissal and accordingly the ERA reduced the starting point of $7000 for compensation by 50 per cent to $3500.

Mary-Jane Thomas is a partner at Preston Russell Law. She is always interested in ideas for articles. Email her at

The Southland Times