Employee Wins, Then Owes Employer $43,789

It is often assumed that when an employee takes a personal grievance and establishes that their employer got the process wrong, the employer will inevitably end up paying. This is not always the case.

A recent Employment Court case involving Kyle Spencer and Modern Transport Engineers Limited is a reminder that it does not always work that way.

By the time the matter reached the Employment Court, Spencer ended owing $43,789 to his former employer.

Spencer was a general manager in one of Modern Transport Engineers Limited’s businesses. The dispute arose after the company discovered that staff had been carrying out private work on Spencer’s boat, a family member’s campervan and a car, using company time and resources without permission or payment.

His employment agreement stated that private work was not permitted on or off the premises without the employer’s written permission. The employer also alleged that goods had been ordered for private use. The issues came to light when an employee resigned because of the stress of overwork due to the need to fit in Spenser’s private work around paying customers.

Spencer was subsequently dismissed for serious misconduct. He raised a personal grievance in the Employment Relations Authority and won. Although the Authority considered that the substantive decision to dismiss Spencer was available to a fair and reasonable employer, it identified significant problems with the process the company had followed.

Among the concerns were the way Spencer had initially been suspended, discussions with other employees that had not been disclosed to him, and comments that caused the Authority concern about whether the outcome had been predetermined. The result was that the Authority awarded Spencer $12,000 compensation, after a 20% reduction for his contribution.

The employer counterclaimed for the losses it said it had suffered through the unauthorised private work and purchases. The Authority ordered Spencer to pay approximately $8,570 in damages to the employer. However, the company was unhappy with this quantum and the Authority’s decision about the dismissal. They appealed to the Employment Court.

Additionally, the Court concluded that the disciplinary process was fair despite some minor flaws, and therefore no compensation was payable for the dismissal. Spenser did win on his claim that the suspension process was unfair because he was not consulted prior to being suspended. The Court also reassessed the damages payable by Spencer to the company and adjusted it to $43,789.

So, despite Spencer successfully establishing problems with the employer’s disciplinary process, the case has ultimately resulted in him being required to pay a substantial sum to his former employer.

It is worth noting that this decision related to issues that arose before the February changes to the Employment Relations Act. Those changes make it more difficult for employees to be successful in a personal grievance as a result of a faulty disciplinary process. We are still waiting on a substantive decision by the Authority that takes into account the legislation changes. We will be sure to let you know as soon as one becomes available.