Auckland business pay $20k to pregnant employee in dismissal

Published 11 September 2024 | 2 min read

Running a business is no easy feat, especially when juggling employee needs, operational demands, and legal obligations. It can be a challenge for managers and HR professionals to find the right balance.

But what happens when that balance tips, leading to legal consequences? A recent case in Auckland highlights how mishandling an employee’s request for flexibility led to a $20,000 payout in a constructive dismissal claim.

Troubling case of constructive dismissal

The case involved a pregnant employee who resigned after repeatedly asking for flexibility due to her medical needs. She sought a small shift adjustment—starting her workday an hour later—to accommodate her morning sickness and traffic issues. Her requests were met with resistance, and instead of receiving the flexibility and support she needed, she felt her concerns were dismissed. Ultimately, she resigned, claiming she was left with no other option.

The Employment Relations Authority (ERA) found that her resignation was a case of constructive dismissal. The ruling stated that the employer failed to consult in good faith about roster changes, did not provide adequate notice of these changes, and ignored her rights to special leave under the Parental Leave and Employment Protection Act 1987 (PLEPA). The result was a costly $20,000 compensation order against the employer.

Cost of Poor Communication and Mismanagement

So, how did things go so wrong? The employer’s actions—or lack thereof—highlighted several key mistakes that managers and HR professionals can learn from:

1. Failure to act in good faith: The employer did not properly consider the employee's requests for flexibility, which is a fundamental duty under New Zealand employment law. When a request for flexible working arrangements is made, employers must assess it in good faith and reply in writing within a month. In this case, the employer failed to engage in a fair and reasonable discussion about the employee's needs and did not provide a valid business reason for rejecting the request.
2. Ignoring legal entitlements: The ERA noted that the employer did not consider the employee's right to unpaid special leave for reasons connected with her pregnancy, as provided under the PLEPA. Employers must be aware of such entitlements and make accommodations where necessary, especially when employees are facing health-related issues.
3. Inadequate communication: Effective communication is critical. In this case, misunderstandings and a lack of clear, empathetic dialogue contributed to the deterioration of the employment relationship. Managers should ensure they clearly communicate with their employees, particularly when dealing with sensitive issues such as health and pregnancy.
4. Lack of procedural fairness: The ERA found that the employer did not consult in good faith about roster changes and did not provide the required 14 days' notice before changing the employee's hours. Any changes to employment conditions must follow the correct process, including timely communication and consultation with the employee.

How to avoid this costly mistake

This case serves as a wake-up call for employers across New Zealand. Here are some key takeaways:

• Understand legal obligations: Familiarise yourself with employment laws, including employee rights around flexible work requests, special leave, and other entitlements. The Employment Relations Act and PLEPA provide clear guidelines that must be followed.
• Communicate clearly and compassionately: Maintain open channels of communication with your employees. When an employee requests flexibility, discuss their needs and explore possible solutions. Listening and showing empathy can prevent misunderstandings and build trust.
• Document everything: Keep thorough records of all communication and decisions, especially regarding employee requests for flexibility or changes in working conditions. This can protect both parties if disputes arise.
• Act in good faith: Treat all requests fairly and consider the impact on both the employee and the business. Remember that refusing a request must be based on solid business grounds, and these reasons should be clearly communicated in writing.
  Final Thoughts

The Auckland case is a crucial reminder that mishandling employee concerns, especially those related to health and wellbeing, can have significant legal and financial consequences. For New Zealand businesses, the lesson is clear: prioritise good faith, fair communication, and a thorough understanding of legal obligations to maintain positive employee relationships and avoid costly mistakes.