Christchurch manufacturer pays out $18.5K in unjust dismissal

Published 16 April 2024 | 3 min read

In a recent employment case, a Christchurch-based manufacturing company found itself in hot water after dismissing an employee before they had even commenced work, resulting in an $18.5K payout due to unjust dismissal. This incident sheds light on common mistakes that organisations can inadvertently make during restructurings or miscommunications in hiring processes.

After going through the hiring process, including signing an employment agreement, the worker was looking forward to starting but faced delays due to a family bereavement.

Things took a turn when a miscommunication within the company led the general manager to mistakenly believe that the worker was merely a potential candidate rather than an accepted employee. In a phone call with the branch manager, the worker was abruptly told, "We can't have you," and was informed they were no longer employed—all before they had even begun.

Did you know that according to the Employment Relations Authority (ERA), a worker can be considered an employee even if they haven't physically started work?

The Employment Relations Authority ruled that the worker, though not yet physically at work, qualified as a de facto employee under New Zealand law, having accepted the role and signed an employment agreement. This perspective highlights the importance of clear communication and understanding within organisations.

This intriguing perspective challenges traditional notions of employment commencement.

ERA's decision

Here's what the Employment Relations Authority's ruling included:

• The worker was deemed an employee under the law.
• The dismissal was considered unjustified due to internal miscommunication.
• Compensation was awarded for lost wages, humiliation, and breach of notice period provisions.

This case highlights a lack of structured communication and employee management. While the dismissal was a misstep, it sheds light on the importance of clarity and adherence to employment agreements, ultimately paving the way for better practices within your organisation.

To avoid similar pitfalls, organisations must:

1. Clarify Internal Communication: Ensure that all team members understand the status of potential hires and communicate effectively during transitions.
2. Define Employment Clearly: Clearly communicate employment statuses and agreements to avoid misunderstandings.
3. Handle Dismissals with Justification: Always justify dismissals based on clear and legitimate reasons, ensuring fairness and compliance with employment laws.

This case underscores the significance of effective communication and understanding within workplaces. By learning from these experiences and implementing clear HR policies, organisations can foster positive working environments and avoid unnecessary legal disputes.