Employment Law Basics

I am still surprised at the lack of knowledge of the basic requirements of employment law shown by many employers and employees that I come in contact with. It might be useful to look at two matters over which there is much misunderstanding.

The first is that everyone in New Zealand who is employed must have an employment agreement. They either have their own individual employment agreement or, if part of a union, they are covered by a union collective agreement. There are a number of things that must go into such an agreement, such as the job, the nature of the work, hourly rate, grievance procedures and so on, and some matters that whilst not required by statute are useful and important. Such as setting out the law as it relates to holiday pay and statutory holidays, and setting out the sort of conduct that is required by the employer and what will happen if that conduct is not adhered to.

My guess is that the number of workers in the Hutt Valley without an employment agreement is huge. What is not widely understood is that agreements are not only a mandatory requirement for full time workers but also for part time workers and casual workers as well. The sort of agreements that can be drawn up for casual workers and part time workers are different but there still needs to be an agreement. If an employer is found not to have an agreement then there are penalties provided for, the maximum fine is in fact $10,000.00. I am reliably told that whilst there have perhaps not been any penalties of $10,000.00 dished out Labour Inspectors have prosecuted and obtained fines of sums in the hundreds of dollars where errant employers have not complied with the law by ensuring that every employee has an individual employment agreement.

Initially when the Employment Relations Act 2000 first came out longstanding and existing employees who had been working since before the commencement of that Act did not mandatorily require a written individual employment agreement. Since then however there has been a requirement that workers are told of their rights in the eventuality that there is a takeover of their employer company and whilst that could perhaps be done by some sort of policy note it has generally been taken to be a safer course of action to ensure that all employees, regardless of when they commenced employment, sign up to an employment agreement.

I have to say that I am sympathetic to small employers who perceive this to be yet another compliance cost foisted on them by an over-regulating Government. Particularly when the employee is, say, the 15 year old son or daughter of a friend that you employ for 2 to 3 hours a week being an after school job. However, when things go wrong in the employment relationship then the first thing that the solicitor or advocate for the employee is going to ask for is the employment agreement and if there isn’t one then the employer is immediately on the back foot. Also there is more likely to be a better employer-employee relationship if both clearly understand what is required of them in their respective positions, in terms of responsibilities and obligations to the other party.

The second matter I address is the commonly held belief by employers, particularly small business employers, that it is impossible to dismiss an employee who isn’t performing or has been guilty of some misconduct during the course of the employment. I do accept that it can be expensive for an employer who faces a personal grievance action even when they have dismissed an employee for what most would regard poor or reprehensible behaviour. It is true that there is an industry formed around bringing personal grievance actions in the hope that at mediation the employer will pay a sum of money, say $2,000.00 or $3,000.00, in order to make a stressful and time consuming dispute go away. One Auckland based company spends a lot of money advertising its services on television on a no payment no fee basis.

Employers, however, can markedly reduce the likelihood of facing a personal grievance action, or if the same cannot be avoided they can markedly reduce the likelihood of it being successful. It is best, at the first signs of trouble for the employer to get advice from an experienced employment lawyer or advocate.

The advice that the employer gets is going to be based on an extremely simple principle that all employers should follow. Not only is this principle going to assist them, it also, and hopefully this is not a paradox, is of assistance to the employee as well. Quite simply the employer in all his dealings and procedures needs to be upfront, clear, direct and honest.

Whenever I tell this to an aggrieved employer their first reaction is to assure me that they are very fair indeed. The problem usually lies, however, in the fact that their actions are sometimes not going to be seen as being fair. I have my own theory for this common situation. In New Zealand we are a very egalitarian society, and becoming more so by the day. It is now rare for an employee to address their boss as “sir”, or even “Mr” or “Mrs”, the use of first names is prevalent. I do not suggest that we should go back to times perceived as more servile, however it is a fact that lack of such courtesies and formalities sometimes leads to a blurring or indistinction between the roles and requirements of employer and employee. Bosses sometimes start to regard themselves as friends first rather than employers. So when employee wilfully or otherwise refuses to do what they are required to do or if they do it they do it badly it is difficult for the employer to assume control of the situation. The employer is also then starting to become worried that they may have a difficult employment situation on their hands which could cost them a lot of money. This leads to a toxic cocktail of resentment, anger, fear and frustration bubbling away in the employer’s chest. Suddenly it all boils over when the employee, say, acts in a rude and arrogant way to the employer’s best customer and is pre-emptorily sacked.

The employer then finds himself in my office recounting the litany of sins of the employee which led to the dismissal, concluding that he or she has been a saint to sustain such appalling behaviour for so long and therefore the dismissal must be entirely justified. The bad news that you then impart to the employer is that regardless of the provocation (although it will be certainly taken into account when remedies are considered) they have nonetheless acted in what will be labelled a “procedurally unfair” way and one way or another it is going to cost them money to settle it.

The alternative and preferred action is that the employer is clear with the employee as to exactly what is required of the employee. Lapses and omissions, if tolerated, will be assumed by the employee to be of no particular consequence. By ignoring or avoiding them (perhaps because the employer is frightened of conflict) the employer is viewed, in law, as condoning the action. The employee needs to be told politely yet firmly exactly what conduct is required of him or her and where exactly it is perceived that they have not acted in the proper way. In each instance the employee needs to be given the opportunity to respond or offer an explanation. The employer then needs to determine whether there has been any sort of misconduct or non-performance and minute or document it or put it in a letter to the employee.

If the allegation or matter of concern is of such a serious nature that it might call into consideration whether the employee can remain in employment then the employee needs to be told, in writing, of the concerns and to be given some time to respond and, if necessary, to engage some sort of representative, either a solicitor or an advocate.

I have to say that I am not a great fan of the structured first letter of warning, second letter of warning, third strike you’re out protocol. If there is a serious matter which is polluting the employment relationship I much prefer that it is dealt with far more quickly and promptly. What I usually recommend in that instance is that the employer call the employee to an investigation meeting. Before that meeting the employer fully and clearly sets out its concerns. The employee has time to consider those concerns and engage a solicitor or advocate if he or she wishes. At the meeting the employer can supply such further or other information as may be required and then listens to the employees explanation for such conduct. The employer then takes that information away, considers it with all the other information available and makes a decision. Preferably in writing. If the above procedure is followed then in my experience in the vast majority of situations there will not thereafter (should the result of such hearing be a dismissal) a personal grievance action, or if there is one, then its chances of success are likely to be fairly limited.

Looking at the above scenario from the employee’s perspective, there are a number of steps and tactics (for want of a better word) that can be taken to ensure a better outcome. If the employer’s conduct has been flawed in some respect then it may be that a grievance or disadvantage claim can be raised, and if not considered at the investigation hearing, left hovering in abeyance as it were!

What, however, I think is the most successful strategy for an employee in that scenario, seldom adopted but often very successful, is for the employee, if they have failed to perform or been guilty of misconduct in some form, to make a full, frank and honest admission of it, coupled with either an apology or expression of regret and a resolute statement that their performance will from then on improve markedly. There is a danger, of course, that the employer will accept the confession or admission of liability and use that as a reason for dismissal. However, if there has been fault and there is a blanket failure to accept that fault, in the weight of all the evidence, then that is by far a worse look, and an employer is unlikely to want to continue to have someone in employment who has not been honest with either themselves or their boss. Perhaps it should come as no surprise, but in fact I have indeed been surprised by the number of times that an employer has, in the face of a contrite apology, decided to persevere with the employment relationship and give the employee one more chance.