Personal Grievances – When a Win is actually a Loss

A recent personal grievance case between Philipa Johnson and the National Business Review (NBR) resulted in a win for the employee, which actually ended in a financial loss for her when all was said and done. The Employment Relations Authority determined the employee was unjustifiably dismissed. However, the sting in the tail for the employee was that her legal costs were 10 times higher than the compensation she received.

As an employer, it can at times feel like the cards are stacked against you when dealing with a personal grievance. Frequently the better business decision can be to reach a settlement to resolve a dispute even when you have done nothing wrong. From a point of principle this may not feel particularly comfortable.

However, despite best intentions an agreement might not be reached, or you may decide the principle is more important. As a client goes through the decision process to determine which strategy to adopt, we take you through the risks of each pathway and the potential costs of both winning and losing a grievance in the Employment Relations Authority.

At the same time we analyse the risk for the employee and likely value of any compensation award, and this helps inform the decision on how  much to consider offering to reach a settlement if this is the preferred option. There are times the employee is either too greedy or poorly advised and their expectations of a settlement amount are unrealistic.

Affecting the level of the award Johnson received was the Authority’s determination that she breached her employment agreement when she took and distributed confidential information from the employer when she left their employment.

Johnson was awarded $1,666.67 in lost wages and $8,000 in compensation for the unjustified  dismissal. She had claimed $50,000. However, she was ordered to pay a $9,000 penalty for breaching her Employment Agreement, of which $6,750 was to be paid to the NBR and the balance to the Authority. Johnson paid a staggering $96,000 in legal fees.

The winning party ordinarily is awarded $4,500 in costs for a one day hearing in the Authority.  With this in mind, even without the penalty awarded against her, Johnson was always going to be on the losing side financially, as she claimed $50,000. This case demonstrates how principle can override common sense, and some people cannot be negotiated with.

Payday Filing Q&A

What’s changing?

You need to file employment information more frequently

 

When does it start?

1 April 2019

You can switch early, but most software and paper returns are not available until 1 April 2019

 

What is payday info?

Employment information, similar to the current employer monthly schedule

 

When do I file it?

Payday info is due within 2 working days of paying staff if you file electronically (software or myIR). We would recommend filing when processing pays. Information can be amended if need be.

Payday info is due within 10 working days of paying staff if you file via paper (to allow time for the post)

Regional holidays are considered working days

Change over period: you will need to file the March 2019 employer monthly schedule on the 20th of April, while filing payday information for April during April.

 

When do I pay it?

Payment is still due on the 20th of the following month as before (or 5th and 20th of the month if applicable)

Penalties for late filing and late payment applies just like now

 

How do I file it?

Software

Most payroll software will enable you to file your payday info directly from the software at the click of a button much like the GST returns. It will simply add a step to your payroll process.

myIR

If you are currently filing through myIR (file transfer or onscreen), you will need to log in each payday after you’ve prepared the pays and enter the information. It will work similar to how it works now but moved to the My Business section.

Paper

If you are filing paper returns, you can either switch to online filing through myIR or continue filing papers returns (only available to Employers with less than $50,000 PAYE and ESCT per year). Paper returns can be filed on payday basis or twice monthly. A separate form required for new employee details.

Schedular Payments

Schedular payments:

  • Can file as part of regular payroll or
  • Twice monthly (periods covering 1-15th month and 16th-end of month)

Other Info

If you don’t pay anyone in the pay period, Nil returns are not required

If you have a myIR account you can amend previously filed returns online.

Possible to file in advance

 

What other information do I need to file?

Additional information now required to be filed for new employees, separately to payday information, on or before the new employee’s first payday. There will be a new tab in the My Business section under Payroll called Employees to provide this information.

  • date of birth (if it’s been given to you)
  • start and end date of employment
  • KiwiSaver status
  • Contact detail

 

Bullying, WorkSafe and Personal Grievances

Recently WorkSafe announced that it will ‘typically only investigate bullying and harassment claims where there is diagnosis of serious mental harm’.

This significantly limits the complaints they will investigate. Although the clear acknowledgement of this is new, it is consistent with WorkSafe’s actions to date.

WorkSafe has never prosecuted anyone for bullying, despite receiving over 100 complaints of bullying in the past 4 years. Of those complaints, only 9 were investigated. WorkSafe receives over 10,000 notifications a year, and they only have the resources to investigate the most serious incidents, primarily those that result in serious physical harm.

Radio NZ recently reported on allegations of bullying at the Bay of Plenty DHBs’ Tauranga Hospital. Two Hospital staff, who were at times suicidal after feeling bullied at the DHB, had their cases turned down for investigation by WorkSafe. This demonstrates just how serious the harm must be before WorkSafe will investigate.

This does not mean employer’s are off the hook. The path to seeking some form of recompense is frequently taken by raising a personal grievance.

A recent case, FGH v RST, was heard in the Employment Court.  The employee was being performance managed, and during that process accused her manager of bullying her. The organisation chose not to investigate the complaint, concluding the employee was simply resistant to being performance managed. The Court criticised this approach, concluding that although the behaviour complained of was ultimately found not to be bullying, the employer had an obligation to investigate the concerns raised rather than dismiss it out of hand.

Bullying investigations are often complex, particularly as bullying behaviour is frequently underhand and out of sight of witnesses. Getting the basics right is a good start.

All of the information you gather has to be provided to the alleged bully. Only in extreme circumstances can information be anonymous. Case law consistently rules a person is entitled to know who is making allegations against them. The alleged bully then needs to be provided adequate time to consider the information before responding to it, and they are entitled to have a support person or representative with them.

Other issues include having one person’s word against the other and no witnesses, witnesses unwilling to provide statements out of fear, imbalances of power between a complainant and the accused, seemingly small incidents that separately are minor but collectively paint a different picture.

Bullying is a health and safety issue, and irrespective of the lack of action WorkSafe is likely to take, if you don’t take action it can adversely affect attendance, productivity, culture, employee retention, and ultimately result in a personal grievance.

If you have any issues at your workplace that concern you, please talk to one of our trained consultants for advice before embarking on an investigation process. We offer 10 minute free advice for any new enquiry.

What to Say When

Below is the first in our series of one liners we use in response to challenging behaviours. We hope they come in handy for your own work situations. If you have any of your own that work please email them in and we can include them.

Passive Aggressive Colleagues

We have a passive aggressive person on our team who constantly moans to his colleagues but won’t say anything to me. The team want him to stop. What can they say to him?

Next time he corners them in the tea room and he his being negative about the latest thing, get his colleague to say : “That sounds really important to you, let’s go and tell the manager.”

Crying

What do I say to the employee who always cries when I raise something with them. Firstly accept crying as being okay, not something to be intimidated by. Acknowledge they are upset, but don’t be put off from discussing what you intended, or hearing what they have to say. A response to tears can be as simple as passing over some tissues and saying: “I can see this is upsetting for you, I will give you a couple of minutes.” Just sit there. Say nothing. It is more likely than not they will start talking again. The key is to not allow the tears to bring the discussion to an end. It may temporarily put it on hold, but always come back to it.

Blaming

Next time someone simply blames others e.g. says, ‘but I couldn’t do it because John did/didn’t do that thing’, respond with “I’m interested in what you could do differently next time so that we still get the necessary outcome”. For example: Ted hasn’t completed the report he was supposed to do for you. It was John’s fault (according to Ted) because he didn’t get the information to Ted to complete the report. What could have been done differently? Ted could have chased John for the information, communicated to John a timeline, told you before the report was due that there was possibly a delay, or completed other parts of the report while he waited for the other information. All things Ted could have done. Place the responsibility back on to Ted. i.e. the person who blames others.

What is work?

There will be significant implications for many employers following a recent Employment Court Case. If your employees attend training, meetings, work functions or travel for work purposes you may need to reconsider how you pay them.

The case involved the Smiths City Group. Every morning prior to opening, the sales manager at each of their 29 locations holds a 15 minute morning meeting to discuss issues and talk about sales promotions and targets. The employees were not paid for their attendance.

In January 2016 a Labour Inspector issued an improvement notice to Smiths City that required the organisation to undertake an audit to identify where wages had been paid below the statutory minimum. The audit was for all employees who attended the 15-minute morning meeting who was on, or close to, the minimum wage rate and it applied across all 29 stores. The audit had to cover all current and previous employees for the last six years. The company was to calculate the arrears of pay below the minimum wage and reimburse those arrears accordingly.

Smiths City objected to the improvement notice claiming the 15 minute meeting was not work. In addition, Smith City was claiming the commissions and bonuses paid to employees ensured they were paid above the minimum wage even when the hourly base rate was at the minimum wage and the 15 minute meeting was deemed to be work. The matter went to the Employment Relations Authority and the Authority agreed with Smith City, rescinding the notice. The Labour Inspector appealed, and the case was heard by a full bench of the Employment Court.

The Employment Court looked at the Idea Services case (known as the Sleepover case) as the basis for determining whether the 15-minute meeting was “work” for the purposes of the Minimum Wages Act.

Smiths City argued that the employees were not compelled to attend the meetings, that the meetings didn’t put a significant degree of constraint on the employees, and there was no responsibility on the sales staff during the meetings, and they argued that the meetings were not critical to the business.

The Employment Court found that staff were required to attend the meetings, and that while there were different expectations of behaviour in the meetings compared to when they were in the store, that it did not alter the fact that their personal freedom during those 15 minutes was constrained by the employer.

The Court rejected Smiths City’s claim that there was no responsibility on the employee during the meetings, but rather like a training course, the employees were expected to sit, listen and learn the information being presented by the Sales Manager so they could apply it during the day.

The Court also rejected Smiths City’s claim that both the employer and the employee benefited from attending the morning meeting, by earning higher commissions.

Accordingly, the Court found that the sales employees who attended the morning meetings were working during those 15 minutes.

That left the Court to consider whether Smiths City had breached the Minimum Wage Act. Smiths City contended that when the sales commission was taken into account, all of their sales staff earned more than the minimum wage. The method of payment was justified by the company because wages, and commission, were earned over the whole pay period which it considered to be the correct interval for the calculation of minimum wage.

The Court accepted that the commission does form part of wages, but said it didn’t satisfy s 6 of the Minimum Wage Act. The Court found that commission and incentive payments were not earned for attendance at the meetings and were not connected to hourly rates of pay generally. They were achieved against targets specified by the company. The commission payments were deemed to be additional income earned over and above the contractual hourly rate, and not a substitution for it.

The Court stated that Smiths City’s method of calculation did not satisfy the Minimum Wage Act. The Court reinstated the Labour Inspector’s Improvement Notice. This means Smith City will be required to backpay, for a six year period, any hourly paid employee who attended the morning meetings.

If you have concerns about how your remuneration is structured and whether you are inadvertently failing to meet minimum wage requirements, please contact our team.

Chapman ER News – Employer Successful in Constructive Dismissal Case

We have seen an increased occurrence of employees resigning and then raising a PG, stating that their resignation was constructive dismissal and unjustified.  In many instances they haven’t previously raised their concerns with their employer or the issues raised appeared minor with the employer believing each was addressed at the time as no further concern was raised by the employee.  However, post-resignation, the employee might list all of the minor issues trying to prove that a trend existed. They may even claim an illness that they believe resulted from issues in their employment.

It is reassuring to see the Employment Relations Authority reject a recent claim of constructive and unjustified dismissal by Kathryn Gifkins that she was forced to resign from her position at Marinoto Rest Home in Taranaki.

The claim followed two incidents; one regarding a false accusation of Gifkins dragging a resident and the other about her being stalked by a dementia patient.  Gifkins​ claimed her manager did nothing about either incident and so felt she had no option but to resign i.e. her resignation was constructive dismissal and was unjustified.

Gifkins was employed as a healthcare assistant at Marinoto Rest Home in July 2016. Two issues arose, shortly after she started which she said were of “significant concern for her”.

She soon realised that she was expected to dispense medication to patients which was something she felt uncomfortable doing in case she made a mistake and also felt it was a a registered nurse duty.

Her manager, Barbara Kay, said Gifkins did not convey her concerns about making a mistake and commented that Gifkins was “very competent” at providing medication and had no concerns about her confidence.

The Authority was satisfied the dispensing of blister pack medications was a reasonable activity for Gifkin’s position.

The second issue Gifkins had was with a dementia patient who became “infatuated” with her.

The patient told her he wanted to marry her and proposed to her. He continuously sought her out, giving gifts, making phone calls to her home and following her to the car park.

Despite complaining to Kay about feeling harassed, she said her concerns were never addressed.

However, Kay argued she told Gifkins she did not have to go to the area of the rest home where the patient was living, she did not have to care for him or communicate with him.

Gifkins said it was difficult to distance herself from him due to the size of the rest home.

The Authority member said it was clear Gifkins received unwanted attention from the resident, but she could not apportion blame to the rest home as options were given to her by management to reduce the interaction.

In May 2017, Gifkins resigned. This followed an incident which Gifkins described as “the final straw”.

Gifkins claimed that earlier that day Kay falsely accused her of dragging a patient when she and another carer were trying to lift a patient off the floor into a chair.

Gifkins claimed Kay yelled “Are you dragging him or lifting him?”. Kay admitted she said those words, but denied she yelled them, or directed them solely at Gifkins.

Gifkins said she was unhappy with the way she had been treated and felt distressed that Kay had not listened to her or been responsive.

The Authority member noted that Kay’s manner, along with the words used at the time of the incident, may have been “insensitive and unhelpful in the moment” and added “I accept, however, that Ms Gifkins was unhappy and resentful as a consequence, but I am not at all persuaded that the interaction could be regarded as a breach of Ms Gifkins’ employment, let alone one that could be fairly characterised as dismissive or repudiatory conduct that would make it reasonably forseeable Ms Gifkins would resign, an employer is under no contractual obligation to behave sensitively towards its employees.”

A constructive dismissal occurs where an employee resigns from employment but really the resignation was forced or initiated by the action(s) of the employer.

The Authority assessed whether a substantial risk of resignation was reasonably foreseeable and found that it was not in this case.

The Minimum Wage Increases from 1 April 2018.

While the Government must review the Minimum Wage annually the new Government has already pledged to get it up to $20 per hour by 2020. The first step to this target is the increase that comes into effect from 1st April 2018

The new minimum wage rates are:

Adult – $16.50 an hour
Starting-out – $13.20 an hour (up from $12.60)
Training – $13.20 an hour (up from $12.60)

If you already pay above the minimum wage there is no obligation to increase it proportionally.

If you have any employees earning less that $16.50 an hour then you MUST increase their pay rate to the appropriate new minimum wage

Employees who are paid wages need to be paid for the actual hours they work. This includes any extra hours completed.

For Salaried staff you need to consider if they are being paid below minimum wage for total hours of work.

Employment Relations Amendment Bill

The first wave of changes to legislation in the employment arena were announced last week. There was nothing unexpected, except for possibly the usefulness of NZ First to act as a hand brake for more widespread changes.

One of Labour’s flagship policies was the abolition of the 90 day trial period. The great news for SME’s is that if you have 19 or less employees, the trial period will still be available to you. An unexpected turn of events and a moved that has disappointed unions. Unions however did get a number of changes they were seeking.

The purpose of this Bill is to implement the Government’s post-election commitments to restore key minimum standards and protections for employees, and a suite of changes to promote and strengthen collective bargaining and union rights in the workplace. Read here a summary of the changes, and over the next few weeks we will detail how the changes may affect how you operate your business.

Proposed Amendments

Restoring Key Minimum Standards and Protections for Employees
  • Removing the exemption for employers with fewer than 20 employees from the current rules about business transfers, which will allow vulnerable workers of these employers to elect to transfer to an incoming employer
  • Extending the time frame for vulnerable workers to elect to transfer to an incoming employer and placing information and notification requirements on employers in respect of their employees’ personal information
  • Reinstating the right to prescribed rest and meal breaks, as applied previously regarding number and length of breaks within specified work time, with limited exceptions for essential services where certain conditions exist
  • Restoring reinstatement as the primary remedy in unjustified dismissal cases, where the employee requests it and where reinstatement is practicable and reasonable
  • Limiting trial periods to employers with fewer than 20 employees
Collective Bargaining and Unions

The proposed amendments include:

  • Removing the requirement for a union representative to gain consent from an employer before entering a workplace
  • Requiring employers to allow union delegates reasonable time during working hours to perform their duties in respect of the employees of that employer.
  • Reinstating that the parties are required to conclude a collective agreement, and repealing the provisions that enable the ERA can determine that bargaining has concluded
  • Reinstating the ability of unions to initiate collective bargaining 20 days before an employer
  • Repealing sections 44A to 44C that allow employers to opt out of multi-employer collective bargaining once bargaining has been initiated
  • Requiring that collective agreements must contain rates of pay and that rates of pay must be agreed during collective bargaining
  • Repealing the ability of employers to deduct pay as a response to partial strikes
  • Requiring that new employees are afforded the same terms and conditions as the applicable collective agreement relating to their work for the first 30 days of employment
  • Restoring key minimum standards and protections for employees
  • Requiring employers to provide the applicable collective agreement and union contact details and the option to join the union at the same time as they provide an intended individual employment agreement to an employee
  • Requiring that employers provide information about the role and functions of the applicable union when the intended employment agreement is given to prospective employees
  • Encouraging an active choice by a new employee on whether to join the union, and whether to object to the employee’s employer providing the employee’s name and notice of the employee’s choice to the relevant union
  • Extending the grounds for discrimination to include an employee’s union membership
  • Extending the time frame under section 107 for which an employee’s union activities may be considered to contribute to an employer’s discriminatory behaviour from 12 months to 18 months

Personal Liability for Employment Breaches

Most business owners, directors, managers and employees are unaware that they can be personally liable for penalties and the payment of legislative entitlements. A person who incites, instigates, aids, or abets any breach of an employment agreement is personally liable for a penalty of $10,000 for each breach.

Employer Owes $2.4 Million To Employees

In a recent investigation into wage payment irregularities at SOE Landcorp, the Labour Inspector found significant issues. The Inspector determined that over the last seven years Landcorp had been incorrectly calculating the entitlements of approximately 1,400 employees.

There appear to be two main areas where Landcorp incorrectly calculated the entitlements:

a) Landcorp did not include the employee’s accommodation allowance into the calculation of gross earnings. This had a flow on impact to the calculation for sick, annual, bereavement and public holiday leave.

b) Landcorp breached the minimum wage for employees who were on salary, but worked long hours during peak season.

The amount owed to 1,400 former and current employees is approximately $2.4 million.

Employers can take several lessons from this decision.

Firstly, even if the employer uses a payroll system to calculate entitlements, it is up to the employer to ensure that the payroll system is calculating this correctly. In Landcorp’s case the payroll system incorrectly excluded the accommodation allowance from the gross salary calculation. MBIE have stated that at the end of June 2017 it has 140 cases which it categorised as payroll audits. Of those 118 had been investigated which led to 53 enforceable undertakings, 29 improvement notices and 2 cases lodged with the ERA.

Secondly, where employers have salaried employees on lower salary levels (less than $55,000 at present) and those employees are working long hours over a peak period of work, the employer must calculate the weekly/fortnightly pay ensure that employee is paid above the minimum wage for every hour they work in that week/fortnight.