Employer assigns manager to smaller area – is it constructive dismissal?

The Employment Court of New Zealand recently dealt with a case involving an unjustified dismissal claim brought by a worker against his former employer.

The worker, who had been employed as a restaurant manager at a tavern, alleged that he was constructively dismissed and disadvantaged by the employer's actions after it assigned it to a smaller area.

The worker began workng at the Kensington Tavern in November 2018 and was promoted to restaurant manager in March 2019.

On September 5, 2020, the worker was informed that he would no longer be managing the restaurant and would instead be managing the bar. Feeling upset by this decision, the worker left the workplace and did not return.

He then pursued a claim in the Employment Relations Authority for constructive dismissal, unjustified disadvantage, breach of good faith, and the imposition of a penalty for failure to provide a written employment agreement.

The workplace incident

Prior to the events leading to the worker's dismissal, an incident occurred on July 26, 2020, outside of the workplace, involving the worker and a teenage co-worker.

The incident led to police involvement, and the worker was subsequently charged with indecent assault and convicted sometime after his employment ended.

The employer took steps to manage the situation, including separating the worker and the complainant (referred to as “Ms. A”) and seeking advice from the Hospitality Association.

 The worker was initially asked to remain at home as an interim measure, but later returned to work following an "ice-breaker" meeting with Ms. A and her family.

The situation took a turn for the worse on September 5, 2020, when the employer called a team meeting and informed the worker that his position had been made redundant and that he would now be managing the bar instead of the restaurant.

The worker felt that this conversation should have taken place in private, with a support person present.

The worker left the meeting feeling upset and later sent a message to the employer advising that he was unwell and unable to work.

He did not return to work and went on sick leave. The next roster showed a reduction in the worker's hours, which he saw as a further sign that the employer no longer wanted him working at the business.

Was it dismissal?

The Employment Court accepted that the worker's employment was unjustifiably terminated and that he had made out a claim for constructive dismissal.

The Court found that the worker was told, without prior discussion and in front of other staff, that his position had been made redundant.

The worker was also advised that a decision had been made to move him out of the position he had been employed to do, against the allegations that he had not been given a chance to comment on.

The Employment Court awarded the worker compensation under various sections of the Employment Relations Act 2000:

1. $14,000 for humiliation, loss of dignity, and injury to feelings;
2. Three months' lost wages;
3. A finding of breach of good faith by the employer;
4. A $500 penalty payable to the Crown for failure to provide a written employment agreement.

The total compensation awarded to the worker, after setting off the $5,000 already paid by the employer as per the Authority's determination, amounted to $9,000 plus three months' lost wages.

The decision in this case highlighted the importance of employers handling sensitive workplace situations with care and following proper processes when making decisions that affect an employee's role and responsibilities.

The court's findings reminded employers that constructive dismissal can occur when an employer's actions leave an employee feeling that they have no choice but to resign, even if the employer does not explicitly terminate the employment relationship.