How a missing signature led to compensation and unpaid entitlement claims
The Employment Relations Authority (ERA) recently dealt with a case where a worker claimed unjustified dismissal after her employer ended her employment, citing an unsigned employment agreement. She sought remedies including compensation and payment of various employment entitlements.
The worker stated she was employed for more than five months until her employment was terminated with a promise of two weeks' notice pay.
During the ERA investigation, it emerged that despite working for what appeared to be a limited liability company, all payments came from a personal account.
The ERA revealed multiple issues regarding statutory payments, with the worker discovering after her dismissal that no income tax or KiwiSaver contributions had been made throughout her employment period.
The worker started as a senior hairstylist and salon manager on 17 July 2023. While an employment agreement named Jazzys Hair and Beauty Limited as the employer, the ERA's decision noted: "although she had received an agreement to look over, [the salon owner] put it on her desk because she had clients waiting to see [the worker] and accordingly it was never talked about again, nor was it signed."
The ERA found the worker was responsible for managing one of two shops while working as a senior stylist in the other, averaging 35 hours weekly.
A Companies Office search revealed that while Jazzys Hair and Beauty Limited existed as an incorporated company, the ERA noted "it appears it has never traded. Certainly, at the time of [the worker's] employment although the company existed, it was not active."
On 4 January 2024, as recorded in the decision: "[the salon owner] confronted [the worker] with accusations that she was speaking negatively about the salon in front of colleagues. Criticisms were also made about her performance in so far as it related to attracting clients. The conversation ended with [the salon owner] telling [the worker] it would be simpler to let her go because she had not signed the employment agreement which meant there was no agreement in place."
In the statement of reply to the ERA, the salon owner acknowledged, as quoted in the decision: "The [employer] accepts the behaviour culminating in the termination of employment fell short of accepted employment process and acknowledged this to [the worker's] advocate."
Following the termination, the ERA noted multiple breaches of employment obligations. The decision states: "Since her dismissal, [the worker] has discovered no income tax was paid, nor was any contribution to her KiwiSaver made. She did not receive her final pay including the promised two weeks' notice and her holiday pay entitlements."
The situation escalated after termination, with the ERA recording that "Following the termination of her employment on 9 February 2024, [the salon owner] made a public Facebook post stating that she and [the worker] were going to war."
The ERA determined the salon owner, not the company, was the worker's employer, stating: "Although the company existed, the evidence suggests the business was not run through the company but was run through [the salon owner's] personal accounts."
The Authority found the dismissal unjustified under Section 103A of the Employment Relations Act 2000, concluding: "summarily dismissing [the worker] apparently on the basis she did not have a binding employment agreement, is unjustified. It does not meet the test set out in s 103A of the Act and was not the action of a fair and reasonable employer."
In its final determination, the ERA ordered compensation noting: "The effect of the dismissal and post-dismissal conduct by [the salon owner] had a very negative effect on [the worker]."
The Authority awarded $25,000 for humiliation, loss of dignity, and injury to feelings, alongside orders for unpaid wages ($2,100), KiwiSaver contributions ($756), holiday pay ($2,000), and lost wages ($13,650).
The decision also required the employer to address approximately $2,910 in unpaid PAYE within 28 days.
