ERA cites 'flawed' disciplinary process, unlawful wage deduction

The Employment Relations Authority (ERA) recently dealt with a case involving a technician who claimed unjustified dismissal and disadvantage against his former employer, a truck company.

The worker sought compensation for hurt and humiliation, lost wages, and reimbursement of a deduction from his final pay.

This case highlights several critical issues in employment law, including the proper handling of disciplinary processes, the importance of clear communication, and the legal requirements surrounding wage deductions.

Background of the case

The worker had been employed as a tyre technician from August 2021 until his dismissal on 8 May 2023. The events leading to his dismissal began with a complaint from another employee, which the worker disputed. The worker requested a copy of the email containing the complaint to respond, but this was not provided.

On 24 April, the employer gave the worker a letter dated 20 April inviting him to a meeting to discuss a restructure proposal. However, on 26 April, while waiting for this meeting, the worker received a phone call from the employer's lawyer instructing him to leave the workplace immediately.

Later that day, the worker received an email from the employer's lawyer outlining three allegations of serious misconduct: attempting to procure customers for a new venture, disruptive behaviour in the workplace, and discussing the proposed restructure with others.

Flawed disciplinary process

The ERA found significant flaws in the employer's disciplinary process. The employer failed to provide sufficient information about the allegations and did not give the worker a genuine opportunity to respond.

The process was rushed, with the proposal to dismiss the worker coming within seven days of the initial conduct concerns being raised.

The ERA noted: "The process was rushed. [The employer's lawyer] communicated a proposal to dismiss [the worker] on 4 May and this was within seven days of [the worker] being told about the conduct concerns."

This haste, combined with the lack of proper communication and consideration of the worker's responses, led the ERA to conclude that the dismissal was both substantively and procedurally unjustified.

Unlawful wage deduction

Another critical issue in this case was the employer's decision to deduct $3,000 from the worker's final pay for allegedly missing tools. The worker denied taking the tools, stating that he had left the truck at work with the tools in it.

The ERA found this deduction to be unreasonable and unlawful. The decision emphasised that wage deductions require employee consent, which can be withdrawn at any time.

The ERA stated:

"Even if it could be said monies were owing, [the worker's lawyer] communicated to [the employer's representative] the deduction was not consented to so to the extent the IEA provided consent for a deduction, consent was removed."

Remedies and compensation

The ERA ordered the employer to pay the worker lost wages for 12 weeks, amounting to $2,789.36. This was calculated based on the difference between the worker's combined income before dismissal and his income in the 13 weeks after dismissal.

Additionally, the worker was awarded $23,000 in compensation for humiliation, loss of dignity, and injury to feelings caused by the unjustified dismissal, suspension, and unlawful wage deduction.

The ERA's decision highlighted the impact of the employer's actions on the worker:

"[The worker] gave evidence of the humiliating impact and distress caused to him by the summary dismissal and the effect on his health and wellbeing. His financial situation was impacted and although he was able to increase his hours at his other job, the hourly rate was less so he needed to work extra hours to ensure he met his mortgage payments."

This case serves as a reminder for employers about the importance of following fair and reasonable processes when dealing with employment issues.

The ERA's decision emphasised:

"Given the suddenness of the employer's actions with no warning, the change from a redundancy to a misconduct investigation and a flawed process, I consider an appropriate award of compensation under s 123(1)(c)(i) of the Act to be $22,000.00 for the dismissal (which includes the redundancy) and unjustified suspension and $1,000.00 for the unlawful wage deduction."