Worker walks off job site: Was there a contract breach?

The Employment Relations Authority recently dealt with a case involving an employment relationship problem between a worker and their employer.

The dispute centered around the worker's alleged breach of the employment agreement and the employer's claim for damages.

The case involved complex issues surrounding the nature of the employment relationship, the terms of the agreement, and the consequences of the worker's sudden departure from the job site.

Background of contract breach case

The employer, a specialized roofing company, engaged the worker for a roofing job that was expected to take about 60 days.

The employer claimed that there was a "guaranteed payment of $25,000 for the work that was calculated on the basis of 625 hours at $40 per hour."

The plan was for the worker to "do two weeks’ work and then have one week off and that [the worker] would be paid $2000 each week until he had been paid the full $25,000."

However, on June 8, 2023, the worker left the job site without completing the work and without providing notice.

The employer alleged that at the time of the worker's resignation, "he had been paid for 600 hours of work in the sum of $24,000 when he had only worked 43 days and 336 hours."

The employer sought reimbursement of $6,000, claiming that the worker had been overpaid by $9,950.

Authority’s investigation into resignation

The Authority attempted to investigate the matter, but the worker did not fully participate in the process after lodging a statement in reply.

The employer said the work took “longer than expected” to complete. Thus, in the worker’s reply, he said that “he lost out on other work as a result” because the “employer requested that he not work some days.”

Despite efforts to contact the worker, including a case management conference and an investigation meeting, the worker did not attend or respond.

The ERA noted that "[the worker] did not participate thereafter in the investigation process, which was unfortunate."

Employment relationship issues

The Authority identified several key issues to be determined, including:

• Was there an employment relationship?
• If so, what was the nature of the employment?
• Was there a breach of the employment agreement? and
• If there was a breach was damage/loss caused as a result?

Based on the evidence, the Authority concluded that the relationship between the parties was one of employment rather than a contractor arrangement.

The employer stated that they had "accounted for PAYE, paid holiday pay and KiwiSaver." The Authority accepted that "when the overall relationship is considered its real nature at the material time was that of an employment relationship."

Regarding the nature of the employment, the ERA found that it was more akin to a fixed-term agreement that would end upon the completion of the specified roofing project, rather than a casual relationship.

The Authority noted that "The payment made every week even when [the worker] was not working points away from a casual relationship as does the advance payments made."

Worker breaches employment agreement

The Authority determined that the worker had agreed to undertake work on the roofing project and had been paid money in advance on the basis that they would work on the roof until completion.

However, on June 8, 2023, the worker left the site without providing notice, breaching the employment agreement.

The Authority found that "in breach of the agreement on 8 June 2023, he left the site advising that he did not intend to continue to work. He did not provide any notice before doing so."

As a result of the worker's sudden resignation, the employer suffered foreseeable damage and loss, including the need to employ another labourer and incur additional costs and expenses.

The ERA was "satisfied that as a result of [the worker] resigning with no notice before the roofing project was complete, [the employer] did suffer damage and loss of a foreseeable nature."

Consequently, the Authority ordered the worker to pay the employer $2,000 in damages, representing the amount that would have been paid for the notice period. Additionally, the worker was ordered to reimburse the employer for filing fees.