Employers urged to raise stakes in staff disputes

By IRENE CHAPPLE law writer

Employers are being encouraged to use the Employment Relations Authority to hit back at disgruntled former staff.

They can also use the one-stop legal shop to claim unlimited damages against employees.

The authority was established last year by the Employment Relations Act and was heavily criticised by employers for its alleged bias in favour of employees.

But the authority's wide powers mean employers can counter employees' claims without incurring the additional costs of a separate court case. And, because the authority can make orders under "any enactment or rule of law relating to contracts", employers can claim for any damages relating to an employee's breach of contract.

Depending on the employee's position, damages can reach several thousand dollars.

On top of any liability for costs incurred by the breach, the authority can fine the employee a penalty of $5000, up from the $2000 maximum penalty under the Employment Contracts Act.

"The employer is able to take advantage of the low-level, speedy justice dished out by the authority," said KPMG Legal employment partner Clayton Kimpton.

Under the old Employment Tribunal, which heard Employment Contracts Act disputes, penalties could be awarded but not damages, which would have to be argued in court.

Mr Kimpton is acting for several clients that are countering personal grievance claims with investigations into employees' behaviour.

One is accusing its former employee of overcharging $20,000 on work expenses.

"What we are saying to employees is that if you shake this tree, something might fall on your head," said Mr Kimpton.

"When faced with a personal grievance claim, we are asking employers to look at whether they have any issues with that employee - have they checked the expense claims? Has that employee cost any money? We ask them to have a good think."

Counter-claims could be used to push for a fast settlement, said Mr Kimpton.

The new ground was tested this year by Northland Pathology Laboratory. It took a case against Dr Tersia Vermeulen, who was hired on a two-year contract, with a $180,000 salary. Dr Vermeulen quit within two months, citing constructive dismissal.

The authority found there was no constructive dismissal and ordered Dr Vermeulen to pay damages of $6700 and a penalty of $2000.

The damages were costed from the accommodation for a replacement locum and finding a replacement employee, plus a proportion of Dr Vermeulen's relocation and recruitment costs.

Northland Pathology also sought the right to sue Dr Vermeulen for losses incurred if her departure meant it lost a joint-venture contract with Northland Health.

The authority said such an order was inappropriate, because there was never a "cast-iron guarantee that staff would be available [for the contract]". Also, it would be difficult to prove the contract loss was directly and solely caused by Dr Vermeulen.

In another case, heard late last year, a counter-claim for overpaid wages was brought by an employer after its former staff member sued for holiday pay and a final week's pay. Despite the employer's leaving the accusations undefended, its counterclaim was largely successful and it recovered $100 from its former employee.

The Engineering, Printing & Manufacturing Union general counsel, Tony Wilton, said the spirit of the legislation was to promote working relationships.

"Digging dirt after sacking someone would be against the spirit of the act," he said. "It would encourage employers to sack first and ask questions later. That would be the antithesis of the act."

The chief of the Employment Relations Authority, Alastair Dumbleton, who also sat on the tribunal, agrees the wider jurisdiction enables employers to counter-claim against employees.

But the role of the authority was to be an investigative body created to determine whether there was a problem between the parties and, if so, resolve it, he said.

Combating personal grievances with counter-claims was overly legalistic.

"You can come to the authority with counter-claims, but that doesn't mean the authority buy into it," he said.

"We will look at it as part of an overall problem."