The Employment Relations Authority has ordered an employer to pay $30,500 after finding that one of their employees was constructively dismissed.

The employee worked for the employer for over a year. Towards the end of his employment, the employee suffered a serious injury outside of work, and had to have major hand surgery. This injury rendered him fully unfit to work for five months, at which point the employer endeavoured to introduce a graduated return to work plan.

Soon after the implementation of this plan which involved the employee’s return to work, there was a leaving party for one of the employee’s departing colleagues.

Toward the end of the party, the employee made a comment regarding dissatisfaction with his pay rate, which resulted in a heated discussion between him and his boss. This ended with the employee leaving the party, after receiving ridicule from his boss, and another colleague, about his injury and his work ethic.

The employee sent a letter to his boss two days later, informing him of his resignation.

The employee then filed a personal grievance claim of unjustified dismissal, claiming that his resignation met the criteria of a constructive dismissal.

A constructive dismissal occurs when an employee resigns, but the Authority decides that the resignation was reasonably foreseeable as a result of the employer’s actions.

In this situation, the Authority decided that the employee resigned as a result of the employee’s conduct at the leaving party, and that such conduct would reasonably lead to the employee’s dismissal.

The Authority then had to decide whether this dismissal was justified in the circumstances. The employer did not follow the required process when dismissing an employee. This process includes setting out the employment issue to the employee, consulting with the employee to discuss potential alternatives, and asking for feedback from the employee.

The Authority decided that this dismissal was unjustified, and ordered the employer to pay $20,000 in compensation for loss of dignity and injury to the feelings the employee, and $10,500 as reimbursement for lost wages.

If there is confusion around the correct dismissal process of an employee, it pays to seek advice from a professional with experience in the area.

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Alan Knowsley & Matthew Binnie

Litigation Team
Wellington