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Published 17 October 2023 | 2 min read
What happens when employment agreements remain unseen?
In a recent Employment Relations Authority (ERA) ruling, Te Matai Partnership (TMP), a Southland dairy farm, was ordered to pay a substantial sum of $27,500 in compensation to a former employee, Carl Shanks, for humiliation, loss of dignity, and injury to feelings. Shanks, who had worked as a team leader at TMP, had a tumultuous employment journey marked by the absence of a written employment agreement, allegations of a "poor attitude," and a subsequent dramatic exit from the farm.
Lack of clarity
The saga began with a significant lack of clarity surrounding Shanks' employment conditions. Upon starting his job at TMP, Shanks was not provided with a written employment agreement, which is a fundamental requirement under New Zealand employment law. This oversight led to various disputes, with the most significant one being the disagreement over annual holidays.
Despite standard employment practice requiring both employer and employee to agree on annual leave timing, Shanks was directed to take his leave during the June to early July period. During this time, Shanks continued to work long hours with little time off, creating tension and stress in his working relationship.
Workplace tensions erupt
The tipping point came in August when Shanks worked a long shift with no lunch break. After an exhausting day, he inquired about when he could go home, prompting an accusatory response from his employer, Ray Thomas, who alleged that Shanks had a "poor attitude" and "didn't like working there."
This confrontation ultimately led to Shanks deciding to leave, believing he had "quit" as per Thomas's comments. The situation escalated when Shanks attempted to drive away, leading to Thomas opening his vehicle door and stating that Shanks would not be welcomed back if he left. This incident resulted in Shanks deciding to leave his employment and subsequently seeking compensation for his mistreatment.
While it is clear that this situation was a failure in the sense that Shanks had to endure mistreatment and humiliation, the positive aspect of this story lies in the fact that the Employment Relations Authority upheld Shanks' claim for compensation.
The ERA's Verdict
The ERA's Member of the Authority, Philip Cheyne, ruled in favor of Shanks, emphasizing that TMP had initiated the termination of Shanks' employment by pressuring him to continue working, which was in breach of agreed working hours. This pressure, combined with the significant disagreements and the absence of a written employment agreement, pushed Shanks to a point where he felt compelled to leave his job. As a result, TMP was ordered to pay Shanks $13,750 in reimbursement for lost remuneration and a significant $27,500 in compensation for humiliation, loss of dignity, and injury to feelings.
This case highlights the importance of written employment agreements and the need for clear, fair, and respectful communication in the workplace. For New Zealand managers and decision-makers, it serves as a reminder of the legal obligations and responsibilities they must uphold to ensure their employees are treated fairly and respectfully. It also underscores the potential financial consequences of not adhering to these obligations, making it clear that avoiding such issues through clear and transparent communication is not only ethically responsible but also financially prudent.