RECORD DAMAGES AWARDED IN A RECENT EMPLOYMENT RELATIONS AUTHORITY CASE

Posted by Tony Sung on June 30 2022 in News

Recently, the Employment Relations Authority handed down a significant decision, awarding record damages to a teacher for wrongful termination of employment. Amongst other findings, they confirmed that an employer’s post-termination aggravating conduct can increase the remedies.

Background

Mr. A was employed as a teacher at School B. A group of students who had been in Mr. A’s class alleged that he had touched several students’ breasts in front of the class and used profane swear words. When questioned by the principal, Mr. A agreed that he did ask the students why they thought they could treat him like “shit” but vehemently denied sexual touching. Mr. A told the principal he had been at the front of the class throughout the lesson and the allegations were completely fabricated by the students. The principal unilaterally suspended Mr. A. 

Shortly thereafter, the Police commenced a criminal investigation. Instead of continuing to suspend Mr. A to allow the criminal process to conclude before proceeding further, the School Board of Trustees (the Board) summarily terminated Mr. A. This was despite a letter from a Union representative pointing out that suspension on full pay was standard procedure. The Union rep’s letter cited past case authority and noted the Education Ministry’s special fund for such events, as well as Mr. A’s right to silence. The Board’s chair was an experienced businessperson and a member of the Institute of Directors. The Board also included a practicing court lawyer. At the hearing, the lawyer admitted to not having reviewed the decisions cited in the Union rep’s letter before voting to sack Mr. A.

At the criminal trial, some of the children recanted their allegations. After being acquitted of all criminal charges (the jury took less than 45 minutes to deliberate), Mr. A sued the Board for unjustified dismissal and disadvantage.

Employment Relations Authority’s determination

The Employment Relations Authority was very critical of the conduct of the Board. The Authority found that the Board did not follow a fair and reasonable investigation process and did not enter into a disciplinary process with an open mind.

In terms of substantive justification, the Authority dismissed the Board’s argument that the consideration of its duty of care to the students should have outweighed the Board’s responsibility to reach a finding of serious misconduct, following the full consideration of the allegations against Mr. A.

The Authority also found that the Board had breached the duty of good faith by accepting the evidence of the students from the outset, not considering Mr. A’s denial carefully before reaching a decision, failing to investigate any third-party potential evidence (which was volunteered unprompted and was contradictory), not delaying its decision-making process and rejecting the suggestion that it applies to the Special Reasons Teaching allowance.

The Authority was satisfied that Mr. A had suffered significant hurt, humiliation, and injury to feelings. This had been very real as he was labeled a “pedo” in his community, and had media stationed outside his home.  With regards to lost wages, the Authority was critical of the fact that the principal refused to sign the Agreement to Censure (for swearing) proposed by the Complaints Assessment Committee of the Education Council of Aotearoa New Zealand.  This meant that the matter had to be referred to the New Zealand Teachers Disciplinary Tribunal which issued its decision on 28 July 2020.

After considering the above, the Authority awarded Mr. A:

• 39 months of lost wages
• $45,000.00 for hurt and humiliation
• above scale costs; and
• a $20,000 penalty for the breach of good faith.

The Authority reduced the penalty to $5,000.00 due to an apparent lack of funds on the part of the school.  The reduction is surprising since a School Board of Trustees is a Crown agency.

Key lessons

Mr. A’s case illustrates the following important points for employers:

• Employers should be aware that their post-termination conduct can significantly increase the level of remedies.
• Employers must consider evidence carefully before reaching a decision.
• Employers must investigate any potential third-party evidence.
• Employers must delay their investigation process if required.
• Where criminal investigation commences, employers must consider the option of suspension on full pay pending completion of that process.
• Consideration of employers’ duty of care to third parties does not outweigh the employers’ duty towards their employees.
• An employee invoking the right to silence when criminal charges are pending cannot be used as inculpatory evidence in an employment disciplinary context.

In Mr. A’s case, to the tune of over $200,0000, the dangers of wrongful termination for employers are significant. Employers should always be cautious when ending employment contracts to ensure termination processes are both compliant and procedurally fair.

If you would like more information regarding the above or have any questions, please contact us.

Kalev Crossland | Partner | kalev.crossland@shieffangland.co.nz
Tony Sung | Associate | tony.sung@shieffangland.co.nz