Many employers have at some stage experienced a case of buyer’s remorse after making a bad hire. This can be frustrating where the business has invested significant resource in recruiting and training the employee, and can lead to heat of the moment decision making and poor employment processes.

The temptation to “call it early” was too much for one employer which informed a senior employee that “this isn’t really working out” just 10 days after they started in the role and without any prior notice or warning. 

The employer, an Australian logistics company NGS World Transport Limited, presented the employee, Henning Hansen, with a Record of Settlement containing a “without admission of liability” exit package and gave him until 2pm that day to accept it.  Hansen was understandably shocked and said he wanted to get legal advice.  The timeframe for acceptance was subsequently extended until the end of the following day.

Hansen did not accept the offer and was then asked to leave immediately and escorted off the premises.  He filed a personal grievance in the employment relations authority claiming he had been unjustifiably dismissed.   The authority agreed, finding that there had been no performance or disciplinary issues raised and there were no grounds for dismissal.

When questioned at the authority hearing, Terry Tzaneros, NGS’s Executive Chairman who was based in Australia, acknowledged that a fair and reasonable process had not been followed as required by New Zealand employment law, but said that there was “no time to waste”. 

In awarding Hansen substantial remedies, including 6 months lost wages amounting to $104 614.58 and $25 000 compensation for humiliation and distress, the authority remarked that the dismissal had been contemptuous and had no regard to employment law in this country. The authority also ordered NGS to pay a penalty of $5000, which is intended to be a punitive sanction designed to act as a deterrent and send a message to other employers not to behave in a similar manner.

This case serves as a reminder, that regardless of how brief the relationship, an employee is entitled to fair process in any disciplinary or dismissal situation.  However, it also highlights how ham fisted the approach taken by the employer was, and that seeking to effectively bully an employee into agreeing to an exit package will not serve them well if challenged.

If the employer had handled the situation differently, there may have been a different outcome.  In particular, if NGS had taken the time to explain to Hansen why it thought things were not working out, and then engaged in a mature and respectful discussion with the employee about potential options, an agreement may have been able to be reached. 

Any such discussions would have been best to take place on an “off the record” or “without prejudice” basis” because simply presenting an employee with an offer to leave provides little to no legal protection in the case of a challenge.

In this context, it is important to be clear about what “off the record” or “without prejudice” actually means.  There is no statutory definition as such, but in basic terms it means that any communications which occur on this basis cannot later be used to support a claim by the employee in the authority or court, or in any way as evidence.

The circumstances within which these conversations or communications can legitimately occur are limited to situations where there are acknowledged differences or a dispute between the parties which could end up in litigation, and both parties agree to discuss potential options for resolution of that dispute on a without prejudice basis.  In this regard, one party cannot simply announce that the discussion is “off the record” and then say whatever they want with impunity. If each of these ingredients is not present, and the parties do not both agree to the communication occurring on this basis, it will not be covered by the “cloak” of legal privilege. 

There are strong public policy reasons for maintaining the “without prejudice” rule including encouraging parties to potential litigation to discuss their differences at an early stage with a view to resolving them and avoiding litigation.  This is consistent with the objectives of the Employment Relations Act which include the quick resolution of disputes and reducing judicial intervention.

Returning to the case of NGS and Hansen, it would be fair to say that it was “unfortunate” at best, and if one was to be generous, it could be viewed as reflecting a lack of understanding on the part of the employer of the requirements of New Zealand employment law.

Nonetheless, putting the legal issues to one side, thought should also be given to treating people with some basic decency and respect.  That does not generally cost an employer anything, and in this case, is likely to have cost NGS significantly less.

This article was originally published in The Post