Bosses Suing Workers

The election over, the pendulum swings further to the bosses right on our industrial relations grandfather clock. Nationals policy is to loosen up collective wage bargaining and this could make unions less and less relevant. Labour’s policy was in stark contrast. They campaigned on putting old father time back to the 1960s and 70s when unions had a monopoly of various industries workers and controlled industry wage bargaining through national collective employment agreements (awards). In those days even lawyers needed the consent of the parties to become involved in industrial disputes. Now there’s an idea!

I want to explore however, a more subtle mind shift that also helps the boss. This is coming about quietly, unheralded through judge-made employment law rather than political promises enacted by Parliament. If a worker can sue the boss for treating him or her unfairly, disadvantaging or dismissing one – the case law is starting to say why then can’t a boss sue a worker for expensive work mistakes, losing customers, or disrupting a workplace? Are not the scales of justice to be evenly balanced? Is not the sauce for the workers goose also the sauce for the bosses’ gander? Kind of ignores the inequality of the parties at the start – eh!

Some recent cases illustrate this emerging trend.

Nicholas Bettany was a well qualified and experienced computer aided design (CAD) draftsman. He got a job for three months with Masonry Design Solutions Ltd. They became concerned about his timekeeping and work output and told him to sort this out. In their view he failed to do this, so was fired. Mr Bettany took a grievance to the Employment Relations Authority and was awarded lost wages and $2,500 for hurt and humiliation over his dismissal. The boss counterclaimed the $18,000 it cost to fix up his sloppy work practices. This counterclaim failed. Masonry Designs however appealed to the Employment Court. Here it was a different story and they were successful. They were awarded $12,000 calculated on the basis of 100 hours at $120 a hour it cost to fix the drafting mistakes. The earlier findings of an unjustified dismissal were also overturned. Mr Bettany sure copped it. It cost him $12,000 to take his grievance plus legal fees on top of the ignominy of having his name dragged through the press.

Zamir Hussain was a mobile mortgage manager for ANZ. The bank got concerned about his paperwork and started a disciplinary investigation. Mr Hussain resigned. The bank found that he had broken its credit policy by failing to check the property valuation his clients submitted. The bank got caught out by having to sell these properties at much lower market value. Needless to say the people to whom he lent the money to have disappeared. Mr Hussain who grew up in the Papatoetoe has done a runner. He did not turn up at the Employment Relations Authority hearing, and is rumoured to be in London. The Authority found the banks claims were made out in 18 cases and he was penalised $3,000 for each breach of failing to take care as an employee. In addition to this he was found liable for $1,282,051 the bank had to fork out for its losses that were not covered by insurance.

For a boss to get home suing a worker certain hurdles have to be cleared. The first is, that the worker has broken a written or implied (self-evident) term of an employment agreement. In Mr Bettany’s case his obligation to take care doing his work; in Mr Hussain’s failing to check property valuations. The next hurdle is that the boss must suffer a financial loss directly arising out of the workers breach of the employment agreement. The final hurdle is that the worker would or should have known his or her breach would cause financial loss to the boss. It must have dawned for instance on Mr Bettany that his boss would have to pick up the tab for fixing his sloppy work.

An example of a case where the boss failed to win damages from workers concerned the Masterton BP service station Wagg and Harcombe Ltd. Ms Pike managed the service station. A regular customer often used his BP fuel card. The card stated it was for “fuel and oil only”, but the manager and two of her colleagues allowed him to use it to buy other items, such as fuel vouchers. The terms of the fuel card were only known to the customer and BP. It later transpired this fuel card attracted a whooping 25% discount from BP and its use for purchases other than fuel and oil was not allowed. BP required the Wagg and Harcombe Ltd. to repay the shortfall of around $14,000, for the purchases made outside the cards strict terms. The boss went the workers for this $14,000 loss claiming they had acted in bad faith and breached their employment agreements by allowing non-fuel purchases on the card. The workers defence was that they had not been properly or reasonably made aware of the cards conditions or consequences. The Authority concluded that although the experience had proven “understandably bitter” for the company’s director, it was not fair or reasonable for the company to recover its loss from the workers. There was even a tussle over the boss having to pay Ms Pikes reasonable legal fees defending the case.

Thinking ahead, is not conceivable perhaps for a boss try to recover damages off a worker who fails to turn up at work? Take two carpenters for instance who don’t turn up without giving any prior notice or reason why they can’t work on the last day of a job subject to completion penalties if not finished on time. The boss tries to find other carpenters and work overtime to meet the deadline, but is unsuccessful. Is this not foreseeable, as the carpenters knew about the completion penalty and their failure to finish the job could cost the boss dearly? Furthermore they had no reason to be off work; indeed they were seen whitebaiting at the start of the run.

Maybe this is a legal space worth watching. Workers beware.

Have a matter you’d like to discuss? Get in contact with us now for a free 15 minute phone consultation.