You're fired... but wait, there's more

By Andrew Laxon

How can a worker who fakes references and can't do the job win thousands of dollars in compensation? Andrew Laxon reports on the employment decisions that baffle bosses

Gordon Faber had to pay more than $10,000 to an incompetent ex-worker. Photo / Alan Gibson
Gordon Faber had to pay more than $10,000 to an incompetent ex-worker. Photo / Alan Gibson

Gordon Faber sacked a bogus refrigeration engineer who falsified his work history, wrecked customers' equipment and almost electrocuted one of his fellow workers. Then he had to pay the man more than $10,000 for lost wages and distress.

Faber is still stunned by the Employment Relations Authority (ERA) decision, which landed a week before Christmas. "They are a law unto themselves," says the bluntly spoken former South African from his Independent Refrigeration and Electrical business in Whakatane. "It doesn't matter that the employee is a fraud and you can prove he's a fraud - you'll still lose the case."

Faber hired fellow countryman Friedriech Gostmann in March last year to work for his company, installing and repairing commercial refrigeration and air conditioning. Gostmann had a good reference from his former employer and claimed 15 years' experience, but everything he touched seemed to go wrong.

Faber says Gostmann burnt out compressors on three refrigeration units by overcharging them and couldn't even do a basic flare connection - the first thing an apprentice learns - so customers lost all their gas.

Then he almost electrocuted an apprentice by telling him cables had been isolated when they had not. The cables short-circuited just before the apprentice touched them.

Faber maintains Gostmann initially agreed to resign, although the ERA ruled he was confronted with his failings and fired on a single day. Afterwards Faber spent about 10 nights on the phone trying to get hold of Gostmann's former boss in South Africa. That's when he discovered Gostmann was a former handyman who had worked with technicians - "so he could talk the talk". (Gostmann later told the Herald he used to line up fridges, which he said was a technician's job in South Africa.) His qualification was effectively a two-week course designed to get a work visa, compared to the New Zealand standard of three years' full-time study with extensive practical requirements. Gostmann admitted to the ERA that he faked his reference letter and had it signed by an unwitting office person.

ERA member Rachel Larmer accepted that Gostmann had misrepresented his skills and experience and was not competent to do the job. But she rejected the company's claim that his incompetence justified his dismissal, saying a fair and reasonable employer would have given the man several warnings and put him through performance management. She also criticised Faber for not checking Gostmann's story before hiring him.

Faber says the case cost him $38,000 in legal fees and the business, which owes $30,000 in tax, is still struggling to recover. He wants nothing more to do with the ERA, which he regards as blatantly biased against employers. "It's a very one-way thing. As an employer, you have nothing. You're just a bad boy all the time and the employees, they're just little angels."

It's a familiar complaint from employers, who over the past decade have highlighted a series of employment law decisions where procedural slip-ups seem to take precedence over common sense or even natural justice. There was the Auckland hairdresser who asked her boss for the weekend off to go to her grandfather's funeral but secretly went to the Big Day Out instead. She was sacked on the spot but won $2000 in compensation. In 2010 a Christchurch repairman who admitted supplying drugs to a workmate was sacked but won $12,000. And Christchurch children's clothes store manager Koren Sullivan was sacked after she received four warnings - including a final warning - for a range of offences, including ignoring instructions, poor customer service and abusing her managers. She lost her job after her manager, Karla Martin, said Sullivan threw a roster book at her and said: "Actually get someone else to do my f-ing job, right here right now".

The ERA ruled Sullivan never used the words "I resign" and her employer had seized the opportunity to get rid of her. She received $5053 in lost wages and $3000 for humiliation, loss of dignity and injury to feelings.

You might expect the Employers and Manufacturers Association to come out swinging on behalf of bosses but advisory services manager David Lowe is guarded. He says there's still a perception the authority is anti-employer "and, in a number of cases, it is a reality" but these days there are far fewer decisions that leave employers scratching their heads.

Lowe says the biggest factor was a 2011 law change directing the authority to decide cases based on whether an employer's decision was fair, rather than the best outcome as the law had previously stated. It allowed employers to make minor mistakes in procedure and still win their case.

Employers are understandably happier because they have improved their winning average from a third of all cases in 2008 to 46 per cent in 2011. In the first half of 2012 just over half the compensation paid for all employment disputes was for relatively small amounts, between $2000 and $6000 - although it may pay workers to have their cases heard in Christchurch, which had six of the eight payouts of over $15,000. The number of personal grievance cases has slumped from 591 in 2010 to 371 in 2011 and just 102 in the first half of 2012.

Lowe thinks the Gostmann case shows the law should be relaxed further, so even employers who make a major procedural mistake can win if their overall decision was fair.

Employment Law Experts director Kristina Andersen agrees the result of the Gostmann case looks offensive to the public and would annoy many of her clients, who receive smaller payouts when they have done nothing wrong.

She thinks the authority should still find these dismissals unjustified but slash the awards for lost wages and compensation. She notes the ERA did halve Gostmann's award for lost wages to $5304 because of his actions but still paid him $5000 in compensation - an amount she believes could have been reduced to zero.

Andersen says the case has similarities with another controversial decision, "Mr X v Independent Liquor", in which a manager, sacked for drunken, abusive behaviour won $62,000 in lost income and compensation in January despite embarrassing himself and his company at a public function attended by the Prime Minister.

According to Independent Liquor, the manager - whom the ERA called Mr X after suppressing his real name - was grossly intoxicated before, during and after the December 2011 Fight for Life charity boxing match, sponsored by the company.

Witnesses claimed he abused other staff members and some Indian customers, swore aggressively at a colleague, harassed a customer's wife and groped a promotion girl.

Independent Liquor told the authority Mr X's behaviour as a senior manager had damaged its reputation as a responsible liquor organisation during "highly delicate negotiations" with the Government over proposed industry reform.

But the authority found the company suspended him for no good reason, failed to investigate whether the claims were true, ignored his requests for more detail about the accusations and did not give him any reasonable chance to respond.

Andersen thinks the decision was not surprising but the awards could have been much lower, considering Mr X's behaviour. He received $58,118 for lost wages - equivalent to the full seven months' pay and bonuses he claimed - and $4000 for humiliation, loss of dignity and injury to feelings, a reduction of only 20 per cent.

The common theme, she says, is a failure by employers to follow the right process, which she thinks should not be dismissed as trivial.

"If you made it easier for employers to 'get away' with procedural failures, this would harm the many employees who have genuine cases."

She says Faber could probably have sacked Gostmann on the same day if he had been more careful to follow procedure and possibly could have argued Gostmann's poor performance had become a trust and confidence issue, justifying summary dismissal.

Lowe advises bosses not to rush in all guns blazing, no matter how upset they feel. "Take a breath, go and walk around the block, come back and ask the employee to explain what happened - even if you think it's absolutely obvious and incapable of explanation."

Meanwhile, the disillusioned Faber is literally on his last legs. He's had both knees replaced and believes he failed to spot Gostmann's shortcomings early enough last year because of strong drugs he was taking to block out the pain. He tried to appeal against the decision but his post-summer holiday application was too late.

"That's all we can do, "he says. "I've got no more money to fight the thing. If I could get a second chance at him, mate, I'd take it."

- NZ Herald

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