Key Points:

A decision by the board of the Te Whanau O Waipareira Trust to fire its chief executive was fair, but the dismissal was not conducted properly, the Employment Relations Authority has ruled.

Reginald Ratahi appealed his dismissal and sought compensation after a motion of no confidence was moved against him in April last year resulting in the loss of his job two days later.

The no confidence vote came after Mr Ratahi failed to tell the trust's board of the existence of pending legal action from the Inland Revenue Department (IRD) as well as the extent it was indebted to the IRD.

In 2004 Waipareira Trust came under political scrutiny after former Labour MP John Tamihere was investigated by the Serious Fraud Office.

He resigned from Cabinet in November 2004 after the SFO said it was investigating allegations of fraud at the trust while he was its chief executive.

Mr Tamihere was cleared of fraud the following year.

In its recent ruling, the authority said Mr Ratahi, together with board treasurer Rickey Houghton, had covered up the extent of the $640,000 debt to the IRD by not itemising it in the financial reports and asking the IRD not to detail the amount of debt in its communications with the trust.

"The trust was able to view Mr Ratahi's omission and actions as serious misconduct, destructive of the basic level of trust and confidence that underpins the employment relationship," the authority said.

The trust owed in total $4.1 million.

The authority found that the vote of no confidence followed a number of "emotional" emails by board member Mr Tamihere, who accused Mr Ratahi of incompetence and corruption.

While Mr Ratahi had received copies of two of the emails, he dismissed them, as similar unfounded allegations had been made against him by Mr Tamihere two years earlier.

The authority found that prior to the no confidence vote, Mr Ratahi had no reason to believe his job was in jeopardy.

The ruling said that after such a vote, a reasonable employer should have provided Mr Ratahi with the opportunity to seek legal representation and given him time to explain his actions.

However, the ruling found that even if the board had followed correct procedure, in this case, Mr Ratahi would likely to still have been dismissed.

"In these circumstances, I decline to make an award for lost remuneration to Mr Ratahi."

But because the board had not followed "procedural fairness" the authority awarded costs to Mr Ratahi.