An argument over a measurement error recently led to the unjustifiable dismissal of a cabinet maker which ultimately cost the employer over $16,000 plus legal costs. This case shows how important it is for employers to seek legal advice in a timely fashion to ensure prudent responses.
Case note – Penman v Nico Kitchens and Joinery Limited  NZERA 89 (19 February 2019)
The Employment Relations Authority (Authority) recently decided that an argument over a measurement error led to the unjustifiable dismissal of a cabinet maker. This had significant consequences for the employer
David Penman commenced employment with Nico Kitchens and Joinery Limited (Nico Kitchens) in April 2017 as a joiner and was a party to an individual employment agreement.
On 13 December 2017, a discussion took place between Mr Penman and the sole director of Nico Kitchens, Paul Eastwick, about a measurement error on a bench top that was going to cost the company $1,500 to fix. What was said during the exchange was relevant because Mr Penman said that he was dismissed whereas Mr Eastwick argued that Mr Penman resigned. How the relationship ended was an issue for determination.
Mr Eastwick said that this was one of three mistakes Mr Penman had made during his employment at the company. Mr Penman argued that the mistake came from the plans that Mr Eastwick had drawn up and that it was Mr Eastwick’s mistake. Both parties agreed Mr Eastwick had asked Mr Penman whether Nico Kitchens was the right place for him, however, he disputed this should be taken as dismissal. Mr Eastwick said that Mr Penman told him that he would give two weeks’ notice. In his evidence, Mr Penman said he was told to pick up his tools and leave.
Mr Penman did not return to work after the 13 December 2017 exchange.
The Authority found it reasonable for Mr Penman to believe he had been dismissed and Mr Eastwick made no attempt within a reasonable time to communicate and correct any misunderstanding about that. The Authority referred to Chief Judge Goddard’s helpful judgment in Boobyer v Good Health Wanganui Limited (Employment Court Wellington 24 February 1994 WEC 3/94) and noted that in situations where there is doubt as to how the relationship ended communication to clarify reduces the need for judicial intervention and accords with good faith (para 29). In this case that communication did not occur.
The Authority said that Mr Eastwick was entitled to raise a concern with Mr Penman about the benchtop and communication is to be encouraged when there is concern about a matter. The Authority noted that where performance is an issue an employer should disclose specific reasons for the dissatisfaction; identify a reasonably specific and measurable improvement to be made and allow reasonable time to demonstrate any improvement; and consider any further process and remedial steps before dismissal can fairly and reasonably be considered (para 43). The Authority accepted that there was a mistake made by Mr Penman. That caused Mr Eastwick dissatisfaction and he was entitled to raise the mistake with Mr Penman. The answer to mistakes is to undertake a fair and reasonable process to improve performance. Mr Eastwick, however, had failed to follow any procedure that would have allowed his employee to make improvements.
Nico Kitchens was ordered to pay Penman $9,545 for lost wages and $6,800 in compensation for emotional distress.
This case shows how important it is to seek legal advice in a timely fashion to ensure prudent behaviour in an employment context. As the Authority correctly noted in this case, communication between the parties to clarify any misunderstanding reduces the need for judicial intervention and accords with good faith. If you are an employer dealing with any challenging communication issues, we can help you to communicate clearly and effectively to minimise the risk of legal problems.
Published: 21 May 2019