Publications
FYI
Employment Law
08 Sep 2009
Case Summaries
There have been two recent cases from the Employment Court which provide useful guidance to employers. Set out below are the key points from these two judgments:
Unjustified Dismissal/Reinstatement - Safe Air Limited v Walker
The Employment Court's decision in Safe Air confirms an employer's ability to summarily dismiss staff for breaches of email and internet policies. Mr Walker's dismissal for this reason was held to be justified, even after the Employment Relations Authority had ordered his reinstatement.
Mr Walker had been promoted to purchasing officer several months before his dismissal, and had stated in his application for the role that he had "a good knowledge of the Safe Air computer system". The majority of his work was conducted via email, always with company logo attached. Following a company wide investigation into inappropriate email usage, Mr Walker was found to have sent 425 inappropriate emails over a six month period, 26 of which were 'distinctly offensive'. He was subsequently dismissed for his actions. As a result of the same investigation a number of other Safe Air staff also received disciplinary penalties, four of whom were dismissed.
Mr Walker's challenge to his dismissal was based primarily around his lack of knowledge about the details of his employer's email policies, and around an alleged disparity of treatment between him and other colleagues who had also been investigated. Neither of these arguments were successful.
In relation to Mr Walker's knowledge, the Court held that he ought to have known the content of the email policy: Mr Walker was aware that policies existed and that he was bound by them. He had also admitted that he knew it was wrong to send the emails he had sent. In these circumstances Mr Walker's ignorance of the policies was found to be inexcusable.
Safe Air also successfully refuted the allegation that there had been disparity of treatment. The Court confirmed that disparity is permissible as long as there is an adequate explanation for it. While one of Mr Walker's colleagues had sent five of the seven most concerning emails that Mr Walker had also forwarded, it was the two which were circulated only by Mr Walker which Safe Air found to be most offensive. The total volume of inappropriate emails sent was also significantly less than those sent by Mr, and in these circumstances the Court was satisfied with the rationale for the difference in penalties.
While of course every case must be determined on its facts, this Safe Air decision, which follows the Employment Court's recent decision in Arthur D Riley Ltd v Wood (which also confirmed a dismissal for breach of email policy as justifiable, in contrast to the findings by the Employment Relations Authority), should provide some comfort to employers that they are entitled to act on breaches of such policies, and that if the circumstances are sufficiently serious, dismissal can be an appropriate outcome.
Departing Employees' Obligations - Rooney Earthmoving Limited v Kelvin McTague & Ors
South Island based Rooney Earthmoving Limited (REL) employed three managers who left it in 2004 to establish a competing business (BMW). No restraints of trade or written employment agreements existed. The Employment Relations Authority held that while one of the three ex-employees had breached implied contractual terms, the breaches were not causative of financial losses to REL. On appeal to the Employment Court (after 14 days on matters of liability only), the Court found that all three employees had breached obligations owed to REL, and that the Company was entitled to damages as a result. The quantum of these damages is yet to be determined, but it would appear to be substantial.
In the absence of written contractual terms, REL's case was based on the employees' implied duties to act in good faith and with fidelity, and not to mislead or deceive REL. It was alleged that they breached these duties by (among other things) soliciting current employees, and existing and potential clients, of REL, misusing confidential information either to bind REL to unprofitable contracts during their employment, or for the benefit of the competing business BMW, in circumstances where the opportunities should have been available to REL. Furthermore, it was alleged that the employees removed REL documents, and that the employees breached their continuing confidentiality obligations after their REL employment had ceased.
The Court found that if a manager or senior employee observes actions which harm the employer, it is not a significant extension of the duty of trust and confidence to require the employee to report those actions to their employer. Interestingly, the Court held that this remains true even when the conduct in question is being performed by the employee or at the employee's instigation.
The Employment Court held that the most senior of the three employees (one of REL's regional managers), was under a duty to disclose to REL his knowledge of the efforts of the other two staff members to obtain work for BMW from a certain date, after which it was clear he was able to provide predictions of BMW's workflow. He was also under a duty to disclose any knowledge he may have had concerning the solicitation of any employees to join the new enterprise. If these failures to disclose have caused loss to REL, the manager may be liable for damages. Watch this space for the Court decision on the damages claimed by REL.
This is yet another reminder of the obligations on employees (particularly senior executives) to act appropriately if leaving to set up in competition. Employers do have significant rights to protect their customers and business from unfair competition or unjustified actions by departing employees.
Authors
Carl Blake
Senior Associate - Dispute Resolution
DDI: +64 9 977 5163
Mobile: +64 21 477 228
Email:
View Profile
Katherine Burson
Senior Associate - Employment
DDI: +64 9 977 5112
Mobile: +64 21 498 624
Email:
View Profile
Lucy Jenkins
Senior Associate - Employment
DDI: +64 4 924 3401
Mobile: +64 21 221 4534
Email:
View ProfileWhat next?
In This Article:
The Employment Court's decision in Safe Air confirms an employer's ability to summarily dismiss staff for breaches of email and internet policies.
