JurisdictionNew Zealand
CourtEmployment Court
JudgeA A Couch
Judgment Date27 March 2012
Date27 March 2012
Docket NumberCRC 6/10

[2012] NZEmpC 51


CRC 6/10

IN THE MATTER OF a Challenge to a Determination of the Employment Relations Authority

New Zealand Cards Limited
Colin Ramsay

Robert Beresford, agent for the plaintiff

Jonny Sanders, advocate for the defendant

Challenge to an Employment Relations Authority determination which held the defendant had been unjustifiably dismissed — defendant was a fulltime sales representative — plaintiff wanted defendant to resign and become a casual employee — defendant told to “make this the last day” but not explicitly dismissed — different beliefs over state of employment — whether plaintiff under a duty to communicate with defendant to clarify employment position under s4(1A)(b) Employment Relations Act 2000 (good faith — parties required to be responsive and communicative) — whether defendant entitled to three months lost remuneration under s128 (lost remuneration as a result of the personal grievance) when he elected to become care giver for his mother.

The issues were: whether B had breached the duty of good faith under s4 Employment Relations Act 2000 (“ERA” (good faith); whether R had been unjustifiably dismissed under s103A ERA (test of justification); and whether R entitled to three months lost remuneration under s128 ERA (lost remuneration as a result of the personal grievance — up to three months) when he elected to become care giver for his mother.

Held: It was a fundamental component of every employment relationship that the parties had to deal with each other in good faith pursuant to s4 ERA. Of particular relevance was s4(1A(b) ERA (parties to be active and constructive in establishing and maintaining a productive relationship where they parties are responsive and communicative). When R did not call B as expected, B should have been concerned.

When B learned that R believed he had been dismissed, the duty to be active and constructive in maintaining the employment relationship, and the duty to be communicative, had required B to get in touch with R as soon possible. That duty fell particularly on B, because only he knew that he and R had different understandings. It was more than likely that R would have returned to work had B promptly clarified him had not been dismissed. B's failure to promptly communicate with R after finding out he believed he had been dismissed amounted to a dismissal and had failed to correct the situation in breach of the employer's statutory duty of good faith under s4 ERA. A fair and reasonable employer in B's position would have communicated directly with R, which B could have easily done but had elected not to.

The dismissal was not justifiable under s103A ERA for several reasons: B had initiated the conversation with R when he knew R was concerned about his mother's health and was about to meet her doctor. That was not the time to discuss the future of his employment and press R repeatedly and relentlessly to resign. B had failed to communicate promptly and effectively with R, and had concluded that R could no longer carry out his role without consulting him fully.

The statutory remedy under s128 ERA (reimbursement) provided for money lost as a “result of the grievance”. After he was dismissed, R had elected to be a full time care giver for his mother and had not taken steps to earn income which might have mitigated the loss of wages. In such circumstances, it could not be said R's loss of wages was not the result of his dismissal. All that R could justly be awarded was wages in lieu of notice. In the absence of an agreed period of notice, it was what would have been reasonable in the circumstances. Having regard to the nature and length of his employment R was entitled to four weeks, which equated to $2,880 based on a 40 hour week. R would receive an award of $8000 in compensation for the emotional impact on R. R believed he had been dismissed so was unaware of the need for any clarification. Any performance issues were historical. Overall his actions had not contributed to the situation pursuant to s124 ERA (remedy to be reduced if contributing behaviour by employee).

By operation of s183(2) ERA (decision) the determination of the Authority was set aside and this decision stood in its place.



New Zealand Cards Limited (the Company) makes and sells scenic postcards and similar products. The sole shareholder and director of the Company is Bob Beresford. Colin Ramsay was employed by the Company for ten years or more until late November 2008. The principal issue in this case is how the parties' employment relationship came to an end. Mr Ramsay says he was dismissed. The Company, through Mr Beresford, says that Mr Ramsay either resigned or abandoned his employment.


Mr Ramsay pursued a personal grievance alleging that he had been unjustifiably dismissed. The Employment Relations Authority sustained his claim and ordered the Company to pay Mr Ramsay about $12,000 in remedies 1.

Subsequently, the Authority ordered the Company to pay a further $3,000 for costs 2. The Company challenged both determinations and the matter came before the Court by way of a hearing de novo.

In the course of the hearing, which occupied four days, a great deal of evidence was given. This included several lengthy documents and three audio recordings. Much of this evidence was irrelevant or, at best, peripheral to the essential issues and need not be referred to. I confirm, however, that I have reviewed the whole of the evidence in the course of preparing this decision.

Background and sequence of events

The Company operates a small business. Mr Beresford is a talented photographer, particularly of landscapes. He takes photographs which are used to make postcards, sold principally to tourists. The Company also makes some other products but scenic postcards provide most of its business. These postcards are sold to retailers throughout New Zealand.


Mr Ramsay was originally employed by the Company on a part time basis to make and repair stands used to display the postcards. He was introduced to Mr Beresford by his sister, Elaine Ramsay, who worked for the Company as an accounts clerk and bookkeeper. It was unclear from the evidence when the employment relationship was established but it appears to have been between 1996 and 1998. As well as working for the Company, Mr Ramsay earned money doing gardening.


In about 2000, Mr Ramsay became a full time employee of the Company. In addition to carrying on with the work he had done before, he became a sales representative for the Company. His territory included the whole of the South Island and the lower part of the North Island. This part of the work required Mr Ramsay to undertake lengthy trips, during which he frequently worked long hours. Working full time for the Company meant that Mr Ramsay did less gardening than before but he continued to do some.


In 2002, Mr Beresford was dissatisfied with some aspects of Mr Ramsay's performance. In particular, he felt that Mr Ramsay worked too slowly. Mr Beresford recorded these matters in a letter in which he suggested that Mr Ramsay give up the sales work and return to working only part time. That never happened and Mr Ramsay continued working full time as before.


In about 2005, Elaine Ramsay began cultivating and selling four leaf clovers as a novelty item. Mr Ramsay assisted her to place a few of these in retail stores. When he learned that Mr Ramsay was doing this, Mr Beresford became concerned. There was some discussion between the two men about it but this was never a disciplinary issue and Elaine Ramsay stopped producing the items after only a year or so.


Also around 2005, one of the retailers of his cards commented to Mr Beresford that Mr Ramsay had been promoting what were known as 3D cards for another supplier. This prompted another discussion between the two men but, again, there were no disciplinary connotations.


In mid-2008, another issue arose. During his sales trips, Mr Ramsay worked many more than 40 hours each week. While he was in Christchurch, his other work sometimes did not occupy him all of each day. To even out his income, and possibly to reduce the amount of tax he had to pay, Mr Ramsay recorded some of the hours he had worked while away on sales trips as hours he had worked in Christchurch. It appears he started this practice some time in 2006 but it only came to Mr Beresford's notice in July 2008. He then had a lengthy discussion about this with Mr Ramsay. It concluded with Mr Ramsay saying he would stop the practice and Mr Beresford saying he could continue if he wished. Subsequently, Mr Ramsay did not transfer any more hours.


After resolving this issue with Mr Ramsay, Mr Beresford took up the same issue with his sister. As a result of accusations of dishonesty made by Mr Beresford which Elaine Ramsay found unacceptable, she resigned. She finished work for the Company around the end of October 2008.


An important consideration for Mr Ramsay was the care and well being of his elderly mother. During the second half of 2008, her health was deteriorating. She lived alone in her own home and, while she was able to care for herself during the day, she increasingly needed assistance at night. While he was in Christchurch, Mr Ramsay was able to provide that assistance but he was obviously unable to do so while away on sales trips.


The market for postcards of the type produced by the Company was seasonal. During the winter, the demand was less and few, if any, sales trips needed to be made. There was, however, a real need for such trips to be made from September onwards. Mr Ramsay made a trip to coastal Otago in late August 2008, a trip to Central Otago in mid-September and a further trip to Picton in late September but more trips were required.



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