| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Wellington |
| Reference No | WA 3/01 |
| Determination date | 23 February 2001 |
| Member | G J Wood |
| Representation | C na Nagara ; B Barclay |
| Location | Wellington |
| Parties | Hope v Trend West Holdings Ltd t/a Superior Sleep Lower Hutt |
| Summary | UNJUSTIFIED DISMISSAL - Genuine redundancy - Sale of business - Failure to inform staff of proposal to sell business - Failure to act in good faith - Denied opportunity for a dignified exit - Duty to consult about proposed sale of business - Procedurally unfair |
| Abstract | This was successful unjustified dismissal claim investigated by the Employment Relations Authority.;The applicant was employed by the respondent. The respondent was in financial difficulties and its owner, Mr Barclay, made plans to sell the business. He did not inform staff of his proposal until the sale had been confirmed. However, the applicant was in a particularly vulnerable position due to his age and because he had recently been diagnosed with cancer with an operation to take place the following day. Mr Barclay was aware of the applicant's circumstances and spoke with him separately, advising him that his employment would end in 2 weeks and that there was no place for him in the new organisation. As the applicant was in hospital and not able to work out his 2 weeks notice he was paid by way of outstanding lieu days.;HELD: (1) An employer was entitled to sell its business whether or not it was profitable. Once the business was sold, all employment agreements terminated due to the redundancy of the workers, as the employer that had sold the business no longer required them. Any decision by the new owners not to take on certain staff members could not be visited on the seller of the business. Workers could not be treated as chattels in the sale and purchase of a business, as employment agreements were personal contracts and could not be assigned to another party. Southern Distribution Workers Union v Tourist Souvenirs Ltd [1989] 1 NZILR 952 referred to.;(2) The respondent proposed to sell its business and in doing so it was required to deal with the applicant in good faith, ERA s4(4)(d). It could not, amongst other things, do anything that would, or was likely to, mislead or deceive the applicant, whether directly or indirectly.;(3) The respondent failed to act in good faith by not identifying redundancy to the applicant as a possible option of the business being sold when the sale was first proposed. The respondent's actions were not those of a fair and reasonable employer. The applicant's redundancy came from out of the blue" just before a major operation and was not sensitively handled with him leaving that day and thus being denied a dignified exit. Aoraki Corporation Ltd v McGavin [1998] 1 ERNZ 601 applied.;(4) It was not open to the respondent to pay for the notice period by way of "lieu days" when the applicant was entitled to five days sick leave. After that period the respondent could not be required to pay the applicant for the remainder of the notice period, because he was unable to work it, as opposed to being required to use his lieu days. The applicant was unjustifiably disadvantaged as a result of a combination of the respondent's actions.;(5) Compensation must be directed to the breaches of duty by the employer. The breaches of duty were the failure to consult fully with the applicant at the proposal stage, the failure to pay him properly and the insensitive handling of his redundancy. This would not have changed the fact that the company was sold and thus it could not have rescued the applicant's job." |
| Result | Application granted ; Reimbursement of lost wages ($442.40)(Sick leave deducted from payment in lieu) ; Compensation for humiliation etc ($2,000) ; Costs reserved |
| Statutes | ERA s4(4)(d) |
| Cases Cited | Aoraki Corporation Ltd v McGavin [1998] 1 ERNZ 601;Christchurch City Council v Davidson [1996] 2 ERNZ 1;Southern Distribution Workers Union v Tourist Souvenirs Ltd [1989] 1 NZILR 952 |
| Number of Pages | 4 |
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