| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 351/07 |
| Hearing date | 2 Mar 2007 - 19 Mar 2007 (2 days) |
| Determination date | 12 November 2007 |
| Member | R A Monaghan |
| Representation | M Smyth ; K Nicolson |
| Location | Auckland |
| Parties | It Maniacs Ltd v Ford |
| Summary | BREACH OF CONTRACT – Applicant claimed breach of contract and sought damages – Applicant claimed respondent attempted to set up competing business, enticed applicant’s employee to work for him and breached confidential information and IT policies – Applicant also invited Authority to conclude respondent in contempt of Authority by failing to produce evidence – Respondent intended to set up business to sell specialist computer software – Applicant advised that plan acceptable if did not promote business to applicant’s clients or work on business during applicant’s time – Applicant offered respondent franchise opportunity which respondent rejected – Proposal included applicant’s financial information and business plan – Information provided on confidential basis – Forensic examination revealed respondent copied several of applicant’s client’s CVs to laptop – Applicant claimed was evidence respondent using CVs for own business – Respondent argued CVs necessary to test software – Applicant’s primary concern respondent setting up business in competition with applicant and breached obligations as employee – Authority identified supplementary breaches prior to hearing primary breach – Claimed breached Employment Agreement (“EA”) by purchasing domain name, preparation of stationary, transferring large quantity of applicant’s information to home server, registering recruitment website, testing applicant’s software, and registration of new business – Authority found duty of fidelity did not prevent employees preparing for own business provided done without breaching duty of trust and confidence to current employer – Authority found no evidence respondent offered employment to co-worker – Authority not persuaded respondent diverted applicant’s candidates to own business – Found allegations regarding misuse of confidential information and intellectual property was conduct capable of undermining trust and confidence, however, in these circumstances breaches not sufficient in themselves to amount to undermining conduct – Authority found respondent’s credibility dented by deleting material from personal laptop which prevented applicant and Authority from identifying extent of activities – Authority considered applicant’s evidence not as compelling as applicant believed – However, respondent’s subsequent conduct seriously suggested guilty conscience – Authority concluded respondent’s failure to inform applicant that working on new business after declining franchise offer favours finding respondent preparing to establish business in breach of duty of fidelity – Damages – Authority satisfied not enough evidence to warrant order that respondent repay salary – Found no loss suffered by applicant as result of breach of EA by respondent – Respondent ordered to reimburse applicant for costs incurred in forensic examinations ($14166) – Found respondent aggravated matters by deleting material after became aware of applicant’s concerns – Authority found not enough evidence to support other damages claims – COUNTERCLAIM – UNJUSTIFIED DISADVANTAGE – Respondent claimed decision to suspend unfair as not given opportunity to be heard before suspension – Found no disadvantage as applicant’s interests in protecting its proprietary information justified suspension without respondent being heard – UNJUSTIFIED DISMISSAL – Applicant argued decision to dismiss based on evidence in forensics report – Authority did not accept applicant’s reasons for failing to reconvene disciplinary meeting – Respondent’s breach of fidelity reflected extent to which could commence a competing business, however, when made decision to dismiss applicant read more into material available and therefore resulting conclusions flawed – Authority found use of respondent’s “VPN connection” from home server a breached applicant’s IT policy but risk to security not expressly relied on as reason for dismissal – Authority concluded reasons for dismissal not properly put to respondent – Dismissal unjustified – Remedies – Authority concluded respondent’s efforts in response to applicant’s investigation made respondent author of own misfortunes – No remedies awarded – ARREARS OF WAGES – Authority did not accept wages could be withheld on account of damages when neither quantum or liability established – Authority ordered applicant to pay $9328 being final pay and holiday pay unlawfully withheld from respondent – PENALTY – Authority found respondent’s approach to applicant’s information irresponsible but not breach of good faith – Authority concluded view of respondent’s conduct reflected in remedy being declined for personal grievance – Penalty declined – National sales manager/senior recruitment consultant |
| Result | Application granted (Breach of contract) ; Application dismissed (Penalty) ; Damages ($14,166.54) ; Counterclaim granted (Dismissal) ; Counterclaim dismissed (Disadvantage) ; Counterclaim granted (Arrears of wages and holiday pay) ($9,382.57) ; Costs reserved |
| Main Category | Personal Grievance |
| Statutes | ERA s4;ERA s4A;ERA s103A;ERA s133;ERA s148;ERA s196;Wages Protection Act 1983 s4 |
| Cases Cited | Air New Zealand Limited v Hudson [2006] 1 ERNZ 415;Airline Stewards & Hostesses of New Zealand IUOW v Air New Zealand Limited [1990] NZLR 549 (CA);Graham v Airways Corporation of New Zealand [2005] ERNZ 587;Jesudhass v Just Hotel Limited [2006] 1 ERNZ 173 |
| Number of Pages | 45 |
| PDF File Link: | aa 351_07.pdf [pdf 124 KB] |