| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 22/09 |
| Hearing date | 13 May 2008 - 26 May 2008 (2 days) |
| Determination date | 28 January 2009 |
| Member | R A Monaghan |
| Representation | C Eggleston ; K McConnell |
| Location | Auckland |
| Parties | Sulusulu v Fires by Design Ltd |
| Summary | UNJUSTIFIED DISADVANTAGE – Restraint of trade –Applicant claimed suspension and subsequent dismissal unjustified – Respondent claimed actions justified for conflict of interest – Respondent sole director and shareholder of Warmington Industries Limited (“WIL”), Fires by Design Limited (“FBDL”) and Tech Install Services Limited (“TIS”) – Applicant employed at FBDL – Employment agreement (“EA”) provided policy regarding use of company resources and restraint of trade clause – No clause authorising suspension – Applicant registered own fireplace installation company (“ISL”) – Applicant performed ISL work and FBDL work – Respondent discovered ISL – First meeting – Respondent advised conflict of interest – Parties agreed applicant resume employment by managing TIS - Conflict of evidence whether applicant agreed to “dissolve” ISL – TIS subsequently ceased trading – Respondent changed installation policy to contract installation work to installers with New Zealand Home Heating Association (NZHHA) certificate – Work contracted to former TIS installers without sufficient qualifications and to former TIS installer with installation business - Applicant not contracted work – Applicant resumed ISL trading claiming permission sought from sales manager (“L”) – Second meeting – Respondent advised conflict of interest and applicant suspended to “protect business” and “take heat out of situation” – Suspension payment treated as annual leave and holiday pay withheld – Respondent sent letter asking whether ISL operating in competition with FBDL; whether ISL using FBDL’s resources; whether ISL provided installation services in competition with FBDL – Respondent claimed applicant’s answers insufficient – Applicant dismissed – Respondent claimed dismissal due to conflict of interest and performing work for competing organisation; using FBDL equipment to carry out ISL work – Authority found suspension procedurally unjustified – Found suspension not justified under “take heat out of situation” – Found suspension justified to “protect business” – Found ISL's resumption of trade and applicant performing ISL work while at FBDL workplace posed sufficient threat to warrant action – Found alternative steps not considered when applicant’s annual leave overlapped with suspension period – Found no opportunity to respond – Disadvantage unjustified – REMEDIES – No contributory conduct - Found annual leave not reinstated for employees who take leave during suspension – Found $1,000 compensation for loss of vehicle and fuel card based - Found respondent condoned limited personal use of company resources – UNJUSTIFIED DISMISSAL - Authority found dismissal substantively unjustified – Found no evidence of commercial agreement between contracted installers and FBDL to amount to “service” under EA therefore ISL not competing service – No conflict of interest - Found insufficient evidence to assess extent of ISL activities while at FBDL – Found use of company resources linked to concern ISL competing service – Alternatively, applicant's personal use of company resources insufficient grounds for dismissal – Found respondent tolerated practice - No finding on whether applicant agreed to “dissolve” ISL – Dismissal unjustified – REMEDIES – Found 60 percent contributory conduct - Applicant’s resumption of ISL without appropriate discussions with respondent breached good faith – Respondent to reimburse applicant $9,660 after reduction for expectation loss –– Found underpayment of holiday pay – Respondent to pay applicant outstanding sum - Found $3,000 compensation for humiliation after reduction appropriate – PENALTY – Penalty awarded for breach of s130(2) Employment Relations Act 2000 – PRACTICE AND PROCEDURE – Counterclaim - Declaratory determination – Respondent sought declaration applicant’s commissions overstated and not qualified for commission on “mantel sale” – Found “mantel sale” negotiated by respondent therefore applicant not entitled to commission – Technical Sales Consultant |
| Result | Applications granted (Unjustified disadvantage) (Unjustified dismissal) (Penalty) ; Applications dismissed (Counterclaim) (Declaratory declaration) ; Reimbursement of lost wages ($24,150.75 reduced to $9,660.30) ; Arrears of holiday pay ($1,275.02) ; Loss of benefit ($1,000)(4.5 weeks use of vehicle and fuel card); Compensation for humiliation etc ($7,500 reduced to $3,000) ; Penalty ($1,000)(Payable to Crown) ; Costs reserved |
| Main Category | Personal Grievance |
| Statutes | ERA s103(2);ERA s124;ERA s128;ERA s130(2);ERA s130(4) |
| Cases Cited | Graham v Airways Corporation of New Zealand Ltd [2005] ERNZ 587;NZ Engineering, Coachbuilding, Aircraft, Motor etc IUOW v Firestone Tire & Rubber Co of NZ Ltd [1986] ACJ 801;Singh v Sherildee Holdings Limited t/a New Zealand Opotiki, unreported, Couch J, 22 Sept 2005, AC 53/05 |
| Number of Pages | 33 |
| PDF File Link: | aa 22_09.pdf [pdf 93 KB] |