News Article

latest news in employment law

New record high ERA penalties

Published 17 Mar 2024

David Parker (‘Mr Parker’) claimed he was constructively dismissed by Magnum Hire Limited (‘Magnum’), among several other legal claims. He said this was due to him being severely bullied by the company’s director, Liam Field (‘Mr Field’). Mr Parker was employed for about 12 years prior to his dismissal.

By way of background, Magnum is a heavy machinery equipment hire business. It was common ground that Mr Parker signed an employment agreement on or about July 2009 which recorded his salary at the time being $90k. There was also an addendum recording an annual bonus based on the company’s annual profit before tax. Magnum only paid Mr Parker a bonus on two occasions in 2011 and 2012. By way of practice, Mr Parker often used his bonus to purchase goods and services off Mr Field, e.g. a boat & new motor, tractor, loader, ride on mower, etc. Mr Parker claimed that Mr Field pressured him into accepting payment of bonuses in goods and services over cash payments. Mr Parker’s salary increased in 2012 to $100k and again in 2014 to $120k.

In 2016, Mr Parker complained he about his bonus being limited and not getting any benefit from Magnum’s profits when they were above $1 million, so he wanted a big pay rise. Mr Field said that he offered him a pay rise to $180k with the removal of the bonus scheme and backpay until August 2016. Mr Parker received a lump sum back payment of $23k.

Another Director exited the business in around 2012, which Mr Parker said had previously had a moderating effect on Mr Field’s behaviour. Following this, he claimed he was subject to bullying and psychological abuse, including: excessive personal criticism, repeated blindsiding, verbal abuse, baseless allegations, threats to his job security, humiliating him publicly, degrading him, amongst other allegations.

A former employee who was employed as a truck driver gave evidence that the culture at Magnum was toxic and Mr Field set the tone of the business in this regard. In particular, he gave evidence that Mr Field was unapproachable, rude, verbally aggressive, had tantrums, etc. He said there were numerous times where he heard arguments between the pair. Another former employee said he left his employment due to Mr Field’s bullying saying he was picked on, bullied and threatened on a regular basis. Various other former employees gave evidence along similar lines.

The Employment Relations Authority (‘ERA’) considered a range of other evidence and incidents that were alleged to have occurred during Mr Parker’s employment, including during Covid-19 where he claimed that Mr Field’s bullying and abusive behaviour ramped up. This coincided with a reduction in revenue due to a downturn at Magnum.

In 2021, Mr Parker became unwell and needed to take some time off work. A C.T. scan revealed he had an abscess on his small intestine and had to undergo surgery. He said that shortly after his surgery, Mr Field contacted him in an attacking manner blaming him for the company losing money and that he employed a CEO to take over his place. This conversation caused extreme distress to Mr Parker and ruptured his surgical incision in his lower abdomen causing significant bleeding to occur and required medical attention.

On or about October 2021, Magnum was supplied a medical certificate saying Mr Parker could work from home in his current condition and that it was not advisable for Mr Parker to travel to work while he had an open wound to his abdomen. Mr Field responded saying there was no option to work from home and that the company would handle things while he was away – to relax and get better.

Mr Parker subsequently engaged legal counsel who raised various issues including the non-payment of his bonuses, and the deterioration to the employment relationship, including their view of Mr Field’s unreasonable and repeated treatment towards him. Mr Parker’s lawyer also claimed that he was unjustifiably suspended from work without pay. Counsel requested mediation to discuss the employment relationship problem and corresponding issues. Mediation occurred, but failed to resolve the issues.

After assessing all the evidence, the Authority determined that Mr Parker was bullied at work and that the company failed to protect him from the bullying. The Authority also ruled that Mr Parker was unjustifiably suspended as no attempt was made to understand what duties he could perform, and no process followed before making its decision, nor any alternatives considered. The Authority also determined that Mr Parker was constructively dismissed on 14 December 2021 - part of this included Magnum’s approach to appoint their own legal counsel to investigate his bullying allegations, which the Authority determined was the 'final straw' for Mr Parker against the background of other issues and problems he experienced at work.

Mr Parker was awarded the following remedies:
  • $50,000 injury to feelings compensation for his bullying disadvantage grievance
  • $5,000 injury to feelings compensation for his suspension grievance
  • $50,000 injury to feelings compensation for his constructive dismissal claim
  • $30,000 (gross) lost wages being lost income from 14 December until 14 February 2022, plus
  • An additional $2,463.68 lost wages for a further period and a $1,000 penalty with the balance of the penalty being $3,000 paid to the Crown.
The parties were encouraged to resolve any issue of legal costs between themselves and if they cannot, then seek a determination regarding costs from the Authority. However, as the successful party Mr Parker will be entitled a minimum contribution towards his legal costs in line with the Authority’s Daily Tariff approach to costs in addition to the other remedies ordered. Parker v Magnum Hire Limited [2024] NZERA 85. Magnum has initially indicated they will be appealing the decision.

Employer Takeaway: The significant remedies involved in this case sends a very strong message to employers that they can expect to be held to account in the event they act inconsistently with their legal obligations, bully employees, or where they otherwise treat employees in an unlawful, or egregious manner. Some key takeaways for employers in this case are to: Ensure bullying issues are taken seriously in their business, where appropriate consider appointing an experienced and external (licenced) investigator at an early stage to investigate complaints, have a workplace policy on bullying and harassment, along with a clear policy in terms of responding to complaints, treat staff fairly, consistently, and respectfully.

Over $100,000.00 in hurt and humiliation fines is precedent setting, but so is the apparent physical effects of the bullying. Whether or not this indicates a new level of ERA awards remains to be seen, but the lessons are patently clear.

How Employers Assistance Can Help: EAL has a range of resources & templates, including template workplace policies and eBooks that cover related subject areas such as bullying & harassment, managing workplace investigations, discipline and dismissal management, etc which can be accessed through our Employer Toolbox. Please get in touch with one of our Employment Relations Consultants or Lawyers for further support, or if you have any questions 0800 15 8000.