Employment Agreements - Part 2

The continuation of Employment Agreements - unjustified dismissal.

In our last instalment, Farmer Freddy brought Bill and Judy on board to help out for a few months, while Jack recovered from the shock of the fire.

Bill and Judy have now moved in and started work on the farm. Bill and Freddy are getting on like a house on fire.

Judy is milking every second weekend and doing other odd jobs.

Then Jack decides he can come back to work part-time. So, the next morning at milking, Freddy tells Bill that Judy's help is no longer needed. Bill, burning with indignation, has a massive argument with Freddy and then storms off saying that he won't be back until after the weekend.

Judy and Bill had come to rely on the extra income to save for a much needed holiday they had just booked. They ring their lawyer.

That afternoon, Freddy is woken from his nap by the ring of the fax machine.

He gets up to find a fax from Judy and Bill's lawyer advising that Judy feels she has been unjustifiably dismissed and is seeking reinstatement, lost wages and compensation for her humiliation.

Furious, Freddy rings his lawyer.

He is convinced this is not right. He also thinks he should be able to require Bill to work the coming weekend.

What will Freddy's lawyer advise him?

Although Freddy is able to ask Bill to return to work, because of the heated nature of the discussion, Freddy, as a fair and reasonable employer, should really allow Bill the weekend to cool off. If he wants, Freddy can try to talk to Bill about it but he is not justified in giving Bill a warning for walking off the job.

Why is this? Employers should recognise heat of the moment reactions for what they are.

Freddy also needs to be careful because Bill and Judy are closely linked. If Bill leaves, he may be able to claim constructive dismissal based on Freddy's treatment of Judy.

Since Freddy had given Judy regular work, Judy may be able to argue that she was a permanent, not a casual, employee. That would mean that Freddy cannot just tell Bill he doesn't need Judy anymore.

Freddy is in breach of the Employment Relations Act anyway since Judy did not have a written employment agreement.

If Freddy and Judy can't resolve matters themselves (and mediation via the Employment Relations Service may help), then Judy may file her claim in the Employment Relations Authority. If she is successful, reinstatement is a real possibility plus lost wages and compensation. Although this would be a low level claim, the average award is $7500. Add to that reinstatement (if practicable), her lost wages and costs plus his own legal fees, and Freddy can expect a bill of $10,000-$30,000 for what he thought was a casual employment relationship.

How can Freddy help himself?

Freddy needs to talk to Bill and Judy to sort things out. His best option is likely to be to offer Judy her work back and to tie down the terms of Bill's and Judy's employment in writing.

Can Freddy help himself? Will he follow his lawyer's advice? Or is he destined to throw more fat onto an already hot fire? You'll have to wait for the next exciting instalment of Legal Ruminations to find out.


The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document.
If you would like further information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser.
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