Successful constructive dismissal claim leads to large remedies

A hotel bar manager who was constructively dismissed by her employer has been awarded over $28,000 by the Employment Relations Authority

In August 2017, Dawn Langdon commenced employment at the Junction Hotel as the bar manager. In January 2018, her relationship with another employee, ‘D’, began to deteriorate. Ms Langdon requested a meeting to resolve the issues, but when the meeting occurred she was blamed by Mr Pink (her employer and the Hotel owner) for causing the relationship problems. Ms Langdon’s relationship with D continued to deteriorate. In February, Ms Langdon requested a second meeting. Mr Pink refused to meet and Mrs Pink told her to “start looking for another job” which upset her. On 17 February she was invited to attend a disciplinary meeting about potential serious misconduct which could lead to instant dismissal.

At the disciplinary meeting the parties discussed a loss of customers which Mr Pink attributed to Ms Langdon, but he refused to identify the lost customers. Mr Pink said Ms Langdon blamed other people and had a “superiority complex”. Ms Langdon’s support person was not allowed to speak during the meeting, and Mr Pink “closed down” the meeting when he attempted to do so. Ms Langdon asked for a decision at the close of the meeting.  Later that day, Mr Pink gave Ms Langdon a letter which said, among other things, her rostered hours would be reduced and that she needed to look at her attitude which needed a “vast improvement”.

The letter made Ms Langdon stressed and her doctor signed her off from work as a result. Despite communicating this to Mr Pink, he replied to Ms Langdon referring to the abandonment of employment clause in her employment agreement. Ms Langdon confirmed she was not abandoning her employment. At the end of February Ms Langdon’s rostered weekly hours were reduced from 42 to 25.

On 2 March Ms Langdon raised concerns that her bullying issues had not been resolved and that the reduced hours had not been discussed with her. Mr Pink replied that Ms Langdon had “bombarded” him with emails since commencing employment and asked Ms Langdon to compensate him $500 for the “time wasted unnecessarily.” Ms Langdon then resigned as she felt so stressed that she had little choice to resign.

Test for constructive dismissal

The Employment Relations Authority held that Ms Langdon had been constructively dismissed. It conducted a two step test to reach this decision.

First the Authority asked whether Ms Langdon’s resignation was caused by a breach of duty on the part of Mr Pink. The Authority held Mr Pink had behaved in a manner that was either calculated or likely to destroy or seriously damage the employment relationship in breach of his good faith obligations. The reasons for this finding were that:

  • Mr Pink had not properly investigated Ms Langdon’s relationship issues with D and had predetermined that she was the one responsible for the issues;
  • the $500 compensation request was not in good faith, discouraged her from raising concerns, and did not comply with the relationship problem resolution clause in Ms Langdon’s employment agreement;
  • Mr Pink invited D to the disciplinary meeting and then referred to Ms Langdon’s previous employment in a critical manner in front of him; and
  • Mr Pink failed to consult with Ms Langdon about her reduced hours and correspondingly increasing D’s rostered hours.

Secondly, the Authority asked whether Mr Pink’s breaches were serious in nature and whether it was reasonably foreseeable that Ms Langdon would not be prepared to continue to work for Mr Pink. The Authority held ‘yes’ to both of those questions and said that Ms Langdon’s personal grievance for constructive dismissal had been made out. The Authority held that the dismissal was not fair or reasonable.

Ms Langdon was awarded $18,000 for compensation for the humiliation and loss of dignity she had suffered. She was awarded $8,232 for lost wages and received a further $2,374.60 made up of interest, employer KiwiSaver contributions, holiday pay and an alternative holiday not taken.

Learnings

Employers should take complaints or concerns about working relationship issues seriously and should never penalise or discourage employees from raising such concerns. Where the relationship issues are serious or sensitive employers might be wise to use a third party investigator which will maintain employer impartiality, especially when required to decide on the investigation’s findings.

To avoid claims of constructive dismissal employers should act in accordance with their good faith obligations which require parties to be active and constructive in establishing and maintaining a productive and communicative relationship. Any decision made by an employer must be justifiable, and where the decision might have an adverse effect on the employee’s employment they must be given relevant information and an opportunity to comment before the decision is made.

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