Can slashing an employee's hours constitute their dismissal?
In a recent decision, the Employment Relations Authority considered whether a café owner, who had almost halved a worker’s weekly hours, had signified a constructive dismissal. The applicant, a friend of the respondent’s daughter-in-law, commenced working at the respondent’s food cart and coffee shack in mid-2018.
The terms of the applicant’s employment were never recorded in writing. However, given wage and time records showed the applicant typically worked 45-57 hours per week, the authority found that a guaranteed weekly minimum of 45 hours was a term of her employment.
Although the applicant’s primary work was on the food cart, she frequently performed roles in the coffee shack, given the café had no full-time barista.
In December 2018, a disagreement arose between the applicant and a family member of the respondent. While further details were not disclosed, the applicant submitted this disagreement was a catalyst for her dismissal.
Shortly thereafter, the applicant was called to a meeting, during which the respondent informed the applicant that a full-time barista had been hired for the coffee shack.
The applicant alleged that she was then told her weekly hours would be reduced to 25, as the food cart “wasn’t making money” and that she could “take it or leave it”. She submitted that she could not survive on this reduction in hours and became very upset and left the meeting.
In contrast, the respondent alleged that he wanted the applicant to return to the “original arrangement” of working 36 hours per week on the food cart. He denied dismissing the applicant and said that she simply left the meeting and never returned to work.
The authority found the respondent’s reduction of the applicant’s hours to be a “fundamental breach of the agreement between the parties”. The authority did not believe the respondent sought to mislead or deceive but rather had a “naïve understanding of the obligations an employer has towards an employee.”
The dismissal had a harsh effect on the applicant’s wellbeing, manifesting in two suicide attempts in the following three months.
The authority awarded $20,000 in compensation and $13,036 in lost wages to the applicant.
Key Takeaways for HR:
- A significant reduction in an employee’s working hours may constitute a dismissal
- Although an employment contract may not be in writing, regular patterns (such as in the number of working hours) may constitute a term of the agreement
