Worker rejects dismissal, argues there was no performance management process
A builder employed for four months was summarily dismissed the day after returning from annual leave taken to celebrate his wedding, with the employer citing faulty workmanship on a house build that resulted in loss of a major contract.
The employer claimed the worker failed to follow building plans, causing a house to be built in the incorrect location, seriously damaging the company's reputation and leading to contract termination.
The worker maintained he was unaware of any dissatisfaction with his work, had received no formal performance management, and was never told dismissal was a possibility if mistakes continued.
The dispute centered on whether the employer acted fairly and reasonably in summarily dismissing the worker without prior investigation, opportunity to respond, or warning that his employment was in jeopardy.
Employment background and dismissal circumstances
The worker was employed as a builder with the employer from mid-January 2024 until late May 2024, when he was summarily dismissed. The worker was paid an hourly wage of $32 per hour and worked 44 hours per week. The employer's sole director and shareholder met with the worker and terminated his employment.
The worker was on annual leave from early to late May 2024 to celebrate his wedding. On 22 May 2024, he called the director to advise that he was not well and took sick leave that day. During the phone call, the director advised the worker that he wished to meet with him on 23 May 2024 at 8:00 AM but did not say what the meeting would be about.
According to the worker, the director blamed him for faulty work that was done on a house before the worker went on annual leave.
The worker said that the house had passed a council inspection, but the director stated there had been faults with the house because the building plan was not followed, and as a result, the employer lost its contract with that company, selling the homes the employer was contracted to build.
Termination letter and allegations of serious misconduct
In addition, the worker's mistakes meant the employer had to compensate the company. The worker said the director advised he had no other work for the worker, so he had to let him go, and that because the worker was in deficit for his annual leave and was paid while on annual leave in May 2024, the director said they were square, and he wouldn't be paying anything further.
The worker said that following the meeting, he sent the director a text message asking about garden leave, whether to work four weeks or whether he would be paid four weeks.
He stated that the director swore at him in response and that the director believed they had an agreement at the 23 May 2024 meeting, and that he could go the long way if needed and that the worker would not get another building job in this town. The worker requested that the termination be put in writing.
The director then emailed the worker the letter later that evening on 23 May 2024. The covering email stated this was due to two serious breaches of the employment contract in regard to the work carried out: repeated failure to follow a reasonable instruction, and actions that seriously damage the employer's reputation.
On top of the two serious breaches, the worker had also had warnings on numerous occasions, including damage to work property, failure to read plans causing faulty workmanship, incorrect installations, failed inspections due to incorrect fixings, poor roof framing causing extra costs, and not working the hours agreed in the contract.
Prior performance discussions and disputed meetings
The letter stated the worker's employment was terminated effective immediately. This decision followed a series of incidents where the worker had consistently failed to follow direct instructions and delivered poor workmanship on multiple projects, including a major error that significantly damaged the company's reputation. Despite previous warnings and attempts to rectify these issues, there had been no improvements in conduct.
The worker stated that issues about his performance had not been raised with him previously by the director. The worker stated there were no formal one-on-one meetings regarding performance or conduct, and on the contrary, text messages sent by the director to the worker about previous jobs indicated the director was pleased with his work at one site.
The worker was unaware of any dissatisfaction. In relation to the specific defect on the build the worker was in charge of prior to going on annual leave, the meeting of 23 May 2024, where he was dismissed, was the first time the worker was made aware by the director of the error.
When the ERA asked the director what constituted serious misconduct under the employment agreement, he stated it was the worker's failure to follow reasonable instructions. The director stated that this included previous instructions about the worker's work and failure to arrive at work on time.
According to the director, he had previous meetings with the worker about his poor performance. The director's calendar showed that meetings took place in early February 2024 for the worker arriving late for work and for damaging work property, and in mid-March 2024 for other poor workmanship.
Evidence disputes regarding prior performance issues
On 14 March 2024, the director met with the worker about a failed framing inspection, in which he advised the worker that he needed to perform better. The worker's recollection of these meetings was vague. There was a dispute between the parties as to the extent of the worker's mistakes at work.
The ERA sought clarification from both the worker and director as to whether the issues around the worker's workmanship that were referred to in the termination letter had been discussed prior to the dismissal, and if so, what those prior discussions entailed.
In relation to damage to work property, after some dispute as to the specific damage, it transpired that the worker had been advised by the director about the damage to a sensor on a gate when the worker was returning a trailer to the director's property.
The worker accepted that this was brought to his attention by the director at that time, but there was nothing further discussed other than that.
The parties disputed whether a prior failure to read plans had been raised previously. In relation to incorrect soffit heights at one street, the worker accepted he had made this mistake but noted he had called the director to troubleshoot his mistake at that time and that the mistake was rectified on the same day.
In relation to incorrect installation on the same street, the worker also accepted that he made this error, but stated that there was no discussion about it with the director prior to the dismissal from a performance management perspective. The error was simply pointed out to him.
Authority's assessment of performance management process
The ERA did not find the worker's evidence particularly helpful on the basis that he failed to acknowledge that the director did in fact raise issues with his previous workmanship but later accepted the fact, albeit with some minor disputed facts.
Nevertheless, the director accepted that he never once raised dismissal as a possibility in these meetings, referring to the prior issues as relatively minor issues.
Therefore, despite raising some of the mistakes the worker made previously, the employer did not take action to properly address or manage the worker's performance, or to explain the potential consequences of continued mistakes in the context of his employment with the employer.
The director considered the worker's final error to have been more than trivial because the employer had lost a major contract as a result of the worker's error.
The director stated that he believed the worker agreed to leave the employer on 23 May 2024 on the basis that he did not have to repay his annual leave. The worker disagreed and considered there was no investigation into this issue, nor did he have a reasonable opportunity prior to dismissal to respond.
During the investigation meeting, the director acknowledged that one of his learnings from the dispute is that he did not provide an opportunity for the worker to seek legal advice prior to the dismissal, nor did he provide any prior indication that his job may be in jeopardy.
He also acknowledged that prior to employing the worker, he did not undertake independent work references.
Unjustified dismissal determination and summary dismissal
Having reviewed the evidence, the ERA considered that the worker had been unjustifiably dismissed. There are situations where summary dismissal without notice may be appropriate under the Act, but this was not one of those situations.
Understandably, poor performance will give rise to concerns for an employer and may be considered serious misconduct in some circumstances.
However, simply stating that failure to follow reasonable instructions constitutes serious misconduct in an employment agreement does not automatically mean an employer can dismiss an employee who failed to follow reasonable instructions at will.
Whether an employee's actions or inaction constitutes serious misconduct should not be an arbitrary assessment, but an objective assessment where the seriousness of the conduct is so destructive of the employer's trust in the employee that no notice is warranted before dismissing.
In these circumstances, the director accepted that while he had raised some prior issues with the worker, these were mostly related to minor issues, and there was no form of performance management or steps taken to support the worker in avoiding making similar mistakes in his work.
The director also acknowledged he never raised with the worker that dismissal was a possibility if the mistakes continued or escalated.
Instead, the worker was later left in charge of a build in which he failed to follow the building plan, which led to a major defect. It was this major defect that led to the employer's decision to dismiss the worker.
Procedural defects and unfair treatment findings
There was no dispute that this issue was only brought to the worker's attention at the meeting of 23 May 2024, in which he was dismissed. It therefore could not be said that the worker was provided a reasonable opportunity to provide a response to the issues about this major defect that the director claimed had led to the employer losing a major contract prior to dismissal.
The ERA was not persuaded that there was an agreement reached between the director and the worker from that meeting that the director claimed resulted in the worker agreeing to resign, because the manner in which the discussion took place left no room for negotiation.
In that meeting, the director relied on the worker's faulty workmanship as the primary reason for having to let him go, as well as saying there was no other work for him. The purpose of the meeting on 23 May 2024 was to dismiss the worker.
Furthermore, the letter of termination, which was provided subsequent to the meeting, was dated 22 May 2024. Although this alone was not determinative, the director did not deny that the letter was drafted the day before the meeting.
The termination letter that was provided to the worker subsequent to this meeting expanded in reasoning for the termination, but as accepted by the director, at no point was dismissal raised in prior discussions as a potential consequence of the worker's performance prior to dismissal.
Lost wages calculation and three-month limitation
The director himself acknowledged that he had learned from this experience and should have offered the worker a reasonable opportunity to seek legal advice prior to the dismissal and given prior notice that dismissal was a possibility. The ERA commended him for reflecting on his actions in these circumstances.
The Authority found that as the worker's performance had not been properly addressed by the employer nor was he made aware that certain or continued poor performance could lead to serious misconduct and potentially dismissal, there were more than minor defects in the employer's process when it dismissed the worker without notice which resulted in the worker being treated unfairly by not being given a reasonable opportunity to respond to its concerns.
The worker stated that following the dismissal, he found employment, but that new job ended after two weeks.
He also found some contracted work following this period, but said that he only became an employed builder again in January 2025 after several attempts to find new employment. Submissions advanced for the worker were that the Authority should exercise its discretion and award more than three months' wages.
The ERA did not consider that the discretion afforded was intended to extend to these circumstances because the causal link between the unjustified dismissal and the worker's unemployment had been broken.
Although the worker's new employment ceased after two weeks of work, the Authority was not persuaded that the cause of that employment ending could be attributed to the unjustified dismissal, other than that the worker only sought new employment due to the dismissal.
Compensation and contributory conduct reduction
The ERA considered an appropriate award in these circumstances was three months' wages. Based on the employment agreement, the worker's weekly wage was $1,408, calculated at $32 per hour multiplied by 44 hours per week. As such, the sum of lost wages over three months was $18,304.
The worker gave evidence on the impact the unjustified dismissal had on his emotional and physical health, noting that it occurred following his wedding and took away from what should have been one of his happiest years. The worker stated that, as he has children, the financial impact compounded matters.
Although he sought $30,000 in compensation, the ERA considered an award of $10,000 appropriate in these circumstances, having balanced the evidence against current trends in the Court. The Authority was required to consider the issue of any contribution that may influence the remedies awarded.
Submissions advanced on behalf of the employer were that a dismissal would likely have still occurred, as the worker had acknowledged his wrongdoing and that the mistakes he made were significant.
Consequently, the employer held the view that the worker had significantly contributed to his employment ending and that this should result in a discount in remedies awarded. The ERA agreed that the worker's continued poor performance contributed to the dismissal.
Although the worker's representative submitted that he may have continued employment with the employer had it initiated a performance review and therefore resulted in improving his work, this was speculative and did not obviate the worker's mistakes at work.
Final orders and 25% remedy reduction
There was no dispute that the worker's work had been defective on several occasions, and there was also no dispute that the build he was in charge of prior to going on annual leave was not a trivial defect. More than simple causation is required; there needs to be culpable action by the employee.
The Court in a similar case held a 25% reduction in remedies was appropriate after finding that there were substantial difficulties with the employee's performance, balanced with the employer's substantial procedural deficiencies in carrying out termination.
Similarly, on the current facts and evidence, there were repeated flaws, including a major defect, for which the worker was responsible and accepted, albeit reluctantly. As such, the ERA found that the worker's actions contributed to the outcome of his employment.
For these reasons, the Authority considered a 25% deduction from the compensation award of $10,000 appropriate. The employer was ordered to pay the worker $18,304 in lost wages and $7,500 in compensation after the 25% deduction.
