Informal transfer between related companies leads to compensation order
The Employment Relations Authority (ERA) recently dealt with a case where a long-serving worker claimed she was unjustifiably dismissed after an informal transfer between two closely connected companies.
The worker, who had 44 years of service in the newspaper industry, argued she had only agreed to "give it a go" in a new role with a sister company.
When she found herself struggling with unfamiliar tasks and inadequate support, she said her concerns weren't properly addressed.
The dispute centered on whether there was a proper employment agreement in place and whether the worker was constructively dismissed when she resigned after raising concerns about her new role.
The case originated within a media organisation where a print media company needed to quickly establish in-house distribution operations after its external contractor suddenly ended services in mid-2022. The worker had been with the print media company since 2018, carrying over significant long-service benefits from previous ownership changes.
The print media company operated through its wholly-owned subsidiary, the distribution company. They shared the same premises and CEO, with the print media company providing human resources and financial services to both entities.
The regional manager approached the worker about a role in the distribution company just before her annual leave. As noted in the decision, this conversation lacked formal documentation and clear role description - elements that became central to the dispute.
The Authority found there was no job description when the position was offered. The evidence showed urgency in filling the role, with the distribution manager stating "the time was ticking to put someone in the role."
The worker soon found herself struggling with computer-based tasks and workload management. The Authority noted in its decision that "computer work like this was not her strength and she was soon struggling with it."
When the worker raised these concerns with management, a meeting was held where, according to contemporaneous notes accepted by the Authority, the regional manager said the role "was always going to be a high stress position with everything coming at you all at once and all of it urgent."
A critical finding was that the worker remained on the print media company's payroll throughout her employment, despite supposedly working for the distribution company. The Authority noted this arrangement "supports that [the worker] remained an employee of [the print media company]."
The Authority emphasised that "The Act requires employees to be given sufficient information and an adequate opportunity to seek advice before entering an IEA [Individual Employment Agreement], part of the duty of good faith behaviour in forming an employment relationship."
In examining the recruitment process, the Authority found the worker had received "insufficient information to enable her to accept despite there being verbal acceptance of a pay rate and her long service entitlements being carried over."
The Authority concluded there was "a breach of duty of good faith and implied duty of trust and confidence" in how the worker's workplace concerns were handled. The decision noted she "reasonably could no longer trust [the print media company] to resolve the issues she came in serious distress to [the regional manager] about."
The worker's evidence highlighted the personal impact: "The [employer] was my family. It was a major part of my social life. I have been there for 44 years, and I trusted my boss... Losing my job was like losing a part of myself."
The Authority determined that the print media company "ought to have been reasonably foreseen [the worker] would resign having by then likely not had her considerable distress in the workplace addressed when it could have been when she raised it."
As a result, the Authority ordered the print media company to pay compensation of $22,000 and lost wages of $11,544 gross.
