It all unravelled when a colleague resigned, calling the work dishonest
An employee who had company staff work on his boat and campervan has been ordered to pay his former employer nearly $44,000.
The Employment Court of New Zealand handed down its judgment on October 1, overturning an earlier finding that the worker’s dismissal was unjustifiable - and ramping up the damages he owes.
The worker had been employed by Modern Transport Engineers. The trouble started when a workshop employee went to the company director to resign, saying he was under too much pressure to complete work for paying customers because he was spending significant time on the worker’s personal vehicles. He also said he felt he was being asked to do things that were dishonest.
The director asked the company’s chief financial officer to investigate. What the Authority later found was that the worker had carried out personal work and directed other employees to do the same on a boat and a campervan - at no cost to himself and without the company’s agreement.
While the worker was on leave, he learned of the enquiries, cut his leave short and came in to see the director. He was handed a letter inviting him to a meeting the following week and told to stay on leave until then. He was advised to get legal advice.
Things moved slowly from there. The worker obtained a representative, asked for a fuller explanation of the allegations, and the parties eventually met on January 19, 2024. Before that meeting, the worker had been told he would be put on special paid leave. After the meeting, the company decided to suspend him while the investigation was completed.
That sequence became the heart of the dispute.
The Employment Relations Authority had found the suspension unjustifiable because there had been no proper process. It also took issue with the director’s informal conversations with other staff about matters relating to the allegations, finding those were not disclosed to the worker during the investigation - flaws the Authority said were not minor. On top of that, the Authority was troubled by the director’s comment that the meeting would give the worker an opportunity to “come clean,” which it read as predetermination.
Still, the Authority accepted the substantive decision to dismiss was open to a fair and reasonable employer. It awarded a global sum of $12,000 for the procedural failings, reduced by 20 percent for the worker’s own contribution.
Modern Transport Engineers challenged.
The Employment Court agreed the suspension was flawed - the worker should have been given a chance to respond before it took effect, and the circumstances were not so pressing as to make that impracticable. The Court awarded $2,000 for that unjustifiable disadvantage, with no reduction on the worker’s part.
But on the dismissal itself, the Court parted ways with the Authority.
The director’s conversations with other staff about office procedures and time-recording protocols did not make the dismissal unjustifiable, the Court held. Even if the conversations went further than advisable, that was a minor issue. And the worker clearly knew about those discussions - that was why he came back from leave early.
As for the “come clean” comment, the Court found it did not show predetermination. The evidence against the worker was strong from an early stage, and the director could not be criticised for hoping the meeting would give the worker a chance to explain himself. Modern Transport Engineers argued that an employer is not required to approach a disciplinary process with a completely blank mind and is entitled to form a tentative view during the process. The Court agreed. The Authority’s finding of unjustifiable dismissal was set aside.
Then came the money.
The parties had already agreed on $2,300 for work done on the worker’s wife’s car, though that remained unpaid. Workshop consumables and boat parts totalled $7,112. What was in dispute was the labour cost for the boat and campervan work.
The Authority had calculated labour at employees’ hourly rates, producing a total of $24,231.48. Modern Transport Engineers said damages should reflect the commercial charge-out rate - roughly three times each employee’s hourly rate, covering employment costs, premises and business expenses. On that basis, it claimed $65,115.13, though the Court found a miscalculation and corrected the figure to $64,971.
The Court agreed that when an employer has been deprived of labour hours through an employee’s breach, the right measure is the market rate for those hours. It recalculated using three times each employee’s individual hourly rate - the employees’ rates ranged from $22.70 to $36 an hour - and arrived at a total of $53,870.43, including consumables and the wife’s car.
Then it applied a discount. There was no evidence Modern Transport Engineers had turned away paying work because of the employee’s vehicles. The director acknowledged that discounts were given on a case-by-case basis, referring to a 20 percent discount on a big job as a “gesture” for a customer likely to bring in more work - though he characterised that as a “loss leader.” He also accepted the company would not charge staff for working on their own vehicles in their own time, even using company premises.
The Court settled on a 15 percent discount, bringing the total to $45,789.87.
After offsetting the $2,000 suspension compensation, the worker was ordered to pay Modern Transport Engineers $43,789.87 within 28 days.
For HR teams, this case is a practical walkthrough of what does and does not sink a dismissal process. Informal staff conversations, a strong early view of the evidence, even a botched suspension - none of it made the dismissal itself unjustifiable where the substantive decision was sound. But suspending someone without giving them a chance to respond first still cost the employer $2,000, even in a case it otherwise won.
