Managing director's 'come clean' comment revealed fatal flaw in investigation approach
A New Zealand employer proved serious employee misconduct but still paid $12,000 in compensation after critical procedural missteps derailed an otherwise justified dismissal.
Kyle Spencer, the general manager of Modern Transport Engineers Limited's Hamilton workshop, was terminated in February 2024 after the company discovered he had authorized work on his personal boat, a family member's campervan, and another relative's car using company time, staff, and resources during work hours.
The evidence was substantial. MTE employees confirmed they had worked on Spencer's boat for over 170 hours and the campervan for hundreds more hours. Invoices showed Spencer had ordered boat parts including a marine stereo and speakers. Spencer himself admitted during testimony that $2,000 was a fair amount for the work performed on the family car. No payment had been made for any of this work.
But the Employment Relations Authority determination, issued February 5, 2026, found that while the dismissal was substantively justified, the process was fundamentally flawed.
The problems began when Managing Director Robin Ratcliffe spoke to staff and told them Spencer had been "stood down" before Spencer was even notified of the allegations. When Spencer heard about the concerns and returned early from holiday on January 10, 2024, he was handed a letter and immediately suspended without being given any opportunity to respond.
More damaging was what emerged during the Authority's investigation meeting. When asked about his decision-making process, Ratcliffe described the investigation as giving Spencer an opportunity to "come clean." Asked directly whether he had decided in advance that Spencer's employment would end, Ratcliffe responded: "No. We had to give Kyle an opportunity to come clean."
When questioned about what he had to consider when making his decision, Ratcliffe stated that "dishonesty will not be tolerated, simple as that."
Authority Member Sarah Blick found these comments raised serious concerns about whether Ratcliffe had genuinely considered Spencer's explanations or had predetermined the outcome. The determination noted that Ratcliffe's informal discussions with staff about the allegations and Spencer being stood down prior to the formal investigation were not disclosed to Spencer during the investigation and likely had a detrimental impact on his standing in the workplace.
Despite acknowledging the employer's legal representation and the efforts of its chief financial officer and solicitors to conduct a fair process, the Authority concluded the procedural defects were not minor and resulted in Spencer being treated unfairly.
The outcome was unusual. Spencer was awarded $15,000 in compensation for humiliation and loss of dignity, reduced by 20 percent to $12,000 to reflect his own contribution to the situation. Meanwhile, Spencer was ordered to pay MTE damages for the unauthorized work, calculated based on materials costs and employee hourly rates rather than customer charge-out rates.
The case offers a stark reminder that proving misconduct is only half the battle. Even well-resourced employers with legal advice can undermine justified decisions through procedural failures. Standing down employees before hearing their version of events, making preliminary determinations, and conducting informal investigations that influence staff can prove costly regardless of the underlying merits.
The lesson for people professionals is straightforward: process and substance must align. The question is not just whether the employer was right, but whether the employer acted fairly throughout.
