When can employers take back company devices during notice periods?
The Employment Relations Authority (ERA) recently dealt with a case involving unpaid sales commissions and allegations of improper conduct during a notice period.
A worker with 19 years of service claimed he was unjustifiably suspended and disadvantaged when his work devices were taken away while on sick leave.
The worker argued that his employer wrongfully deducted his annual leave entitlements without consent. He also sought payment for sales commissions he believed he had earned before his resignation took effect, including deals that were completed after his employment ended.
The employer denied these claims and filed a counterclaim, stating the worker had breached his employment obligations by engaging with their key supplier and customers during his notice period in ways that damaged their business interests.
The case centred on a sales manager who worked for a motor vehicle company from February 2004 to September 2023. He was instrumental in establishing and maintaining the company's relationship with a components supplier that modified trucks for specialised purposes.
After experiencing health issues in May 2023, the worker resigned with one month's notice. While on sick leave following an operation in August 2023, a manager visited his home to collect his work laptop and phone. The manager told him this was to ensure he could focus on recovery.
Evidence revealed the employer had different motives. As stated in the decision: "[The manager] accepted that what he told [the worker] was the motive, was not correct. He also accepted that it was not a request that the laptop and phone be returned, it was a direction." The devices were subsequently analysed due to concerns about the worker's communications.
The ERA heard evidence that the worker had contacted the components supplier about his resignation just one day after notifying his employer. The Authority explained:
"A purpose of the notice period when an employee resigns, is to give an employer a chance to advise customers, suppliers and others of the resignation and take steps to protect their business."
Shortly after this communication, the components supplier terminated their exclusive distribution agreement with the employer.
The Authority noted: "It is difficult to see that [the worker] could possibly have thought his actions in communicating with [the supplier] were advancing the interests of [the employer]. Indeed it is clear the opposite was true."
Evidence showed the worker had also shared supplier contact details with other customers without his employer's knowledge, which the Authority found problematic during the notice period.
The employment agreement specified the worker would receive "10% Nett Profit per vehicle sold, paid weekly in arrears by direct credit."
When examining the commission dispute, the Authority found evidence that the employer had previously paid commissions to employees after their employment ended.
The Authority determined: "[The worker] is entitled to commission on sales he instigated prior to the termination of his employment but which were completed after his employment ended." The parties were directed to calculate the exact amount owing.
The worker was also required to demonstrate which sales had progressed to binding agreements before his departure to qualify for commission payments.
The ERA found the employer had breached good faith obligations by misleading the worker about the device collection. However, it determined this did not constitute a suspension from work.
The Authority clarified the scope of permissible post-employment activities, stating: "There is nothing in law which stops [the worker] making arrangements for life post the end of his employment with [the employer]."
However, it found the worker had breached his duties of good faith and loyalty through his communications during the notice period.
The final determination noted: "The parties will need to work out and agree on what commission is due to [the worker]. If the parties cannot reach agreement on this, then leave is reserved to return to the Authority which will hear evidence on quantum and issue a determination accordingly."
