Caleys Limited is a Tauranga business that specialises in window furnishings. An employment dispute arose in 2022 that was subject to a recent decision by the Employment Court not to award remedies against a former employee, who for health reasons had resigned without giving a month’s notice.
Vertigo
Info.health.nz defines vertigo as “a feeling that you or your surroundings are moving when there is no actual movement. You may feel unsteady, it may be hard to walk or stand, and you may lose your balance. Some people feel as though they are spinning around or falling… often a symptom of an inner ear disorder. But it could be a sign of a more serious medical condition such as stroke, circulation problems or infection.”
It is a condition that forced Tauranga woman Teina Deadman to resign from her new job, in November 2022, which she felt was the right thing to do.
Dispute over notice period
A 13 October 2023 determination by the Employment Relations Authority (ERA) notes that Deadman gave one day’s notice – long enough to pass on sales leads from a recent expo, and return company property. Her employer Caleys Limited withheld her final pay which would have been $1,303.85 because she had not given one month’s notice. It appears that Deadman did not contest this, and probably needed to focus on her health anyway.
However, Caleys wasn’t done. It wanted another $3,157.67 because the employment agreement had a forfeiture, or penalty clause that would apply in the event that Deadman gave insufficient notice of resignation. The $1,303.85 already relinquished was therefore treated by Caleys as a part payment. Deadman disagreed and then stopped engaging with Caley’s demands. Caleys filed a Statement of Problem in the ERA.
The ERA dismissed Caley’s claim on the grounds that the forfeiture/penalty clause was invalid.
Frequent flyer
We note that a few months before Deadman worked for Caleys, that company had a nickel-and-dime success in the ERA when its former employee Shaun Osborne was ordered to pay Caleys $1,289.46 for unauthorised use of a company vehicle when he was employed for five months in 2019. Our blog “Trade Vehicle Policy” about this matter was published soon after the 2022 determination.
Appeal
It appears that after Member Davinnia Tan dismissed Caleys’ claim, its co-director Cyril Pepper felt aggrieved and challenged the determination to the Employment Court, to no avail.
Judge Kathryn Beck’s judgement of 18 October 2024 found that not only was the ERA determination correct, but also:
[63] On the evidence before the Court, it appears that Caleys made a deduction of $1,303.85 from Ms Deadman’s final pay in reliance on the forfeiture provision. As that forfeiture provision was unenforceable, that deduction was unlawful. There is also no indication that Ms Deadman was meaningfully consulted on the deduction prior to it being made, which is also unlawful. That sum ought to be repaid. Ms Deadman has not made a claim of her own, but if she wished to enforce the matter, she could do so in the Authority.
Costs
In both proceedings (Osborne and Deadman), neither party was represented by a lawyer or advocate. Accordingly, no costs were awarded.
Image
Caleys Limited now googles up as a small business that has sued two former employees where the amounts claimed added up to less than $5,000, and after spending several years in “the system”, won $1,289. From a business perspective it is difficult to find an upside to that.
Penalty clauses in s149 settlement agreements are not acceptable either
Law nerds: In 2017 Judge (now Chief Judge) Christina Inglis ruled that a mediated settlement agreement was unenforceable because it contained a penalty clause. 2017-NZEmpC-69-8i-Corp-v-Marino.pdf
Tristam Price
Editor
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