Short shrift for rough deals

People can be treated wrongly whatever their earnings or seniority and all should have access to justice, Peter Cullen says. New proposals on taking a personal grievance case would exclude the better off.

Many readers will remember the case Martyn Turner took against his employer Ogilvy & Mather (NZ) Ltd. The case started in the early 1990s and made its way to our Court of Appeal. Popular Employment Court Judge Derek Castle first heard the case.

At the time, Ogilvy & Mather was a worldwide advertising agency with offices in more than 50 countries. It was part of the largest advertising group in the world. It commenced operations in New Zealand in 1970, and Mr Turner joined the company as a founder employee, having been invited to join by the managing director of the time.

Mr Turner had a background in the advertising industry. He was appointed to the board of directors of Ogilvy & Mather, and in 1979 was appointed managing director. He was dismissed in 1992, having worked for the company for 22 years. The company prospered under Mr Turner's leadership. Sadly, the relationship between Mr Turner and the Auckland leader of the business was not good. To begin with, Mr Turner persuaded the Auckland managing director to take a new position. Then Mr Turner and the Auckland manager fell out.

A Mr Wright, who held a senior position based in Hong Kong, learned of the dispute between the two men. Mr Wright flew to Auckland and held discussions with the aggrieved manager there, and other senior executives. He told Mr Turner not to be present for those discussions.

Mr Wright came to Wellington and was wined and dined by the locals, including Mr Turner. Without any "lead-up" and prior to a function that had been organised for that night at the firm's premises, Mr Wright told Mr Turner he was dismissed.

We are told Mr Turner was at a loss for words, but that Mr Wright did not want to discuss the matter any further at that time. Both attended the dinner function that evening, which was mainly to welcome Mr Wright. The following morning, Mr Wright had a brief discussion with Mr Turner at a staff function at Mr Turner's residence. The tone of the conversation was that Mr Wright had made a decision as to who was to remain with the company, and on the basis of what he had heard, regrettably it was Mr Turner who had to go. Little else was said. Shortly afterwards, a member of Mr Turner's family drove Mr Wright to the airport for Mr Wright's departure from New Zealand.

When Mr Wright was back at his office in Hong Kong, he sent a facsimile letter to Mr Turner. It confirmed his demise but said that he could stay on for six months as non-executive chair. It told Mr Turner that the business was not perceived as successful, and that the work was conservative and dull; Mr Turner was seen as being responsible. Many other performance criticisms were raised.

Not surprisingly, Mr Turner was concerned that the issues Mr Wright brought up had never been raised with him previously. They were generated entirely as a result of Mr Wright's brief visit to Auckland, and Mr Turner had had no opportunity to state his case. Mr Turner firmly believed the criticisms could be successfully refuted. Readers won't be surprised to learn that Mr Turner won his employment case and was awarded a significant amount for loss of salary, and for compensation for humiliation and distress. The awards made for him were probably at the time the highest made for a dismissed plaintiff in New Zealand. Allowing for inflation they still may be.

Judge Castle's decision went on to the Court of Appeal. The total of lost wages was reduced from three years to 18 months. The award for a lost bonus payment was set aside, but the $50,000 awarded for distress and humiliation survived. The costs awarded in Mr Turner's favour were also reduced. The $50,000 awarded for humiliation and distress was granted in the early 1990s. Even today this is a high award.

MANY readers will remember this case, and some will know Mr Turner himself. He is a prominent and respected Wellingtonian. Obviously, what occurred to him was extremely damaging and distressing. That is why the level of the awards was so high. The Government has just brought out a discussion document looking at the personal grievance provisions in the Employment Relations Act 2000. Various suggestions are canvassed for which the Government seeks feedback. One of the ideas the discussion document mentions is having a salary cap on eligibility for raising a personal grievance.

That would almost certainly mean that someone in Mr Turner's position would not be able to challenge what happened. The salary cap idea has some currency in Australia. I recall the unions in New South Wales wanting a salary cap to exclude managers from the legal system for employment cases. They succeeded. The arguments included that having people in management positions bringing claims cluttered the system, and that their higher salaries should cushion them.

I have never understood the argument that people who are managers should not have legal remedies if they are treated poorly. It seems to me irrelevant what a person's position is. If you have been treated in the way that, say Mr Turner was, it is totally inequitable that you are excluded from the legal process. Anybody who has been unjustifiably dismissed should have a remedy.

Another topic for consideration in the discussion paper is whether an employee's length of service should be a factor in whether he or she is able to take a grievance. In other words, employees would need to be with an employer for a specific period of time before they are eligible to raise a personal grievance.

This has nothing to do with the current 90-day period during which people can be on probation without the right to raise a personal grievance if they are dismissed by a small employer. Again, I cannot see why there should be a length of time to qualify for remedies against an unjustified dismissal. If somebody is unjustifiably dismissed, then that person should surely be entitled to a remedy.

I agree that the 90-day probation period for small employers compromises this principle, but because the exception is limited to 90 days and will encourage employers to take on employees, it does seem a reasonable balance of interests. I similarly see the sense of Business New Zealand wanting to extend the 90-day period to all employers. It would do little damage.

I think, however, that going outside of the trial period and having a qualification period of say six months before one can bring a grievance is going far too far. Employees who have been unfairly or unjustifiably treated should not be excluded from access to the courts.

The discussion paper also raises the question of procedural issues in personal grievance claims being given too much weight. There are some decisions where this has occurred, although there are very many more where a common sense approach has been taken to the significance given to procedural fairness.

Clearly, no reasonable employer would want to be able to behave in a procedurally unfair way when taking disciplinary action against an employee. Refusing to give the employee all relevant information about an employer's decision, or an opportunity to state his or her case, would be obvious examples of procedural unfairness.

Overall, the discussion paper has a number of good ideas, and a number of dangerous ones.

Peter Cullen is a partner at Cullen - the Employment Law Firm

Email: peter@cullenlaw.co.nz