Challenge to determination of Employment Relations Authority dismissing claim of unjustified dismissal  – correct interpretation of clause relating to representations – objective approach to interpretation – has company satisfied test of justification? –  compensatable loss – reduction for employee contribution?

Ford v Henry Brown and Co Ltd [2024] NZEmpC 181

Henry Brown and Co Ltd is a small, family-owned construction company. Henry Brown is the sole director. In late 2021, the company advertised a project management role. Brendan Ford applied. Ford had been dismissed from his previous job.

Brown’s wife, referred to only as “Ms Muir”, took the lead in terms of the recruitment process. She spoke to one of Ford’s referees, who had been a colleague at his earlier job (not his manager). When asked why Ford had left the company, the response was “issues with general manager” and health and safety. No further inquiries were made.

Muir emailed Ford an application form and asked him to fill it in and send it back to her. It appears that he did not. Later that same morning, Muir emailed Ford a letter and employment agreement. Ford was having issues with his email system and ended up signing the employment agreement after he started work.

Ford started work with the company on 26 October 2021. After almost a year, in September 2022, Ford notified two personal grievances – one in respect of the company’s approach to health and safety issues and the other in respect of alleged bullying conduct by Muir at a staff meeting.

Muir and Brown were concerned at Ford’s behaviour and contacted his previous employer to speak to the referee. The referee no longer worked there, but they were informed that Ford had been fired and that they (Brown and Muir) would be better off without him.

On 20 September 2022, the company wrote to Ford advising of its concerns that he had misrepresented himself, in breach of clause 16 of his employment agreement, having not advised that he had been dismissed from his previous employment.

Clause 16 of the employment agreement stated:

Representations

In appointing you we have relied on your representations as to your qualifications and experience. You confirm that those representations are true and correct and that you have disclosed everything, which if disclosed may have been material to our decision to employ you. You also acknowledge that we may take disciplinary action against you, including dismissal, if your representations were misleading or incorrect.

Ford responded through his lawyer, advising that he had not been asked why he had left his previous employment, he had not sought to mislead or deceive the company and had provided the name of a referee from his previous employment as requested.

The company notified Ford of its final decision to dismiss, based on clause 16, on 3 October 2022.

Ford pursued a claim for unjustifiable dismissal and disadvantage in the Employment Relations Authority. The company cross-claimed against him. The Authority dismissed all the claims.

Ford challenged the Authority’s determination on unjustifiable dismissal in the Employment Court.

Applicable principles: Employment Relations Act 2000, ss 103A, 123, 124, 128 – what is the natural and ordinary meaning of clause 16? – any ambiguity to be construed against interests of the company who drafted it – has the company established that its decision to dismiss fell within the target of reasonableness? (no) – has Ford suffered compensatable loss? (yes) – appropriate quantum of reimbursement? – should there be a reduction in remedy for Ford’s contributing behaviour? (no)

Held: Ford’s challenge succeeds.  He was unjustifiably dismissed. The company must pay Ford the equivalent of nine weeks’ remuneration by way of lost wages and $9,000 compensation under s 123(1)(c)(i) Employment Relations Act 2000.

Note: The court drew a distinction between a failure to disclose (a failure to say something) and a representation (suggesting something was said). In rejecting the company’s “open-ended” interpretation, the court noted that it would bring a significant amount of uncertainty:

[25]…. How would a prospective employee know what “may” be regarded as relevant to the employer and accordingly what they had to disclose? What of information that an employer is not lawfully permitted to ask about or rely on when making hiring decisions, but which the employer might regard as relevant? Would family commitments, health issues, an historic criminal conviction be relevant?

Ford v Henry Brown 2024-NZEmpC-181-Ford-v-Henry-Brown-and-Co-Ltd