The Devil is in the Detail

Mr Ford was employed by a small construction business Henry Brown and Co Ltd to help out Mr Brown who was needing surgery. Mr Ford was summarily dismissed 12 months later, fundamentally for not disclosing he had been dismissed from his previous employment.

The position of Project Manager was advertised and eight applications were received, a selection process was followed, and ultimately Mr Ford was appointed to the role.

The employer claimed that during the recruitment process Mr Ford was asked why he left his previous employment. The employer said Mr Ford did not disclose that he had been dismissed, however said he left because of relationship issues with the area manager and health and safety concerns. Mr Ford claimed he was not asked the question.

During the selection process referees were requested and Mr Ford provided names, including someone from his most recent employment. That referee was not Mr Ford’s manager, but a colleague. When the referee was asked why Mr Ford left, he said because of “issues with the general manager” and health and safety.

Mr Ford was offered and her accepted the position. An Employment Agreement was provided and signed (after employment started) which had a representations at clause 16, which 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.”

Initially, things were going well. Mr Ford claimed that in a casual conversation with Mr Brown he explained his experiences at his previous employer and said he had been dismissed. Mr Brown accepted the conversation occurred but didn’t recall when.

Eleven months into the employment relationship Mr Ford raised a personal grievance based on health and safety concerns. A short time later a second personal grievance was raised claiming Mr Brown was bullying Mr Ford.

The employer was concerned about Mr Ford’s behaviour and the manner in which he was interacting with staff, themselves, subcontractors and clients. They were so concerned they contacted his referee at his previous place of work to see if they could shed light on the issue. When they rang, they were told that the referee no longer worked there. They were asked what the purpose of the call was, and, when advising that they were ringing about Mr Ford, they were told that he had been fired and that the employer would be better off without him.

The employer initiated a response to the personal grievance claims and at the same time wrote a separate letter to Mr Ford advising that they had concerns that he had misrepresented himself to them when applying for the role and was in breach of cl 16, having not advised, when asked, that he had been dismissed from his previous employment. It said that termination was a possible outcome and sought his response.

Mr Ford responded through his lawyer, advising that prior to being offered and accepting the role he had not been asked why he had left his previous employment. He said that he had not sought to mislead or deceive the company about his background; he had provided the name of a person from his previous employment as he had been requested to do.

Ultimately Mr Ford was dismissed for breaching clause 16, and he raised a further grievance for unjustified dismissal.

The case was heard in the Employment Relations Authority who ruled in favour of the employer. Mr Ford appealed the decision in the Employment Court on the unjustified dismissal claim only.

The Court found the interpretation of clause 16 was central to the decision. The Court outlined the principles applying to the interpretation of employment agreements as follows:

“[19] The approach to the interpretation of employment agreements is objective. The aim is to ascertain the meaning which the agreement would convey to a reasonable person having all the background knowledge that would reasonably have been available to the parties in the situation in which they were at the time of the agreement. This objective meaning is taken to be that which the parties intended. While the meaning of a clause in an agreement may appear clear, meaning is informed by context. A provisional conclusion as to meaning is to be cross-checked against the context provided by the agreement as a whole, and any relevant background.”

The Court found that based on its ordinary, natural meaning, clause 16 did not require the employee to disclose his dismissal. In coming to that decision, the Court relied on the following:

• The requirement to disclose “everything” material to the decision to employ needed to be interpreted in the context of the “Representations” provision as a whole.
• Based on its ordinary and natural meaning the provision was about representations as to qualifications and experience.
• Interpreting the reference to “qualifications and experience” as including any disciplinary action and any grievances the employee may have raised was not “how a fair and reasonably informed objective observer would likely read cl 16”.
• The description of the role and the technical duties associated with it, outlined in schedule 2, showed the expertise required in the role; this context reinforced the interpretation of clause 16 as being about the qualifications and experience required to do a technical job.
• The employer drafted the agreement, meaning any ambiguity should be construed against its interests.

The Court found the employer was not justified in relying on clause 16 to dismiss the employee.

The detail of the wording in Employment Agreements is incredibly important. Employers often only realise this when they are trying to resolve a challenging issue and it is too late to make changes. While free Agreements off the internet may seem an easy option, they often leave you stranded when you most need it.

Please call us if you would like your Employment Agreements reviewed. It may be well worth the investment.

For those of you who are wondering what this case cost the employer – in addition to the cost of being represented at the Authority and then the Court, as well as the costs contribution they will have to make to the employee, the Court awarded $9,000 compensation and nine weeks wages for lost remuneration.