Falsified work references

The case of an employer ordered to pay more than $10,000 to one of his refrigeration engineers who had falsified his work history, wrecked a customer’s equipment and almost electrocuted one of his fellow workers has attracted recent media attention. The newspaper report indicated that these decisions baffle bosses. Mr Faber the owner of the employer company was reported to be stunned by the ERA decision saying “It doesn’t matter that the employee is a fraud and you can prove he is a fraud – you still lose the case”.

So just how did the employer come to lose the case and be up to pay the employee compensation?

The applicant in the case, a Mr Gostman, had moved to New Zealand from South Africa having obtained a work visa to work for Mr Faber’s company as an air conditioning and refrigeration technician. Mr Gostman had been summarily dismissed. As is typical in these cases Mr Gostman claimed his dismissal was substantively unjustified and the result of an unfair procedure. He sought reinstatement, loss of remuneration, interest, compensation for distress and a penalty for breach by the employer of its good faith obligations.

The outcome of the case was determined by whether the employer had satisfied the justification test under the Employment Relations Act (ERA). This requires the ERA to assess whether the employer’s actions and how the employer acted were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred.

It seems from the report of the case that Mr Gostman had admitted eight work performance incidents where he may have been at fault, costing Mr Faber’s company in excess of $2,200.

The Authority concluded that it was more likely than not that Mr Gostman’s difficulties with his work arose because he did not have skill or knowledge commensurate with the 15 years industry experience he said he had.

The ERA saw the incidents as matters of poor job performance, not misconduct. It said that a fair and reasonable employer would not dismiss an employee for substandard performance unless it had first attempted to improve the employee’s performance by way of a performance management or monitoring process. So here it was fatal to the employer that Mr Gostman had not received prior poor performance warnings designed to improve performance or at least put the employee on notice that his work was so unacceptable as to place his ongoing employment in jeopardy.

The ERA however did take account of the admitted incidents of unsatisfactory work and the fact that extensive training coaching and supervision of Mr Gostman would be required to conclude that it would not have been reasonable to reinstate him. The ERA observed that reinstatement was no longer the primary remedy for a dismissal grievance and in determining whether it was practicable to reinstate Mr Gostman involved a balancing of the interests of the parties and the justice of the case with regard not only to the past but more particularly to the future. Safety concerns were expressed by some of Mr Gostman’s colleagues, all of whom said they did not wish to work with him.

So Mr Faber had some success by at least avoiding Mr Gostman being reinstated.

What about the “fake references”?

The employer claimed that Mr Gostman had seriously misrepresented himself when he filled out his job application form and in his interview. The misrepresentations that were alleged involved Mr Gostman citing his skills qualifications and experience in his CV and job application. The ERA was satisfied on the balance of probabilities that Mr Gostman had misrepresented his skills and experience. However the dismissal does not appear to have been based on the misrepresentation.

The fact that Mr Gostman did not have the requisite skills and experience necessary for the job however was not only a factor that disentitled him to reinstatement but also resulted in the ERA reducing Mr Gostman’s remedy for reinstatement. He ended up receiving half of what would have been awarded otherwise due to his contribution towards the situation that gave rise to his dismissal. The high level of contribution by Mr Gostman to the situation causing his grievance was also a reason for the ERA not to award him interest on his loss of remuneration.

Counterclaim

In the case, the employer had relied on misrepresentation as one of the grounds for claiming the cost of Mr Gostman’s work errors. The ERA held that the losses were not caused by the misrepresentations. The ERA held that while Mr Gostman’s performance was poor, he had not been negligent to the standard required to enable these losses to have been recovered from him. The ERA also thought that the employer had contributed to some of its losses by not making thorough enquiries at the pre-employment stage, including discussing Mr Gostman’s history, skills and experience with his referees and also by not managing Mr Gostman’s performance once issues became evident. So no award was made against Mr Gostman on the counterclaim.

This was a case where the employer had not managed performance issues properly before dismissing its employee. While the employer may have felt aggrieved at getting an award just over $10,000 made against it, the outcome to the employer could have been much worse. Regard was had to the employee’s failings both by declining reinstatement and also the 50% discount on the lost wages remedy that would otherwise have been awarded.

If you would like further information about this article or require advice on anything related to employment matters, please contact your usual JR advisors, or our employment law specialists.