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Avoiding the constructive dismissal trap

13 February 2019

KiwiBuild had been a key pillar of Labour's policy platform but the programme has hit turbulence.

Ministry of Business Innovation and Employment chief executive Carolyn Tremain proclaimed that the arrival of Stephen Barclay as chief executive of KiwiBuild was a significant appointment. He was previously headed the San Francisco's Americas Cup event, and even more recently held a senior role in the Ministry of Health.

Barclay started with KiwiBuild in May 2018. In October, Housing and Urban Development Minister Phil Twyford was criticised about the scheme's first buyers when he admitted it wasn't to help low income families.

Wanaka's KiwiBuild development encountered a lack of buyers, as did a development in Onehunga. No doubt all of this would have put pressure on the chief executive and minister.

Pressure of this sort can cause considerable tension within an organisation. In the case of KiwiBuild there were reports of complaints from employees, contractors, and stakeholders regarding Barclay's leadership behaviour, according to Andrew Crisp, chief executive of the Ministry of Housing and Urban Development under which KiwiBuild now sits.

An employment investigation commenced and it appears Barclay was put on special leave or suspended for over two months.

On January 18, Barclay resigned. In a statement issued on Barclay's behalf, he claimed the complaints were "entirely linked to the implementation of the Kiwibuild programme" and he had responded to each complaint and requested independent investigations, but this was denied.

He claims the long suspension and investigation into his behaviour made his position untenable and led him to resign.

Employees don't find employment investigations into their behaviour pleasant, but the employer has an obligation to investigate complaints if they receive them. It is hard to see how conducting an investigation in itself would justify the resignation.

Employees who decide to resign and claim they were forced out create an uphill burden for themselves if they want to raise a legal claim. When an employee claims constructive dismissal the obligation is on them to prove that there was in fact a dismissal and not simply a resignation.

According to the leading case in 1985 involving Woolworths and the Auckland Shop Employees' Union, there are three types of constructive dismissals.

The first is where the employer says "resign or I will dismiss you".

The second is where the employer engages in a course of conduct designed to force you out.

The third type is more subtle. It involves a breach by the employer of a fundamental duty that leads the worker to resign and which an independent observer would predict would lead to a resignation. Working in unsafe conditions is an obvious example of a breach of such a condition.

The classic case of this third type of constructive dismissal involved the old Auckland Electric Power Board which asked an employee to read electricity meters in properties in Mangere where he was repeatedly attacked by dogs.

The employee reported the multiple attacks and concerns for his safety but received little response from his employer. This situation came to a head when the meter reader refused to read the meters he was assigned to because of a marauding pack of vicious dogs.

When he explained this to his employer, he was told he was unsuitable for the job and if he continued to refuse to read meters in the assigned area he would be in breach of his employment agreement. In response, the employee resigned.

The Court of Appeal held that there was a constructive dismissal because the resignation was caused by a breach of the employer's duty to provide safe working conditions.

Any finding of constructive dismissal depends on the circumstances. In Barclay's case, there appears to be disagreement between the parties as to what happened.

Barclay also complains that his boss breached his privacy by speaking to the media about the nature of the complaints against him after his resignation.

When an employee complains to the media about the way they have been treated, of course they run the risk of a response in the media. However, according to media reports it seems the ministry spoke publicly first.

Accordingly, Barclay may succeed in arguing that his privacy was breached by his employer, and a ministry, disclosing personal information about his employment.

We do not know the full circumstances in which Barclay resigned. However, on the surface, it looks like he cut his own throat by resigning and he must now prove his resignation was really a constructive dismissal. He must then prove that the dismissal was unjustified to strike gold.

Workers should always take advice before resigning in circumstances such as these. While in some circumstances a resignation is appropriate, generally it is better to let an investigation run its course and defend your position accordingly.

Cullen - The Employment Law Firm was one of the first eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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