Snap Resignations didn't justify dismissal

11 April 2021

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Ms Yu and Ms Jin (the employees) had jobs as Curtain Makers for Urban Décor Limited (Urban Décor) trading as Promax Colours.  On 10 December 2019 Mr Han, sole Director and Shareholder of Urban Décor, and the employees were involved in a heated argument in the factory after Ms Jin used her phone.  The employees claimed they were unjustifiably dismissed by Urban Décor on 11 December.  Urban Décor’s position was that the employees resigned or abandoned their employment.  The Employment Relations Authority (the Authority) decided to hear the employees’ claims together.

Urban Décor asserted that it had a phone use policy.  This was in the form of a document titled “Promax Colours staff meeting minutes” from a 2 July 2019 staff meeting.  The Authority found that both the employees were reluctant to accept that there was a policy limiting phone use during work time.  Ms Jin acknowledged that phone use was mentioned at the 2 July meeting, but her attitude was that, as she had seen other people using their phones, there could not be a policy.  Ms Yu was reluctant to accept that the minutes document was what was given to her at the meeting and she denied being able to remember the contents.  However, the Authority found that it was more than likely that both employees were at the meeting and given the meeting notes.
The events that led to the dismissal on 11 December 2019 included an argument that erupted due to Ms Jin using her cell phone.  What then followed was an argument, initially between Ms Jin and Mr Han.  However, after a little while Ms Yu became involved.  Mr Han and the employees all accepted the argument became heated.  There were differences in what was said, including whether the employees mentioned resigning.  The Authority, having reviewed the evidence from all parties, accepted that both employees said they quit before leaving the premises.
Later that afternoon the employees sent Mr Han a WeChat message regarding the argument.  There was no immediate response, but Mr Han sent via WeChat a letter which was described as a resignation letter to both employees.  Both letters conclude that the employee showed a negative attitude to work, was unwilling to comply with Urban Décor’s policies and unwilling to accept their error or correct their behaviour.  Therefore, the employees’ employment was terminated immediately.  Mr Han accepted that the letters look like he dismissed the employees.
Urban Décor’s position in its statement of reply was that the employees had been summarily dismissed due to serious misconduct.  By the time of the Authority investigation meeting, its position had changed that the employees had resigned and were therefore not dismissed.  The Authority accepted that the employees said they quit when leaving the factory.  However, these were clearly heat of the moment statements.  At such times it is incumbent on the employer to allow some time for a cooling off period to ensure that a resignation is genuine.  Mr Han did not wait long enough to see whether the employees retracted their resignation.  Instead, Mr Han let his annoyance at the employees’ argumentativeness and insubordination take over and decided to dismiss them.
For the dismissal to have been justified it needed to be something that a fair and reasonable employer could have done.  It was clear the dismissal was based on the heated argument in the workplace where the employees challenged Mr Han, however the employees were not warned that dismissal was a possibility, and Mr Han said in the argument he did not want to dismiss them.  He understandably found the situation frustrating with both of the employees challenging the policy.  The Authority did not find that the situation was one that destroyed the trust in the employment relationship.  Therefore, the dismissal was not one a fair and reasonable employer could have done, and the dismissal was unjustified.
Urban Décor was ordered to pay Ms Yu lost wages of $2,675.20 and Ms Jin $2,451.20 in lost wages.  The employees each received $4,000 for hurt and humiliation after a 50 per cent deduction for blameworthiness and contribution towards the actions that gave rise to their dismissals.  Costs were reserved.
Yu v Urban Décor Limited [[2021] NZERA 60; 19/02/2021; N Craig]

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