Termination for incompatibility is only justified in rare and unusual cases, as articulated by the Employment Relations Authority in Parmar v Pharma Pac Limited 10 February 2020 [2020] NZERA 57. In this case, Pharma Pac was ordered to pay Mr Parmar a total of $22,500 in compensation and $14,570 for lost wages. We delve further into the facts of this case and the key takeaways below.
Ganesh Parmar was employed by Pharma Pac as a Stores Assistant for 11 years prior to his dismissal. On 10 September 2018 Mr Parmar was involved in a forklift incident. Following a meeting Pharma Pac emailed Mr Parmar with its findings of what occurred and asking him to let them know if he felt that he was unable to perform the tasks of his role. Mr Parmar was very upset by the email and felt that he was being blamed for the incident. He requested more information from Pharma Pac, including the health and safety procedures he should have followed, video footage and the meeting minutes. Pharma Pac denied that this information existed.
On 25 September 2018 Mr Parmar provided a medical certificate stating he would be unfit for work for 10 days due to stress. He repeated his request for the documents and that being blamed for the incident had caused him immense stress. Pharma Pac went on to request further information on Mr Pharma’s medical diagnosis and stated that it would need Mr Parmar to attend its medical practitioner prior to allowing him to return to work. Mr Parmar did not object to seeing Pharma Pac’s medical practitioner; however he reiterated he wanted more information around the allegations Pharma Pac had made around his capability to do his role and the grounds for the medical examination. Mr Parmar’s sick entitlement ran out and he was on unpaid leave for one month.
As matters deteriorated, Pharma Pac asked Mr Parmar to attend mediation to discuss the issues. Mr Parma responded asking why he was being kept away from work unlawfully when he had a medical certificate stating he was fit to return to work. In response to Mr Parmar’s concerns, Pharma Pac’s lawyers wrote to Mr Parmar stating that his actions were undermining the employment relationship.
Pharma Pac went on to invite Mr Parmar to a disciplinary meeting, with the letter confirming that there were a number of issues requiring resolution, and that a possible outcome of the meeting was termination of his employment. Mr Parmar explained to Pharma Pac that termination of his employment had already occurred when they prevented him from returning to work. On 2 November 2018 Pharma Pac sent Mr Parmar a letter terminating his employment on the grounds of incompatibility.
Authority’s findings
The Authority found that, while the relationship had certainly deteriorated, it was not irreconcilable. It found, on balance, there were a number of steps that Pharma Pac could have taken to salvage the 11 year employment relationship. These included addressing Mr Parmar’s concerns about the forklift incident and providing the information he wanted, which as it turns out, Parma Pac had all along. The Authority thought that providing the information from the beginning may have led to a different outcome by alleviating Mr Parmar’s feelings of being ignored.
Secondly, while Pharma Pac was entitled to request a medical examination, this should have been organised quickly, particularly considering Mr Parmar did not object to having it done and he was prevented from returning to work until he did so. Further, the parties could have met in person to understand the basis for his concerns, rather than insisting Mr Parmar attend mediation and then corresponding through lawyers. The Authority also noted this was the preferable method of communication, as Pharma Pac knew English was not Mr Parmar’s first language.
The Authority found the dismissal was not substantively justified, nor was it procedurally sound. There were a number of serious defects in the process, including failing to sufficiently investigate its concerns and/or raise these with Mr Parmar prior to his dismissal, i.e. a letter was sent stating he was terminated for incompatibility, when this had not been put to Mr Parmar for his view. The Authority reiterated that it is a rare and unusual case where incompatibility will justify dismissal.
When it came to remedies, Mr Parmar was awarded lost wages for his unjustified dismissal, lost wages for his unjustified disadvantage (i.e. the time he was prevented from working) and hurt and humiliation compensation. The Authority did make a discount for contribution by Mr Parmar to his grievance, as it found Mr Parmar contributed to the relationship breaking down and possibly inflaming a difficult situation.
Key takeaways for employers
- Address issues as they arise
- Provide documentation if you have it
- Sometimes meeting in person is more productive than written correspondence – this can go a long way to clearing up misunderstandings from an employee’s perspective
- Always follow a fair process. Provide an employee with a reasonable opportunity to respond to concerns before terminating
- Termination for incompatibility can only be justified in rare circumstances – employers need to consider if the relationship is truly irreconcilable. All steps to salvage the relationship must be taken.
Workplace Law team
Employment: Andrew Shaw, Fiona McMillan, Gwen Drewitt, Maria Green, Hannah Martin, Joseph Harrop, Holly Struckman, Alex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia Strickett, Ken Huang, Mary Zhou, Shi Sheng Cai (Shoosh), Sarah Kirkwood, Janeske Schutte, Lingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew Shaw, Fiona McMillan
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