Keeping it in the family can turn sour
MIXING business with pleasure can be messy. But, in small businesses, it is an unavoidable reality. In this context, friends and family often form the backbone of the workforce, but, when the family start feuding, the wheels can fall off in a spectacular way.
Difficulties can arise in all aspects of the employment relationship, from being lax about paying wages to disciplinary matters. Family and friends may also be seen to receive preferential treatment, creating resentment.
These complexities have come to the fore in two recent decisions by the Employment Relations Authority and Employment Court.
Paying wages to family members in a fledgling business with no employment documentation happens surprisingly often. These situations often involve recent migrants, language barriers, and a lack of understanding of New Zealand employment law.
Things went particularly badly for business owner Hee Seung Lee, who owns the sushi restaurant Sushi High in Hawera. Lee employed his estranged wife, Hyerim Ji, as the manager. The two operated the business under a verbal understanding that Ji would be paid when the business could afford to pay her. Ji worked hard – she claimed to have worked 11-hour days, six days a week, although no wage, time or holiday records were kept.
When Lee returned from an extended trip to Korea, things turned nasty.
Their personal relationship soured, and Ji kicked Lee out of the family home. Lee retaliated by cutting off the power and phone.
Not surprisingly, these frustrations boiled over into the employment relationship. Lee stopped paying Ji for her work and put her on notice that she may be dismissed. Ji left when things got even worse and matters descended into threats, harassment and verbal abuse.
Lee issued a trespass notice and that was that for Ji.
Ji brought a claim of unjustified dismissal to the Employment Relations Authority and was awarded more than $100,000 in unpaid and lost wages, unpaid holiday pay, damages for hurt and humiliation, and other costs arising from the claim.
The authority found that Ji had been unjustifiably dismissed by Lee’s actions in giving a clear impression to Ji that the family and personal-relationship matters between them had become allconsuming. It found that Lee should not have let their personal problems overlap and affect their employment relationship.
Another family dispute resulted in the employer having to pay an award of compensation and lost wages to a former staff member in a case involving Big Kahuna Holdings, a civil construction group in Northland.
Brendon Booth was employed by Big Kahuna as a general manager. He reported to Steve Bowling, the owner. Booth was in a relationship with Bowling’s daughter, 17 years his junior, who also worked for Big Kahuna.
Bowling disapproved of the relationship. Bowling’s daughter moved in with Booth, and introduced him to one of her friends, who also got a job there.
When Bowling’s daughter ended the relationship with Booth and moved out, things got messy. Booth sent a series of texts to the friend which quickly became the subject of office gossip. Bowling caught wind of and read the texts. That evening, Booth called the Bowling household wanting to speak to Bowling’s daughter.
Bowling wasn’t impressed. The next day Booth was suspended and became the subject of serious misconduct allegations relating to abuse of power arising from his communications with Bowling’s daughter. He was eventually dismissed.
Booth challenged his dismissal in the Employment Court, which found that the disciplinary process was flawed. Bowling’s decision to dismiss Booth was predetermined and blighted by his partiality. He could not investigate Booth’s actions in a dispassionate way given his strong disapproval over the relationship with his daughter and the fact that Booth was continuing to try to engage the Bowling family by calling their home, which led to further abrasive contact.
The court noted that the lack of independence led to Bowling viewing Booth’s responses in a jaundiced way, and failing to fully investigate the relationship between the three staff and Booth’s record of good service. The court awarded Booth lost wages with a deduction for his contributing actions, and $10,000 in compensation.
Family is without doubt the most important social structure in our society. However, for small businesses, it pays to establish the job relationship on a professional footing, including having a written employment agreement and a clear grasp of roles, responsibilities and rights. It is also important to ensure that advice is sought from an independent mind outside the gene pool when things get messy – otherwise the fallout could be expensive and long-lasting.
Susan Hornsby-Geluk is a partner at Dundas Street Employment Lawyers. dundasstreet.co.nz