The Post

Keeping it in the family can turn sour

- Susan Hornsby-Geluk EMPLOYMENT MATTERS

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

 ??  ?? Family feud: It is important to ensure that advice is sought from an independen­t mind outside the gene pool when things get messy in family relationsh­ips within a business – otherwise the fallout could be expensive and long-lasting.
Family feud: It is important to ensure that advice is sought from an independen­t mind outside the gene pool when things get messy in family relationsh­ips within a business – otherwise the fallout could be expensive and long-lasting.
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