The Employment Court has issued the first banning order pursuant to the Employment Relations Act 2000, two years after the sanction was introduced into legislation in 2016.
Gordon Freeman, the former owner of the Watershed bar and restaurant and Sequoia 88 restaurant in Christchurch, has been banned from employing staff for three years and ordered to pay a penalty of $10,000, as a result of multiple breaches of employment law.
The primary issue was Mr Freeman relying on an illegal forfeiture clause in his company’s employment agreements. This clause purported to allow the employer to deduct money from wages and holiday pay where an employee did not give the contractually required notice period when resigning.
These clauses are common, particularly in old employment agreements, and are fraught with risk. An employer wishing to make deductions from wages, particularly as a penalty for a failure by the employee to give the contractual period of notice, should take legal advice before doing so.
A banning order is a significant sanction with serious consequences for the individual involved. In this case, the order and penalty were agreed to between the parties, meaning care needs to be taken in applying it to other factual situations. However, it is a timely reminder of the serious consequences of breaching basic employment law.
If you have any questions relating to this article, or the legality of clauses you have or would like to have in your own employment agreements, please contact a member of our employment team.
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