ACT wants law change after boss pays $10K to CV-faker

ACT leader John Banks: Employment laws are confusing

ACT says employment laws need to change after a small Whakatane business was ordered to fork out $10,000 to a refrigeration engineer who lied about his qualifications.

Inquiries by Independent Refrigeration and Electrical revealed Friedriech Gostmann was a bricklayer and had offered little more than handyman help to the refrigeration trade in South Africa.

But he claimed he had 15 years' experience as a refrigeration engineer when he applied for the job at Independent, installing and repairing commercial refrigeration and air conditioning units.

On the job, he made a number of serious mistakes, including an incident when a young apprentice was nearly electrocuted when a set of cables short-circuited because Mr Gostmann had failed to isolate them.

Mr Gostmann took Independent to the Employment Relations Authority after he was dismissed without notice in August, seeking reinstatement.

When Mr Gostmann was asked to resign or undergo a notice of dismissal process, he did not return to work.

Independent’s chief executive and owner Gordon Faber told the ERA he would not reinstate Mr Gostmann because he was employed on the understanding he did not require extensive training or supervision.

Mr Gostmann admitted he had written the reference he gave Mr Faber from his former employer in South Africa himself and asked an office person who had no personal knowledge of his actual work to sign it.

ERA member Rachel Larmer decided the dismissal was unjustified and ordered Independent to pay Mr Gostmann $5,304 in lost remuneration and $5000 in distress compensation because it came up short in its performance management process leading up to the dismissal.

A fair and reasonable employer can not dismiss an employee for poor performance unless they are subject to a graduated warning process, or put on notice that their ongoing employment is in jeopardy, Ms Larmer says in her determination.

Ms Larmer says Independent should have been more thorough in its reference-checking process, but notes Mr Gostmann had misrepresented himself to Independent and should take some responsibility for his dismissal due to his substandard work.

Reinstatement was declined due to Mr Gostmann's lack of practical experience for the job.

Confusing laws need to change – ACT

ACT leader John Banks has seized on the case to demonstrate the confusion small- and medium-sized businesses have with current employment laws.

“There is something very wrong with the laws in this country if an employee can fake their references, lie about their qualifications and experience and be so incompetent they almost kill someone and still be awarded $10,000 in compensation for distress. 

"What about the distress of the person who almost lost his life?” Mr Banks says.

“Our employment laws are complex and confusing and the majority of small to medium business owners struggle to comply, despite their best efforts to do so. 

Mr Banks suggests two remedies:

One: reform of the law dealing with dismissals. 

“The current law is unclear with no standard process. Small to medium enterprises often lack human resource support and struggle to comply as a result. Business need greater certainty and that could be provided by a standardised dismissal process,” he says.

Two:  Extend ACT’s three-month trial period to a period of 12 months for small to medium enterprise. 

“This will bring New Zealand into line with the United Kingdom and is a more reasonable time period for employers to assess the suitability of an employee.

“Implementing those changes would give employers more confidence to employ staff who at the moment don’t get a job because of the risk employers face if it doesn’t work out.

“It would particularly help the thousands of young people who have been priced out of a job by Labour’s disappointing abolition of the youth minimum wage,” Mr Banks says

Compensation order misses the point, boss says

Mr Faber says a refrigeration engineer’s qualification takes three years to obtain in New Zealand.

When Mr Gostmann applied for the senior position, he falsely claimed he had 15 years’ experience as a refrigeration engineer in South Africa and had provided his employer with misleading references. 

While working for Independent he made a number of serious mistakes, the worst being a failure to isolate a set of cables that almost resulted in the electrocution of a young apprentice. 

Mr Faber says he thinks the ERA’s decision misses the point.

"He has fundamentally misrepresented the nature and quality of his qualifications and experience with near fatal results. Is an employer seriously expected to put in place a formal performance review process to get this guy up to speed?”

“As a result of this man’s mess it has taken a toll on our business and trust in our customers because they think that maybe all our staff are of his calibre.

"I have had to go around and talk to customers and explain the situation, which has taken up a lot of my productive time which cannot be billed out."

Mr Faber said he has received phone calls from other employers offering help to appeal the case to the Employment Court.

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Good stuff. Agree 100%


Unbelievable. The ERA needs a shake-up!


How about keeping the trial period as it is - there are already many businesses taking advantage of this, without it becoming dismissal for any reason any time within the first year.

How about a new law that if you are found to be without the qualifications or experience claimed in the hiring process - that is classed as serious miscountduct and therefore grounds for instant dismissal no matter how long you have been working in that role?


Sack the ERA judge?


It is hard to believe this nonsense from the ERA. It seems Gostmann's continued employment was putting other workers' lives at risk. If I worked at that workplace I would have refused to work with such a person.

Get real Ms Larmer! You are saying the process is paramount - even if, as in this case, Gostmann could have continued to put fellow workers at mortal risk while his employer followed the "correct process". Giving someone a warning about their poor performance when the root cause is the lack of qualifications and experience. Nothing the employer does can mitigate or change that situation.

On balance, and in the interest of common sense justice, if there was fault on both sides, surely the less "guilty" party ought not to have been penalised.

So what to do? Make a law change as suggested by John Banks, for goodness sake!


All they had to do was suspend him on pay (with his agreement, or otherwise after considering any reason he might have had for not agreeing to that) and then give him a chance to explain his actions before making a decision. Then they could have sacked him. What's so hard about that?


Why should he be paid when he misrepresented his qualifications? The employer should be suing him for the excess between what he was paid as somebody with 15 years' experience and the minium wage he should have been on.


This case beggars belief. SMEs are on a hiding to nothing with the present H&S and employment law.
The way we are heading leads one to beiieve that the Govt wants to get of rid of employers.
Why? you may ask. Just read the cases coming before the courts and the fines being dished out as we write.
This is a classic!! In a H&S situation alone, Independent would have been fined many thousands of dollars because a death "may have occurred", as happened in a Hamilton case in 2012, let alone the 10K fine - in this case for a liar.
The ERA condones dishonesty - are these people anti-business?.

As SME employers we have a minefield of case law to deal with that appears to be stacked agianst employers.
We are not allowed one error, no mistakes in employment and H&S law, no matter how much intergity you may think you have, no matter how good your paperwork is. You are stuffed before you start .

Just read about the employer who instructed an employee not to use an "unsafe machine". You guessed it, fined thousands, because training is not an excuse.
In another case, safety guards were removed from a machine without permission, and lack of training was the cause (after six years of work experience on the job) and fined thousands.

Do we look both ways before we cross the road? What incentive is there to employ? Unfortunately, we have seen nothing yet.


The fault here, in my view, is not with the law but with those who make the decisions. While there is some disatisfaction with ERA members having pretty significant discretion as to how they determine cases, the fact remains employers must follow some pretty basic rules, otherwise there would be even more 'dodgy' practices.
Remember, there have been recently a number of cases where employers have acted terribly. I agree with the comment that employers have other rules to abide by...........numerous rules, in fact, therefore I do not believe it is asking too much for them to find out about the basics and apply them. While there is always a cost to find out, that cost is way short of the potential cost in the authority or wherever.

However, I am unable to offer any relief from decisions that on the face seem unbelievably unjust. In this case under discussion, the authority member has discretion under the law to apportion blame, and in this regard I agree they came up short ... same with some of the H&S decisions out of the court. But, remember, the area of work is not the only part of our society suffering from such decisions, as evidenced by drivers killing people and getting off lightly and the guy training his pig dogs to work with a live pig tied up. The list goes on.

If someone can come up with a solution I and many others would be extremely grateful. I am an advocate for employers, so I need your help here.



I think the point missed here by the commentators is that Independent spoke to Mr Gostmann about a dismissal process to be invoked, at which point Mr G promptly left and did not return. He could have had further pay if he was present, but chose to leave at that point, thereby not allowing Independent Engineeering to be able to follow the correct process. The man was gone in a flash.


Good on Banksie for pushing this. Ultimately he lied, put fellow workers at risk and exposed the hard earned business brand thus and when confronted abandoned his job. Time for a reality check!


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