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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