Under the Employment Relations Act 2000, employers can now bring actions or claims against employees in the Employment Relations Authority, where the employee has caused the employer to suffer loss.

This is a huge development, when compared to the Employment Contracts Act. Employers are able to take advantage of the informal, speedy, and relatively inexpensive justice meted out by the Authority. There is also an increased maximum penalty that can be awarded against an individual (and this includes employees), of up to $5,000. (The maximum under the ECA was $2,000). This should discourage employees from bringing vexatious claims, which is something that upsets and angers our employer clients.

Employment Contracts Act 1991
Under the Employment Contracts Act, the Employment Tribunal did not have jurisdiction to hear an employer’s claim against an employee for breach of the employment contract. This meant that an employer with a claim against the employee had to bring proceedings against the employee in the Employment Court or District Court for breach of contract – even if the employee had brought a claim in the Tribunal.

Authority’s Jurisdiction
The Authority has exclusive jurisdiction to make determinations about "employment relationship problems" generally, including matters relating to breach of an employment agreement, action for the recovery of penalties for a breach of an employment agreement and any other action (that is not directly within the Court’s jurisdiction), arising from or related to the employment relationship, (section 161). The Authority has wide powers to hear all employment related proceedings.

The Authority’s Power
Coupled with this wide jurisdiction, the Authority has the power to make any order that the Civil Courts may make under any enactment (statute) or rule of law relating to contracts. The only limits to the Authority’s power relate to the variation and cancellation of collective employment agreements.

The Employer as Plaintiff
The effect of the new provisions is far reaching. The ERA has conferred powers on the Authority that the Tribunal did not have. The Authority’s jurisdiction includes the power to hear claims alleging breach of an employment agreement brought by an employer against an employee and make orders against employees. Employers have already taken advantage of the Authority’s jurisdiction.

Breach of Contract
Northland Pathology Laboratory Limited v Vermeulen (28/03/01):
Dr Vermeulen emigrated from South Africa to Whangarei to take up a two year, fixed term agreement. She abandoned her employment after only a few weeks (apparently to take up a similar position in Western Australia). Dr Vermeulen’s employment agreement did not permit her to terminate employment, except in very limited circumstances, in which case six months written notice was required. Northland Pathology brought proceedings against Dr Vermeulen in the Authority, claiming Dr Vermeulen had breached her employment agreement and sought damages for her wrongful breach of the employment agreement.

In her statement in reply, Dr Vermeulen claimed she had been constructively dismissed.

Authority’s Determination
On the facts of the case, the Authority found that Dr Vermeulen had not been constructively dismissed. She resigned. The employment agreement was for a fixed two year term, with limited rights for early termination. Having found that Dr Vermeulen was not constructively dismissed by any breach of her employer’s duties, the Authority determined that by resigning, she wrongfully breached her employment agreement. The Authority determined: