Director on the hook for disparaging ex-employee
- Kim Leighton
- Apr 9
- 2 min read
The Health and Safety at Work Act 2015 makes PCBUs (persons in charge of a business undertaking) more likely to be personally accountable for safety breaches than the HSWA’s predecessor, the HSA 1992.
While employers are usually vicariously liable for its employees’ mistakes that cause serious consequences, and it’s rare for a PCBU or any other employee to be prosecuted, there was a workplace the CEO of Ports of Auckland was recently sentenced for his role in a 2020 workplace fatality. The prosecuting authority was Maritime New Zealand and the jurisdiction was the Auckland District Court.
Health and safety obligations highlighted in sentencing of former port chief executive - Maritime NZ
Disparaging a former employee is far less serious but could still have significant consequences for that person in a competitive job market. If an employment relationship ends by way of a confidential settlement, private sector employers often want a non-disparagement clause to protect the company’s business reputation and brand in a competitive sales or services environment. It is generally accepted that where the departing employee agrees to this, they would benefit from the same protection – that is freedom from disparagement which depending on the industry could amount to blacklisting.
One individual recently brought a claim in the Employment Relations Authority against their former employer for breaching the non-disparagement clause in the s 149 settlement agreement. We don’t know who the employee or employer are because Authority Member Rowan Anderson agreed to anonymise the parties.
What is interesting is that the employee’s claim is also against the company director (and chairman) who not only signed the settlement agreement, but is also a PCBU.
The decision to anonymise parties is generally not taken lightly:
[5] The principle of open justice is of fundamental importance and non-publication will ordinarily only be granted where specific adverse consequences could reasonably be expected to occur.
In this matter the parties have been anonymised to:
FJI – employee and applicant
EDK – employer, a company and first respondent
UWK – director of EDK and second respondent
UWK didn’t think he should be on the hook, perhaps because his company is vicariously liable for his loose lips:
[15] UWK requests that he be struck out of the proceeding as he was not a party to the record of settlement. He contends that while he signed the record of settlement, that he did so only on behalf of EDK as an officer of the company.
But UWK did sign the settlement agreement on behalf of his company, so…
[22] UWK is to remain a party to the proceedings.
[23] The Authority will issue draft timetable directions relating to the investigation of FJI’s substantive claims.
Another type of claim that can be made against the director (usually, or any other person involved in a breach) is for unpaid wages and holiday pay under s 142W where the company is unable to pay due to insolvency for example.
In a few months we should be able to report on how FJI was impacted, and whether the director personally gets pinged.
Tristam Price
Editor
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