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Testing the waters in secret



An unidentified male from the upper North Island was fined $500 (£240) for the heinous act of disparaging his former employer, an unidentified company.  “PSK” has 14 days from 19 August to pay $500 to the Crown. 


$500 is about the same as getting caught driving 91-95km/h in a 50km/h zone, although the 50 demerits would probably hurt more.   The determination could raise concerns in that fraud or other serious wrongdoing could more easily be covered up in this country, which we’ll explain shortly.


Reasons of the Authority


We’ll elaborate on the legal basis for fining PSK.   According to a determination by the Employment Relations Authority (ERA, similar to the UK’s ET), PSK worked for “GQM” for about a year, an employment relationship problem arose and the parties settled in mediation which produced a document called a Record of Settlement (under Section 149, similar to a COT3).



The determination notes:


[16] On 26 June 2024, PSK sent an email to a client of GQM in which he discussed the employment relationship problem and its settlement and inferred that GQM had undertaken fraudulent activities. PSK stated that he would share the findings of his investigations regarding these allegations of fraud with the client.


It appears to be in the nature of a whistleblowing, but the Protected Disclosures Act 2022 was not mentioned.  We also note that PSK was unrepresented, and he has a counterclaim against GQM for its own alleged breach of the Record of Settlement.  Absurdly, one of the terms of the Record of Settlement required its very existence to be kept secret (even if GQM breached it apparently). 


Because we don’t know exactly how GQM was alleged by way of counterclaim to have breached the agreement, we’ll have to leave that for a follow-up article.  All we know is that GQM alleged that PSK breached the Record of Settlement by disclosing its existence and alleging fraud, and Member Andrew Gane agreed that he did, and fined him $500.  Perhaps a little unusually, none of the penalty was ordered to be paid to the former employer GQM, but GQM may claim a contribution towards its costs which is based on $4,500 for the first day of an investigation meeting (this looks like the equivalent of half a day).


Replacement of “ruined” precedent?


GQM v PSQ [2024] NZERA 498 is unusual in that an order has been made for a party to pay money to another party (or the Crown) for breaching a clause in a super-secret settlement agreement, and the identities of the parties are also super-secret.   We are only aware of this happening once before, and most employment law practitioners will be at least vaguely aware of ITE v ALA, because there are 12 decisions in the Employment Court alone, spanning 2015 to 2019.  As the three letter pseudonyms suggest, the Employment Court consistently imposed non-publication orders (as did the ERA in 2015).  In fact, this matter went all the way to the Supreme Court, where the former employee ITE, by then bankrupt as a result of the dispute, was unsuccessful.


ITE was a whistleblower who opposed non-publication, but the employer ALA fought hard to maintain anonymity to avoid being associated with the serious wrongdoing ITE had alleged.   And that worked well for just over two years until the Court of Appeal, despite otherwise finding for the employer, publicised the parties’ names.



So the cat was out of the bag, and media outlets were at liberty to reach out to each party with a view to reporting on the matter.  Sadly, none did.  Leighton Associates didn’t exist until 2019 and we picked it up in December 2020 by which time most of the Council staff involved had moved on.



That’s right - a Tauranga City Council whistleblower was bankrupted and jailed for contempt.  There were subsequent decisions of the Employment Court up until 2019 and for reasons that are unclear, none of those decisions recognised the Court of Appeal’s cancellation of its non-publication order.  But we defer to the senior Court on this issue.


Back to GQM v PSK and conclusion


Both parties wanted anonymisation; PSK has to make his way in the world and probably doesn't want his name to google up in relation to an employment dispute. As PSK has a counterclaim, we may have material for a follow-up article unless all matters between them settle quietly in mediation.   But we see from this determination that there was a mediated Record of Settlement and its existence was secret.  Because it was brought before the ERA for enforcement, its existence was no longer secret, but the parties’ identities were. 


Can you see the potential for moving money illegally, readers?  If PSK happens to see this article and reaches out to us (and we protect our sources), we can’t even report what he has to say without risking a third party enforcement.   In that regard the legal mechanism for covering up secret transactions is the same whether dealing with $500, or six figures, as in Mr Brown’s case.



Tristam Price, Editor

"De-mystifying employment law since 2019"

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