Workplace bullying – Are SMEs all that bad? By Tristam Price

Updated: Feb 5, 2020

New Zealand is the second worst in the OECD for workplace bullying. There has been a lot of discussion recently about WorkSafe’s role in dealing with this issue, and given that there have been no prosecutions to date, we suspect that either WorkSafe have been looking in the wrong places, or the employment law industry has developed a method of keeping bullying cases out of reach of WorkSafe. Here’s what we know:

The private sector employs a lot more people than the public sector. NZ is a good place to start a business; we have a good tax system and are not particularly bureaucratic. SMEs are the backbone of the NZ economy. Profitable SMEs pay company tax and PAYE on behalf of their employees.

A company called Culturesafe NZ Ltd markets itself as the anti-bullying specialist and comments on its Facebook page reflect that. Culturesafe report that 10% of bullying claims that it deals with are from the private sector. That is a surprisingly low number and must mean that workplace bullying in the private sector is not that bad, probably about average. It’s not hard to see why; conventional wisdom is that one way or another bullying is usually bad for profitability.

This tax is used to fund DHBs, Oranga Tamariki, universities, some rest homes etc. There is growing concern that some of these publicly funded entities are being used as a cash cow by a significant minority of employment lawyers who are prepared to exploit a loophole in the ERA2000 for fees well above what they otherwise would have been paid.

This exploitation entails "doing a Section 149 on an unwanted employee" where a manager may want to remove a competitive threat, whistleblower threat, or miscellaneous office politics misfit. As there are easier processes available to deal with employees who are not performing, the Section 149 method is used where a manager would have difficulty raising performance issues against the target. It involves bullying the target until they make a complaint; if that bullying is severe enough the employee will probably have a lawyer, who is likely to push for an employment investigation.

That investigation eventually will often turn around to become an investigation about the employee who made the complaint, and a set of documents is compiled and made ready for cherrypicking. The file, or perhaps a draft report will typically say the employee’s allegations of bullying are without basis, there is now a trust issue, and recommend that the free MBIE mediation service be used in an attempt to resolve differences. At the mediation the employee’s lawyer is ambushed with misleading, and occasionally forged documents while the employee sits alone in a separate room unable to verify the authenticity of the documents. The employee will then be pressured to resign effective several months from the date of mediation, but is not required to turn up to work. A statutory instrument called a Record of Settlement (RoS) is then created.

In other words, a payout is disguised as future salary which has the effect of hiding evidence of a toxic work culture and malfeasance in public office.

The RoS is final, binding and enforceable on the parties and almost always includes Non-Disclosure and Non-Disparagement clauses, ie: in exchange for a payout of sorts (or extended garden leave) the employee agrees not to disparage their former manager(s).

Often, however, the bullying manager retaliates against now former employee for putting them to all the trouble and expense, by skirting around the NDA (as it's not binding on the manager) and getting the employee blacklisted.

Either life goes on at the public sector organisation, or the blacklisted employee tries to repair their reputation which is impossible without explaining to potential allies what fraud the manager has committed against the employee. That puts the employee at risk of the employer seeking a Compliance Order in the Employment Relations Authority, a penalty for breaching the RoS, and legal costs.

A March 2019 Determination ERA121 plumbs new depths by using a RoS in relation to two non-parties; to penalise a third party (NLA) and reward a fourth party (employer's counsel). That case has been challenged to the Employment Court and two regulatory bodies are also looking into serious wrongdoing.

There is another case currently before the Employment Court where a retail worker was being stalked at her workplace by her former manager from her previous job in a hospital. The retail worker eventually took photos of him loitering in the staff carpark and a Non-Lawyer Advocate posted them on its Facebook page. Both the NLA and former employee are now being sued for breach of the manager's privacy. Apart from retail colleagues also noticing the stalking, the retail store was not involved.

Several months ago the ERA interfered with a witness to a commercial dispute that was then in the High Court, by issuing him with a Compliance Order after he had submitted an affidavit in relation to his previous employment with one of the parties to the High Court proceedings. While this happened in the private sector, that incident and the former hospital employee being stalked then sued for publicising that stalking did not involve a mediated RoS. But over several years the notion of RoS enforcement against former employees and non-parties seems to have empowered the ERA to use that as a stepping stone to penalise individuals for whatever their former employers ask for, via lawyers who are willing to articulate these requests, however egregious and often illegal those requests may be. This is rare in the private sector where companies risk reputational harm that affects profitability – something that public sector managers don’t need to worry about.

We conclude that because of the way some of the employment laws have been applied, and a growing awareness among public sector HR advisors and managers that such creative applications of the ERA are available, this would tend to support a bullying culture in many NZ public sector entities.

We further conclude that if NZ is second worst in the OECD, and bullying stats in the private sector are unremarkable (based on Culturesafe's breakdown of what type of organisations its clients were working at), then NZ is most likely the worst in the OECD for bullying in the public sector.

SMEs may unfairly be pressured into committing resources to a severe problem which in reality is moderate in the private sector. Workplace bullying that leads to legal intervention (including mediation) is largely a public sector problem.

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