Wellington Woman Wins $9000 Payout For A Day’s Work

By Renee Karakinos, Lawyer, MST Lawyers 

Background

On 31 January 2019, the New Zealand Employment Relations Authority determined Ms Helen Mawhinney was an employee at Sfizio Limited’s Wadestown Kitchen when she worked 8 hours for her first full shift. It was after this shift that Ms Mawhinney was advised that her time at Wadestown Kitchen was considered to be an unpaid trial.

After Ms Mawhinney worked the 8-hour shift, she asked whether she should provide her bank account details to allow the business to pay her for the day.  Sfizo director, Ms Kathy Parfitt, replied “Oh, did Curtis not tell you? This was an unpaid trial”.  Ms Mawhinney responded by stating that she “had incurred child-care and travel costs to attend the café for the day and didn’t accept nor agree that the work should be unpaid”.

Ms Mawhinney was found to be an employee who had been constructively dismissed and was awarded $7000 compensation, $1890 for four weeks’ notice and $119.07 for the day of work.

The Legal Basis For The Decision

Was Ms Mawhinney an employee of Sfizio?

Section 5 of the Employment Relations Act (Act) defines the phrase “person intending to work” to mean “a person who has been offered and accepted, work as an employee”. It was the employee’s evidence that while an offer of employment was not expressly made, the overall tone and content of the conversation, and in particular the indication given as to hours plus the request to work a ”full shift” the following day, led her to believe that employment had commenced.

The Member of the Authority, Michele Ryan, noted: “the term ‘trial’ has a particular meaning in the context of employment relations in New Zealand including that the worker is employed over the course of the trial period and paid”.  Accordingly, when advising Ms Mawhinney that she would be undertaking a “trial”, it was not farfetched for her to expect to be paid.

Ms Parfitt agreed that “Ms Mawhinney performed most, if not all the tasks, that she would be required to perform as an employee”.  Furthermore, a similar relationship existed in The Salad Bowl Limited v Howe-Thornley case where Chief Judge Colgan observed that the question is whether the:

employer gains an economic benefit from the employee’s activity. In this case, for example, the defendant performed a number of tasks which would have been undertaken by her had she continued to work for the plaintiff.”

Similarly, objectively assessed, the tasks performed by Ms Mawhinney were found to be better characterised as work that contributed to the business and provided it with an economic benefit.

It was also of significance and clear from the evidence that Ms Mawhinney was expected to be rewarded monetarily for her work and therefore not a volunteer under s6(1)(c) of the Act.

Was Ms Mawhinney constructively dismissed?

A constructive dismissal includes circumstances where an employer’s breach of a term of employment is so severe that it is reasonably foreseeable the employee will resign rather than put up with the situation.[1]

Ms Sfizio was found to have breached the fundamental term of any employment relationship; that wages are paid in exchange for work. To that end, it was foreseeable that Ms Mawhinney would consider Ms Sfizio’s reluctance to pay her a repudiation of employment. 

Ryan acknowledged, “The breach was not the action of a fair and reasonable employer in all the circumstances. By that omission, Ms Mawhinney was constructively dismissed.”

A Warning To Employers

The above decision should serve as warning bells for employers.

Employers should carefully and conscientiously consider the whole employment relationship in its entirety before offering an unpaid trial.

The “real nature of the relationship” must be determined by considering the following non-exhaustive issues:

  1. whether it has been made clear, verbally and in writing, that the individual will be involved in an unpaid trial or “competency assessment”;
  2. whether the work the individual will be performing will provide the business with an economic benefit; and
  3. whether the individual would expect to be remunerated for the day.

For more information, please contact the For more information, please contact the Employment Law team by email or call +61 3 8540 0200.

[1] Auckland  Electric  Power  Board  v  Auckland  Provincial  District Local  Authorities  Officers IUOW Inc [1994] IERNZ at 172.