January 2018 . . . A recent Employment Relations Authority decision highlights why employers need to make sure that their employment agreements name the correct legal employer.
Actual employer was not named
Stacey Sissons got a job with the Nosh Mount Maunganui store. The store was operated by Good Food Trading Company Limited, which was owned by Dr and Mrs Blennerhassett.
However Ms Sissons’ employment agreement was signed by Dr Blennerhassett “for and on behalf of Nosh Mount Maunganui”. The problem was that Nosh Mount Maunganui was not a legal entity. Good Food Trading (the intended employer) was not mentioned in the agreement and no one told Ms Sissons before she started that Good Food would be her employer.
Ms Sissons was later dismissed from her employment, and she raised a personal grievance claim. She then joined Dr Blennerhassett personally as a respondent to her claim. In the meantime, Good Food Trading was placed in liquidation.
Person signing the agreement liable
The Authority found Ms Sissons’ dismissal unjustified and awarded her lost wages, arrears, compensation and legal costs totalling more than $16,000.
If Good Food Trading had been the employer then Ms Sisson’s probably wouldn’t have seen any of that money, due to the liquidation.
However, because the true identity of the employer had not been disclosed to Ms Sissons before she signed the employment agreement, and because Dr Blennerhassett probably had the authority to sign the employment arrangement on the company’s behalf, the Authority said that the law gave Ms Sissons the right to pursue Dr Blennerhassett personally for any remedies awarded.
He therefore had to pay the award out of his own pocket.
When drafting an employment agreement employers shouldn’t just use their trading name. It they want to use the trading name they also need to clearly specify the name of the legal employer, ie: “Employer: [Legal entity name], trading as [Trading name].”
Please don’t hesitate to contact Gallaway Cook Allan’s employment team for advice or to discuss your situation.