Abandonment of employment

by The Findlaw Team

Abandonment of employment is a concept in New Zealand case law (it’s not specifically covered by legislation) where an employer can declare an employee’s employment has ended without having dismissed them or the employee having explicitly resigned.

However, certain factors must exist before it can truly be abandonment, such as the employer being unaware of the reason an employee is absent with leave, the employer has tried and failed to get in contact with the employee, and there has been a reasonable period of absence before the employer deems the employee has abandoned their job.

What is abandonment?

Abandonment of employment may be assumed to occur when the employee fails to appear at work for a period of time, without explanation. In such cases, the employment may be treated as having been terminated without notice.

There are no rules regarding abandonment of employment, or what period of absence could be held to reasonably deem the contract abandoned. However, the inclusion of abandonment provisions in employment agreements is a relatively common practice.

Employment agreements that refer to abandonment of employment usually give a period of between 3 and 5 days of unauthorised absence before employment is considered to be terminated.

Forfeiture of wages

Some employment agreements provide for forfeiture of wages if the employee abandons their employment, ie if they do not give the notice required by their agreement.

However, forfeiture provisions must be a genuine pre-estimation of the damage that would be caused if the notice requirement was breached. It cannot be a penalty because if it is, the forfeiture provision will be unenforceable.

Parties to an employment agreement may make an assessment of potential loss at the time they enter into an agreement, avoiding the difficulty later of proving loss. It must be a genuine forecast of the probable loss - it cannot be a provision used to force an employee to perform the agreement by holding a threat over his or her head.

Although a forfeiture of wages provision cannot be a penalty, if an employee abandons their employment or leaves without giving the required notice in their employment agreement, the employer can apply to the Employment Relations Authority to impose a penalty for breach of the employment agreement (section 134 of the Employment Relations Act 2000).

The breach must be deliberate and the amount of penalty is unlikely to be substantial. In one case (Livingston v G L Freeman Holdings Ltd (2013)), the ex-employee was ordered to pay a penalty of $500 for only giving her employer two out of the required six weeks’ notice.

Employer should try to contact employee

Case law suggests that in cases where it appears an employee has abandoned their employment, the employer should inquire into the employee’s reason for absence as a prerequisite to a fair termination process.

Case law also indicates that if there is “good cause” for the employee’s absence and for their failure to contact the employer, the employer may not be able end their employment on the basis of abandonment.

Case example: Failure to contact employee

In Buck v Tinsley’s Mower & Chainsaw Professionals (2001), there was a heated argument between Buck and his employer about the cost of a repair. After this argument, Buck believed he had been sent away permanently. However, his employer considered that it was Buck’s responsibility to contact them.

The Employment Relations Authority held that the company was in breach of its duty to inquire fully into the circumstances of Buck’s withdrawal from the workplace. The breach was sufficient to constitute dismissal, either actual or constructive. The company was ordered to pay Buck lost remuneration and compensation.

Case example: Employee contacted boss by text

In Labour Inspector v Allied Investments Ltd (2009), the employee suffered a severe migraine and took medication for it, which meant he was unable to work his shift that night. He sent a text message advising his employer of this.

The next day, a meeting was held where he was told that a text message was not a sufficient way of giving notice of taking sick leave. The discussion went on to other performance lapses, and a previous verbal warning for poor performance. The decision was made to dismiss Campbell, and he accepted that his dismissal was justified.

However, the employer deducted several hundred dollars from Campbell’s holiday pay, on the basis that it was permitted to do so under the abandonment clause of the employment agreement. It claimed that Campbell was absent without notice when he suffered his migraine, and therefore had abandoned his employment.

The Employment Relations Authority determined that Campbell had not abandoned his employment. The employer knew of Campbell’s intended absence, even if a text message was not the appropriate method of notification. The employer was ordered to pay the outstanding wages.

Case example: Employer did not establish there was no ‘good cause’

In Brown v Five Star Pork (NZ) Ltd ( 2008), Brown did not attend work for 3 working days in a row. The first day was following the night of Brown’s brother’s party, the second day was when he attended a court appearance for drink driving charges, and the third day was when he was looking for a lawyer to represent him.

On the third day, Brown’s employer tried to contact him by phone, without success, and terminated his employment on the basis of the abandonment clause in his employment agreement.

The Employment Relations Authority determined that Brown's dismissal was unjustified. The employer had not established that there was no “good cause” for the absence.

Attempts to do so consisted only of one unanswered telephone call, asking the employee with whom Brown got a lift to work if he knew any reason for the absence, and checking the night answer phone at the factory to see if Brown had left a message (which he had not).

The Authority stated that the good faith obligations under the Employment Relations Act 2000, particularly since the 2004 amendments (requiring parties in an employment relationship to be responsive and communicative), place a higher threshold than previously on employers considering whether a worker has abandoned a job.

Case example: Employer not required to revisit employment after abandonment

In McKnight v Byrnecut Mining (NZ) Ltd (2010), McKnight went home sick without telling her manager. Her manager tried to contact her, but was unsuccessful.

McKnight spoke to someone at a company associated with her employer, but did not directly contact her employer.

After an absence of 3 working days with no direct contact from McKnight to her manager, the company wrote to her to let her know her employment was terminated by way of the abandonment clause in her employment agreement.

The Employment Relations Authority observed that the law is that once the conditions of the abandonment clause have been met, the employment relationship ceases.

There was absolutely no duty on the employer to revisit the end of the employment after the abandonment period.

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