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Breaching agreements can be costly

25 November 2014


Readers will have heard much about Roger Sutton, the Chief Executive of the Christchurch Earthquake Recovery Authority (Cera) in the newspapers lately.

Sutton was the subject of a complaint of sexual harassment made by a senior staff member at Cera. An investigation into the complaint was ordered by the State Services Commissioner, Iain Rennie.

Sutton has now resigned as part of an agreement reached with the State Servces Commission.

The events leading up to and following Sutton’s resignation have become a source of significant controversy. First, there were Rennie’s comments that some of the allegations against Sutton were upheld by the investigation, but it recommended that he not be dismissed.

Rennie has since said that Sutton was guilty of serious misconduct. The disconnect between the two statements has not been properly explained.

The more significant issue, though, is comments made by Sutton during a press conference announcing his resignation.

Sutton said that he called women "honey" or "sweetie" and that was wrong and sexist.

He spoke of inappropriate jokes and comments and that he had given a staff member an unwelcome hug.

Rennie has since stated publicly that Sutton should not have made those comments during the press conference as Sutton, Rennie and the Complainant are all bound by confidentiality agreements.

Rennie has been considering whether to take action against Sutton for his supposed breach of confidentiality.

No doubt Sutton’s comments have incensed the complainant. Within a matter of days, a number of statements have emerged condemning both Sutton and Rennie for holding the press conference.

A friend of the complainant has expressed concern about Sutton’s public show of contrition which allowed him to play down his actions when the complainant had followed the rules, kept quiet and maintained her dignity.

A number of new allegations against Sutton have also emerged.

Sutton was initially going to keep working until January. We understand that he has now been put on garden leave and has been replaced. 

Confidentiality clauses are standard in agreements to settle employment disputes.

Sometimes they go further and expressly exclude any public comment by the parties to the agreement.

Ordinarily these agreements are ratified by a mediator from the Ministry of Business, Innovation and Employment.

If a party breaches any of the provisions in an agreement ratified by a mediator, then the aggrieved party can seek enforcement of the agreement in the Employment Relations Authority. Modest penalties are also common.

In one case involving the Warehouse, the Authority went further and actually repudiated the settlement agreement.

Dianne Henry was employed by the Warehouse. She raised a personal grievance against her employer which resulted in both parties attending mediation. The matter was settled and as part of the settlement, the Warehouse agreed to pay Henry $2500 compensation. The settlement also included a confidentiality clause.

A couple of days later, Henry was in the Motueka Warehouse, where she had previously worked, to purchase a couple of items. As she was paying for the items at the checkout, Henry indicated to the checkout operator that she had "won" her case against the Warehouse.

The checkout operator promptly notified her supervisor. The Warehouse sought an explanation but Henry denied breaching confidentiality.

The Warehouse then indicated that it considered the settlement to have been repudiated and that the $2500 compensation would not be paid until the matter was resolved. 

Henry took the matter to the Employment Relations Authority, however, she received no sympathy. The authority found that Henry had breached confidentiality and that the settlement had been repudiated.

Henry therefore had to forego the $2500 she would otherwise have been entitled to and ended up with nothing. 

The moral of Henry’s plight is that those who go to mediation and sign confidentiality agreements must strictly abide by them or risk paying a heavy price for their breach.

What further consequences there may be for Roger Sutton remain to be seen.

Cullen - The Employment Law Firm is one of only eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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