Rocket Lab must pay ex-employee $97,000 after attempted ‘buy off’

Rocket Lab has been ordered to pay a former employee $97,000 for an “extremely” unfair dismissal, BusinessDesk can exclusively reveal. 

A May 19 determination by the Employment Relations Authority (ERA) in Auckland obtained by BusinessDesk said engineer Craig Owen was sacked by the high-profile space company in a “predetermined” and “unilateral decision”, and he was never given performance feedback or concerns prior to being fired.

It said his sacking was “extremely unfair” and Rocket Lab failed to comply with even the most basic and widely understood principles of procedural fairness.

Rocket Lab breached all four of the procedural fairness tests for dismissal in the Employment Relations Act, breached minimum good faith requirements, and its own contractual obligations and employment policy, the decision said. 

The good faith breaches were "brazen and blatant", and "deliberate and intentional".

The authority also found Rocket Lab had previously made decisions that affected staff’s employment without consulting them but stopped short of making a formal recommendation the company change its workplace practices, saying the decision was enough.

“Rocket Lab is still taking the determination under consideration,” a Rocket Lab spokesperson told BusinessDesk.

‘Humiliating for him’

The ruling said Owen’s dismissal was the decision of Rocket Lab chief executive Peter Beck, who had “lost trust and confidence” in Owen.

Beck alleged Owen had negligent record-keeping, failed to follow proper engineering processes and had poor performance in a technical aspect of his engineering role, and said Owen’s continued work on those issues after being instructed not to reflected “a general attitude where he would not comply with Rocket Lab’s directions or policies/procedures”.

But authority member Rachel Larmer said Rocket Lab’s dismissal of Owen was “substantially and procedurally unjustified”.

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The ruling said Owen “gave up a long and successful career in motorsport” to join Rocket Lab.

He worked for Rocket Lab as vehicle test manager from Feb 7, 2018, and as senior vehicle test engineer from Nov 12, 2018, until his dismissal at a meeting at the company’s Auckland headquarters in February 2019 by the director of Rocket Lab’s people and culture team, Brandi Drew, and an unnamed senior people and culture business partner who is no longer in the company’s employ.

The reason given to Owen was “ongoing performance concerns”, but no further information or documentation was provided. 

In this meeting, Owen was presented "with a settlement agreement that required him to compromise any claims he had against Rocket Lab in return for a $10,000 payment”.

Owen declined to sign. 

“Rocket Lab appeared to have deliberately calculated that it was better for it to ‘buy off’ Mr Owen by offering him $10,000 for not enforcing his legal rights rather than taking any steps to comply with the performance management process set out in his employment agreement,” the ruling said.

"The fact that Rocket Lab entered into the dismissal meeting on 19 February 2019 with a pre-prepared record of settlement demonstrated that it must have known that Mr Owen could have pursued legal action against it regarding the way he had been treated," it said.

"The way in which it acted is a stark example of the inherent inequality of power in employment relationships. Rocket Lab elected to ignore its legal obligations and instead attempted to pay Mr Owen off."

Rocket Lab's actions "indicated a particular callousness and calculation" that led the authority to conclude the company was not acting as a "naive operator, unaware of its legal obligations".

It also said Rocket Lab's treatment of Owen was "extremely stressful and humiliating for him". 

"He was abruptly dismissed and given no information about the reasons why, he was deprived of any opportunity to respond to the alleged performance concerns, and was improperly pressured to compromise his claims against Rocket Lab for a derisory amount. His employment was ended immediately and he was escorted off the premises in front of other staff," the ERA ruled.

Performance concerns

On March 15, 2019, Rocket Lab sent Owen an unsigned document with a one-sentence “reason for dismissal” that said his dismissal was “due to continuous concerns related to his performance”.

The tribunal also found Rocket Lab failed to meet the performance management clause in Owen’s employment contract by not monitoring his performance or ever formally reviewing it. 

Beck alleged his decision to dismiss Owen was based on performance concerns that presented a significant safety risk to the business. 

Rocket Lab’s submissions to the tribunal “acknowledged that it should have run its dismissal process differently,” but justified its actions by saying Beck had “massively lost confidence” in Owen.

The tribunal found that Owen’s role change in November 2018 was presented fait accompli by Rocket Lab, and Owen’s existing terms and conditions of employment were unchanged.

It also found that his role change and dismissal were similarly conducted without fair or proper process.

“This demonstrated that Rocket Lab had previously engaged in similar workplace conduct and practices, namely, making decisions that materially affected an employee’s employment without consulting them. That approach to employment issues needs to cease,” the ruling said, though stopped short of issuing the company with a formal recommendation.

Larmer ordered Rocket Lab to pay Owen $65,000 in gross loss remuneration, $30,000 in distress compensation, and $2,000 of the total $3,000 penalty imposed on Rocket Lab for a breach of good faith, within 30 days.

The authority declined to award Owen indemnity costs or to issue a recommendation to Rocket Lab to address employment relationship problems.

Rocket Lab must pay the remaining $1,000 of the penalty to the Crown bank account.

Owen’s lawyer Sam Houliston indicated his client was not intending to comment.