Rocket Lab's unfair dismissal ruling ‘unusually strong’

An Employment Relations Authority (ERA) ruling that Rocket Lab must pay a former employee $97,000 after his unfair dismissal has been described by employment lawyers as “unusually strong”.

Yesterday, BusinessDesk exclusively reported senior engineer Craig Owen was offered $10,000 by Rocket Lab as a 'buy off' when he was dismissed at a meeting in February 2019.

“It’s unusual for the authority member to overtly criticise an employers’ process to the extent reflected in the judgment,” Susan Hornsby-Geluk, managing partner of Dundas Street, told BusinessDesk.

“The language used in the determination is unusually strong.”

She also highlighted “how brazen the employer was, specifically it came to a meeting with a record of settlement already prepared, placed it in front of the employee and assumed that they could do basically whatever they wanted”.

The May 19 determination called Owen’s dismissal “extremely unfair”, saying the good faith breaches involved were “brazen and blatant”, and “deliberate and intentional”.

The ruling said Rocket Lab chief executive Peter Beck had “lost trust and confidence” in Owen and ordered his dismissal.

The company was found to have 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.

Temptation

“There is always a temptation for employers to attempt to ‘cut to the chase’ and try to buy their way out of tricky employment relationships. This case is an example of the dangers of that approach,” Nick Logan, senior associate at Quigg Partners, said.

“In some circumstances, an employee’s performance can be so far below the required standard, or have such an impact on the employer’s business, that dismissal can immediately be contemplated.

“However, those circumstances are relatively rare and usually involve negligence which is so serious that the employer can no longer have trust and confidence in the employee.”

Rocket Lab has 30 days 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.

Hornsby-Geluk said the $30,000 in distress compensation is “at the top end of the scale of what might usually be awarded”.

“Clearly, the authority member thought that the employer demonstrated a complete disregard for employment law and assumed that it could buy its way out of any legal issues.

"There's a hint throughout the decision that the authority member was disapproving of what might be viewed as a contemptuous approach to employment law,” Hornsby-Geluk said.

Recommendation declined

Notably, Owen asked the ERA to issue recommendations to Rocket Lab on “the action it should take to prevent similar employment problems occurring”.

“This is a relatively unusual remedy for an employee to seek but there have been a number of cases where the authority has made recommendations of this nature,” said Logan, who noted the ERA said the penalty imposed on Rocket Lab would encourage it to comply with employment law obligations in future. 

But he added that “some might question whether the imposition of a penalty of $3,000 on a company the size of Rocket Lab really provides much ‘encouragement’ to comply with its legal obligations".

Hornsby-Geluk agreed it is not common for the ERA to issue recommendations relating to an employer’s conduct, but it was equally uncommon for it to issue the $3,000 penalty. 

“You'd only expect to see that where the authority thought the employer's conduct was particularly egregious.”