A man has been awarded $15,000 compensation by the Employment
Relations Authority (ERA) after he was made redundant from an
Auckland advertising agency he had once owned.
Until mid 2007, Sergio Guida and his wife owned Virtus:
Officine di Immagine. He then sold the business for $100,000
to Ogilvy New Zealand, subject to a number of conditions.
One condition was Mr Guida would continue to work for the
company and for the first three years would be paid $50,000
per year, so long as he was not made redundant.
Shortly before the end of his first year of employment Ogilvy
made Mr Guida redundant, therefore negating the clause in
which they were to make future annual $50,000 payments.
Mr Guida took the company to the ERA and argued that when he
signed the contract Ogilvy had guaranteed they would not be
making him redundant.
Ogilvy denied this.
ERA member James Wilson said on the balance of probabilities
Ogilvy had not guaranteed Mr Guida would not be made
redundant.
However, considering the clause was part of the contract, it
was likely company director Greg Partington probably
indicated there was no intention to make Mr Guida redundant,
Mr Wilson said.
"Mr Guida, perhaps naively but in the light of the other
conditions set out in the sale and purchase agreement and the
proposed employment agreement, accepted...Mr Partington's
assurance." Mr Wilson accepted the global recession had
resulted in the downturn in the advertising industry and Mr
Guida's redundancy was for genuine commercial reasons.
"...(but) the way in which he was made redundant by Ogilvy
was not what a fair and reasonable employer would have done
in all circumstances," Mr Wilson said.
While not contractually obligated to do so, Mr Partington
should have considered a far more generous severance payment
including the three $50,000 annual payments Mr Guida would
have received if he had not been made redundant, Mr Wilson
said.
He accepted that Mr Guida felt there had been an
"unprofessional betrayal of trust", which had a major
emotional effect on him.
He awarded him $15,000 compensation.
