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The Employment Relations Authority yesterday ruled Birchleigh Management Services Ltd was "unnecessarily severe" when it dismissed Kaye Gillan in July 2016.
Mrs Gillan, a caregiver who had worked for Birchleigh since 2004, received a favourable performance review in March 2016.
However, on June 17 Mrs Gillan took a small packet of potato chips from a cupboard where refreshments for Birchleigh residents were kept.
She tasted them, found they were stale, and threw them away.
That snack resulted in Birchleigh management calling Mrs Gillan to a meeting, at which she denied dishonest intent but accepted she had taken the chips.
Birchleigh — which has strict policies concerning security of residents’ property — found Mrs Gillan’s actions to be serious misconduct and dismissed her.
ERA member Christine Hickey said there was a "significant difference" between Mrs Gillan taking a small bag of chips and any risk of her taking a resident’s personal possessions or money, or larger quantities of food or rest-home property.
"A fair and reasonable employer could have found that Mrs Gillan was guilty of serious misconduct," the ERA determination said.
"However, such an employer could not have concluded, in all the circumstances, that the essential foundation of trust and confidence in Mrs Gillan had been undermined to such a significant degree to warrant her dismissal.
"I am not suggesting that no disciplinary sanction would have been justified, but that dismissal was an unneccessarily severe sanction in all the circumstances."
The ERA awarded Mrs Gillan $18,750 compensation for wrongful dismissal and she will also receive reimbursement for lost wages — a sum yet to be agreed by parties.
Costs were reserved but would be sought.
In the months leading to the incident, Mrs Gillan had told Birchleigh she had been bullied at work — claims the ERA did not make a finding on but which it considered only when relevant to her dismissal.
Mrs Gillan yesterday said the stress of the bullying, then her dismissal, severely affected her mental health.
"I tried to take my life ... and last night when I got the decision, for the first time in three years I was glad to be alive, to get that result," she said.
Despite the subsequent trauma, Mrs Gillan was still glad she had admitted she took the chips — and that she had taken the case to the ERA.
"I wanted to be listened to, fairly," she said.
"Whether I won or lost, I wanted someone from outside to hear what had happened.
"If I had lost, that’s fine, I could take that, but I needed to know."
Taking the case was about validation, she said.Mrs Gillan’s advocate, Allan Halse, said the ERA member who heard the case accommodated Mrs Gillan’s mental health issues, including allowing adjournments when required and permitting mental health workers to be present.
"To her credit, she did everything possible to make the process work for Kaye."
Mrs Gillan said she had found a new job as a carer soon after her dismissal.
Her new employer knew about her background and events at Birchleigh and was supportive.
"They took me on knowing the whole story and I don’t know where I would be without them," Mrs Gillan said.
"My husband Trevor, my family, have all been incredible ... It was wonderful this morning to be able to ring my sister and talk about something else, because for years all I have been able to talk about was this case."
Birchleigh declined to comment on the case but said it was considering whether to appeal.
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