Crayons Educational Services Ltd has been ordered to pay an ex-employee just over $10,000 for unjustified dismissal.
A decision released by the Employment Relations Authority this week found in favour of early childhood teacher Jenny Ferguson but Glenn Hart, husband of Crayons director Sally Hart, said the couple disagreed with the finding and might challenge it.
Ms Ferguson worked for the company from August 5, 2009, as a home-based educator throughout Otago and Southland and at the company's Alexandra kindergarten from June 2010.
The home-based service required a licence from the Ministry of Education and when it was time to renew it, the company decided it would not do so.
Both parties agreed the service would close on October 18, when the licence expired, and though Ms Ferguson accepted that would have meant her redundancy, she was offered work at Crayons Community Kindergarten.
It was the terms of that work that the parties disagreed over.
Mr Hart claimed that during the course of the redundancy discussions, he remembered an employee at the facility was about to go on maternity leave and he saw an opportunity to retain Ms Ferguson, at least for a while.
He said he offered for Ms Ferguson to remain and cover the maternity leave, which was scheduled to last until January 31, 2011.
On October 20, she began working regular hours at the facility on Wednesdays, Thursdays and Fridays.
Towards the end of 2010, financial reports confirmed Crayons was making a loss and a financial adviser recommended a staff reduction.
Mr Hart, after weighing options, decided it would be Ms Ferguson who would go, for a number of reasons, including that she did not have security of tenure.
Following a meeting on December 9 to discuss the issue, Ms Ferguson said her view was that the arrangement was permanent and she would not have taken it otherwise.
Both parties agreed that a heated conversation followed and then Ms Hart, who had been present for some of the discussions, handed Ms Ferguson a letter formally recognising the redundancy.
Ms Hart suggested Ms Ferguson take the following day as a paid day off and later told her she was not required to work for the following two weeks.
She was paid for the period of her notice.
Michael Loftus, on behalf of the authority, found that the employment arrangement was permanent part-time, as Ms Ferguson claimed.
"I prefer Ms Ferguson's adamant and consistent evidence over something more ethereal," he said.
"His [Mr Hart] evidence is undermined by his acceptance that ... he was looking for something which would see the relationship continue and just ran it off the top of his head."
Mr Loftus found that the two parties had not entered into a new employment agreement when the home-based service ended and, therefore, Ms Ferguson became a fixed-term employee.
However, the termination of Ms Ferguson's position was made nearly two months before the maternity leave was set to expire, which meant Crayons would need to justify the redundancy.
While Mr Loftus recognised that Crayons "had valid reasons for reducing its staffing", he found they did not consult with staff and had made the final decision before meeting Ms Ferguson and therefore, the dismissal was unjustified.
"The procedural deficiencies are so great. There were other employees who might have been chosen had Crayons not approached this with the view its only option was Ms Ferguson.
"A proper ... process may have led to the consideration of other possibilities and there can be no guarantee Ms Ferguson would ultimately have been chosen had it occurred."
He ordered Crayons to pay Ms Ferguson $5098.56 in lost wages and a further $5000 as compensation for humiliation, loss of dignity and injury to feelings.
When approached by the Otago Daily Times this week, Mr Hart declined to comment but then later called back and said he disagreed with the finding and was considering taking it further.
First, though, the couple would need to weigh up the cost and the effect that would have on the business.
He said that on moral grounds they would love to fight it but, because of finances, they might not.
He said the Crayons facility would continue to operate but "we are just about to open up a new gym and dance centre around the corner ... it is money that is now going to have to be diverted from a community thing into the payout."
He said he was "quite gutted" to be in the situation as, together with his wife, he had employed a lot of people around the country and had never had a personal grievance claim brought against him before.
He said the tragedy was that Ms Ferguson was a personal friend.
