Fuyu Zhuo v BNS Co Limited and BNS Group Limited [2026] NZERA 45

This determination deals with two connected Employment Relations Authority (ERA) proceedings: (1) the employer's claim that the employee breached a duty of fidelity; and (2) the employee's claim that he was unjustifiably dismissed. The Authority rejected the fidelity claim and found the dismissal was unjustified.

What happened

The employee had previously owned and operated several hospitality businesses on Auckland's North Shore. In March 2023, he sold two key venues to the purchaser, but agreed (as part of the sale arrangements) to stay on as the general manager for a period. In practice, the hospitality precinct involved adjoining venues and shared facilities, and staff and resources moved between the venues to cover demand and shortages.

During 2024 the ownership and management arrangements changed again. The evidence described increasing cash flow pressure in the employer companies, including concerns about late supplier payments, PAYE and KiwiSaver, rent, and tax filings. The employee said that significant withdrawals were being made from the business, which created the squeeze, and that he felt personally exposed (including because he was said to be a rent guarantor and the public face of management).

On 21 May 2024 the employee resigned, giving two months' notice. The determination records that the resignation prompted concern from management about the business's ability to keep operating.

The flashpoint

On 24 June 2024 the employee was summarily dismissed and served with a trespass notice. The dismissal was linked to allegations that he had used the employer's money to pay wages for his own employees and had misappropriated funds. A key incident was the employee entering one of the employer venues and taking (or attempting to take) money from the till.

The employee accepted he took cash from the till, but said it was only to pay employee wages at a time when there was not enough money available. He said he did this openly and not for personal gain. The employer treated the conduct as serious misconduct.

The employer's claim: alleged breach of duty of fidelity

The employer also pursued a separate claim that the employee (as a senior manager) owed a duty of fidelity and breached it by operating the precinct in a way that put his own interests in conflict with the employer's interests. There was no signed employment agreement containing a restraint of trade clause, and the Authority examined what duties existed during the employment relationship, and what the evidence actually showed.

The Authority accepted the employee did not run clean, separated accounting between the different business units, and that this was a management failing. However, the Authority was not satisfied the evidence established that he advanced his own interests at the expense of the employer during his employment. The Authority also placed little weight on aspects of the forensic accounting report relied on by the employer because key assumptions were not independently verified and the evaluator did not fully understand the shared-operating model.

Bottom line: the Authority did not find a breach of fidelity/good faith by the employee during the period of employment.

The employee's claim: unjustified dismissal

The Authority treated the alleged taking of money from the till as the substantive reason relied on for summary dismissal. Even where an employer suspects theft, the Authority stressed that a fair and reasonable employer must still act fairly and reasonably in both substance and process.

The Authority found the employer did not follow a fair and reasonable process before dismissing the employee. In particular, there was no proper investigation, the concerns were not put to the employee in advance, and he was given no genuine opportunity to respond before the decision was made. On that basis, the Authority held the employer could not justify a summary dismissal decision and found the dismissal was unjustified.

Wages, holiday pay, and interest

The Authority also found the employee was entitled to wage arrears for the period from 2 June to 24 June 2024, and to final holiday pay. Because the exact amounts were not determined in the text of the orders, the Authority expected the parties to calculate and agree the figures, with leave to return to the Authority if they could not. Interest was also ordered on the unpaid wage arrears and holiday pay until paid.

Remedies and penalties

Why this case matters

• Process still matters, even for serious allegations: summary dismissal for suspected theft without investigation and a proper opportunity to respond is high risk.
• Contribution can materially reduce compensation: even where dismissal is unjustified, employee conduct connected to the dismissal (here, taking cash without authorisation) can significantly reduce the compensation award.
• Separate claims can cut both ways: the employer ran a fidelity claim but could not prove the employee advanced his own interests at the employer's expense during employment, and the Authority rejected the forensic evidence relied on.

Read the full ERA determination (embedded)

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Source: Employment Relations Authority determination hosted on determinations.era.govt.nz.