Gary Cotton v Darcee Gosling, Gosling Solutions Limited, and Rob Ralston [2022] NZERA 90
This determination is mainly about two things: (1) identifying who the employer was at the outset of a short, informal employment arrangement, and (2) whether the worker was unjustifiably dismissed when work stopped without proper communication or pay being resolved. The full determination is embedded at the end of this page.
At a glance
- Citation: [2022] NZERA 90
- Registry: Christchurch
- Authority member: David G Beck
- Investigation meeting: 25 February 2022 (video link)
- Submissions received: 2 March 2022 (Applicant) and 14 March 2022 (First Respondent)
- Determination date: 16 March 2022
- Main issues: employer identity; unjustified dismissal; wage arrears; holiday pay; compensation; contribution; costs
- Outcome: Darcee Gosling held to be the employer and personally liable; summary dismissal unjustified; remedies ordered; no contribution; costs reserved
Background
Mr Cotton responded to a Facebook job advertisement posted by Darcee Gosling around 18 April 2021 to help with a firewood business trading as Ignite Firewood. He started work the next day. There was no written employment agreement. The basic terms were discussed orally (pay rate, hours, and work location). Mr Cotton was introduced to Rob Ralston and was told Mr Ralston would direct his day-to-day work.
A dispute then developed about pay and the continuation of work. Mr Cotton raised a personal grievance by letter dated 17 May 2021 claiming unjustified dismissal and unpaid wages. The matter was filed in the ERA in July 2021.
Employer identity: who was the employer at the outset?
The respondents argued Mr Cotton was employed by Mr Ralston (said to be a sole trader), and that work was "suspended" because it was unsafe for Mr Cotton to work unsupervised due to Mr Ralston's medical issues. The Authority applied the Employment Court approach: the key question is who an independent but knowledgeable observer would say was the employer at the outset of the relationship.
On the evidence, Darcee Gosling was treated as the employer. The job was advertised from his personal Facebook account, he negotiated the key terms, collected Mr Cotton's IRD and bank details, and paid Mr Cotton from his own bank account. The firewood operation was distinct from Gosling Solutions Limited (even though premises were associated with that company), and Mr Cotton was not made aware of any company employer. The Authority concluded that, objectively, Darcee Gosling employed Mr Cotton and did not take steps to protect himself from personal liability.
Unjustified dismissal
The Authority applied the s 103A test (what a fair and reasonable employer could have done in all the circumstances). It found the employment effectively ended without a fair process: there was no meaningful investigation, no clear communication about whether employment was continuing, and no real engagement with the wage arrears concerns raised by Mr Cotton.
The determination treated it as reasonable for Mr Cotton to conclude his employment had ended when work stopped and clarification was not provided. The outcome was a finding of summary unjustified dismissal, along with disadvantage caused by the way the employment was terminated.
Remedies and amounts ordered
The Authority awarded reimbursement of lost wages for 13 weeks, based on an average of 35 hours per week at $22 per hour. It also ordered unpaid wage arrears (two unpaid weeks), unpaid holiday pay (8%), and compensation for humiliation, loss of dignity and injury to feelings. No reduction was made for contribution.
Orders (Darcee Gosling personally liable)
- Lost wages: $10,010 gross
- Wage arrears: $830.45
- Unpaid holiday pay: $131.12 gross
- Compensation: $8,000.00 (no deduction)
- Total: $18,971.57
Costs
Costs were reserved. The Authority set a timetable for memoranda if costs could not be agreed, and noted the usual daily tariff approach (including $2,250 for a half-day) if asked to determine costs.
Practical takeaways
- Employer identity is assessed objectively at the outset: paying wages personally and negotiating key terms can create personal employer liability, even if a business is connected to a company.
- No written agreement is a risk multiplier: failing to provide a written agreement can make identity and process disputes worse.
- Stopping work without clarity can be a dismissal: if a worker reasonably believes employment has ended, the employer can be exposed to unjustified dismissal liability.
- Contribution is not automatic: if the problem is driven by employer communication and process failures, remedies may not be reduced.
Read the full ERA determination (embedded)
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Source: Employment Relations Authority determination hosted on determinations.era.govt.nz.
