Layth Abu-Laban v Everest Corporation Limited [2026] NZERA 292

This case is a useful reminder that an employer cannot simply describe a permanent employee as being on a one-year contract and then treat the employment as if it naturally expires. Everest Corporation Limited, trading as Direct Tyres & Auto, told an apprentice automotive technician that his employment was concluding on the same day. The employer said it had lost trust and confidence because of alleged poor workmanship, alleged customer solicitation and alleged misuse of company property. The Employment Relations Authority (ERA) found the dismissal was unjustified, the alleged misconduct was not substantiated, and the employer's counterclaim failed. The full determination is embedded at the end of this page.

Background

Mr Abu-Laban began work for Everest Corporation Limited (ECL) on 10 June 2024 as an automotive technician. ECL operated as Direct Tyres & Auto, selling tyres and providing tyre servicing and specialist vehicle repairs. It was a small business, with Abdullah Khan as a director and the person managing day-to-day operations.

The employment relationship ended on 11 June 2025. Mr Abu-Laban said he had been unjustifiably dismissed. He also alleged ECL failed to provide wage and time records, and holiday and leave records, after he requested them. ECL responded not only by defending the dismissal claim, but by bringing its own employment relationship problem against Mr Abu-Laban.

What each side alleged

Mr Abu-Laban's claim

Mr Abu-Laban sought compensation for humiliation, loss of dignity and injury to feelings under s 123(1)(c)(i) of the Employment Relations Act 2000. He also sought lost remuneration under s 128. In addition, he pursued penalties against ECL for alleged breaches relating to wage and time records under the Employment Relations Act and holiday and leave records under the Holidays Act 2003.

ECL's counterclaim

ECL alleged Mr Abu-Laban had breached good faith, misused company property, performed work poorly and solicited customers. It sought penalties and damages on the basis that Mr Abu-Laban had breached particular clauses in his individual employment agreement and caused ECL loss.

That made the case wider than a standard unjustified dismissal claim. The ERA had to consider not only whether the dismissal was justified, but whether the employer could prove the allegations it relied on after the employment relationship had ended.

The dismissal meeting on 11 June 2025

Mr Khan invited Mr Abu-Laban to a meeting on 11 June 2025. At that meeting, Mr Khan told him that his employment was concluding that same day. Mr Abu-Laban did not know before the meeting that it would be about termination, and he was not provided with information before or during the meeting.

ECL's position was that, around five weeks earlier, Mr Khan had verbally told Mr Abu-Laban the company would not renew his contract and that his employment would therefore end on 11 June 2025. The reason advanced was loss of trust and confidence. Mr Khan said he had formed the view that Mr Abu-Laban had solicited customers, promoted his own mechanical services business on Facebook, and demonstrated poor workmanship on several occasions.

That argument failed at the first step. The ERA found Mr Abu-Laban's employment agreement did not need to be annually renewed because he was employed on a permanent basis. In other words, this was not a genuine expiry of a fixed-term arrangement. It was a dismissal.

Why the dismissal was unjustified

The statutory test in s 103A required the ERA to assess whether ECL's actions, and how ECL acted, were what a fair and reasonable employer could have done in all the circumstances at the time. That includes the familiar procedural minimums: a sufficient investigation, raising the concerns with the employee before dismissal, giving a reasonable opportunity to respond, and genuinely considering the employee's explanation.

ECL did not meet those requirements. It did not put the allegations to Mr Abu-Laban before dismissing him. It did not seek his response. It did not provide evidence supporting the allegations. It did not give him a genuine opportunity to answer the concerns before the employment was ended.

The ERA held that ECL did not comply with any of the s 103A(3) tests. The dismissal was therefore unjustified.

The record-related penalty claims failed

Mr Abu-Laban also argued ECL had failed to comply with record obligations. After the dismissal meeting he texted Mr Khan asking about payment of wages for the previous week. Mr Khan replied that, because the employment had concluded, he was unable to provide documentation.

ECL later provided a pay item transaction report setting out payments made for salary and statutory entitlements during the employment. The ERA was not satisfied that Mr Khan understood the text as a request for a wage and time record, so it was not satisfied that ECL breached s 130(2) of the Employment Relations Act. There was also insufficient evidence that Mr Abu-Laban sought his holiday and leave record, so the Holidays Act penalty claim also failed.

ECL's counterclaim failed

The employer's cross-claim was significant because it tried to convert allegations about the employee's conduct into penalties and damages against him. The ERA rejected those allegations. It found there was no evidence supporting a claim that Mr Abu-Laban breached good faith.

Poor workmanship allegations

The ERA noted that the poor workmanship, misuse of company property and customer-solicitation allegations were not raised as disciplinary issues during the employment. Mr Abu-Laban had not received written warnings. Mr Khan said there had been verbal warnings, especially about poor workmanship, but that did not prove the alleged breaches.

Several examples were examined. Mr Khan said Mr Abu-Laban damaged a steering wheel. Mr Abu-Laban said the damage happened during a routine wheel alignment, while using a tool that ECL itself had modified. The ERA found ECL could not conclude Mr Abu-Laban was responsible, because the modified tool caused the situation he found himself in.

ECL also referred to a work van with modified tyres and a tyre blowout. Mr Abu-Laban had used the van for work purposes, but he was not responsible for fitting the tyres. He also repaired the valve at his own expense. The ERA found he was not responsible for the blowout.

Another incident involved a customer arriving with boxes of tyres in a car. While Mr Abu-Laban assisted the customer to remove the tyres, a wheel fell out and narrowly missed his legs and feet. The ERA found that incident was caused by the customer's box not being properly secured, not by Mr Abu-Laban.

Customer solicitation and alleged competing business

ECL alleged Mr Abu-Laban solicited customers and promoted his own mechanical services business. The ERA found there was no evidence to support the customer-solicitation allegation. It also recorded that Mr Abu-Laban did not operate his own business. He was an apprentice automotive technician who was also studying at Unitec at the time of dismissal.

Motorbike parts and theft allegation

ECL also accused Mr Abu-Laban of theft after he removed rear brake parts from Mr Khan's motorbike at the workshop. The ERA accepted the parts were removed because the rear brakes were worn and Mr Abu-Laban wanted to show Mr Khan they needed replacement. He did not remove the parts from the workshop. The theft allegation was not made out.

No performance management

Mr Abu-Laban accepted that, from time to time, Mr Khan told him his work rate was too slow. But he was an apprentice mechanic. ECL did not put a performance improvement plan in place and did not take disciplinary action about performance. The ERA concluded Mr Abu-Laban had not breached the relevant clauses in his employment agreement, had not misused company property, had not solicited customers and had not engaged in theft.

Remedies

Compensation: $15,000

The ERA accepted that the dismissal caused real harm. Mr Abu-Laban could not continue his Unitec study because he could not secure another apprenticeship opportunity. He financially supported his mother and sister. The dismissal came as a huge shock, caused embarrassment, created significant stress because his family depended on him, and had a negative mental impact.

The ERA awarded $15,000 compensation under s 123(1)(c)(i). This was not a punitive award against the employer. It was compensation for the impact of the personal grievance on Mr Abu-Laban.

Lost remuneration: $13,258 gross

After dismissal, Mr Abu-Laban undertook some casual work for an electrical company. Between 30 June 2025 and 31 August 2025 he earned $2,888. The ERA accepted that he took reasonable steps to find new employment during the three-month period after dismissal.

ECL was ordered to pay lost remuneration of $13,258 gross. That reflected the equivalent of three months' ordinary time remuneration, less the $2,888 he earned from casual work.

No contribution reduction

The ERA found Mr Abu-Laban did not contribute to the situation that gave rise to his personal grievance. No reduction was made under s 124 of the Employment Relations Act.

Why this case matters

This determination is a clean example of the danger in trying to re-label a dismissal as a non-renewal. If the employee is permanent, there is no automatic annual expiry. The employer still needs a lawful basis and a fair process before ending the employment.

It is also a useful example of failed post-dismissal justification. ECL advanced several allegations after the relationship had ended, but the ERA tested those allegations against the evidence. The fact an employer has complaints about an employee does not mean those complaints are proven, and it does not excuse bypassing disciplinary process.

Practical takeaways

• Permanent means permanent: an employer cannot end permanent employment by saying a one-year contract is not being renewed, unless the agreement genuinely provides for lawful fixed-term employment.
• Trust and confidence allegations still need process: an employer must put the allegations and supporting information to the employee before dismissal.
• Counterclaims need evidence: allegations of theft, solicitation, misuse of property or poor workmanship require proof, not suspicion or after-the-fact assertion.
• Apprenticeship context matters: performance concerns about an apprentice may call for training, supervision or performance management, not immediate termination.
• Record requests should be clear: employees should expressly ask for their wage and time record and holiday and leave record if they want to preserve a penalty argument.
• Mitigation evidence matters: job search evidence helped support the lost-remuneration award, with only actual interim earnings deducted.

Read the full ERA determination (embedded)

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