Pita Pit to pay $35,000 to ex-employee he fired after mistake
The owner of the Pita Pit franchise must pay $35,000, plus interest, to a terminated former employee after belatedly realizing how much commission she could earn, the Employment Relations Authority has ruled.
Anahera Tamahori was hired in February 2020 as Business Development Manager, a new position to help Pita Pit franchisees increase their sales.
The position came with a base salary of $60,000 plus commission, which could bring the total salary above $125,000 a year, Tamahori was told.
PPO, owner of the Pita Pit brand’s master franchise in Australasia, expected the post to focus on growing its corporate catering business. Then Covid hit and the lockdowns started.
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Tamahori has instead spent most of his time focusing on growing through the government’s free school meals scheme, ERA member Pam Nuttall said in a ruling dated Aug. 30.
The Covid-19 closures have hit Pita Pit’s catering and corporate catering business hard, while the school meals program has expanded nationwide, something PPO did not anticipate when it employed Tamahori.
Four Pita Pit franchises won tenders for the pilot school lunch program before Tamahori began work. By the end of 2021, Pita Pit was providing lunches to over 60 schools.
How the Labor Relations Authority works. (Video first published in June 2021)
PPO said that as of June 2020, the company had discussed restructuring and offered to remove Tamahori’s business development manager role.
At one point, management began to fear that the company might be exposed to larger-than-expected commission payments due to the wording of Tamahori’s employment contract.
In an email to PPO directors in September 2020, Pita Pit NZ Managing Director Brett Ingham said Tamahori’s commission calculations were based solely on catering revenue assumptions and a commission rate of 5 % in addition to royalties.
School meals were not considered due to the small scale of the program at the time, and Tamahori’s deal could be construed as a commission on any sales generated.
“I am extremely sorry for how this happened and was not planned at the time,” he wrote.
PPO chief executive Chris Henderson told ERA that the board at one point thought it might be able to avoid a restructuring, but then realized the problem of the commission of Tamahori.
PPO would have seen 83% of its income from school lunches paid as commission to Tamahori, Henderson said, leaving just 17% to pay for operating expenses, including other staff costs.
“This potential liability meant we could no longer wait for a restructuring process to begin, and we began consultations,” Henderson said.
The restructuring proposal was submitted on October 9 and Tamahori was given a month’s notice on December 3.
Nuttall found that the initial restructuring proposal was a genuine response to the outcome of the 2020 Covid lockdowns, not to provide a pretext to fire Tamahori.
Once potential liability was identified, however, there was additional motivation to cancel Tamahori’s role, she said.
“PPO’s belated apprehension of potential exposure in terms of significantly larger than expected commission payments was not communicated in the consultation process or directly to Ms. Tamahori.”
He went through a process of restructuring “in which his motives weren’t quite genuine,” she said.
PPO denied that Tamahori was unfairly terminated or disadvantaged, and denied breaching his legal obligations in good faith.
Nuttall awarded Tamahori $15,000 for three months of lost wages and interest on it beginning December 21, 2020.
She concluded that Tamahori was wrongfully terminated, but not unfairly disadvantaged, and that PPO breached its good faith obligations. She awarded Tamahori $20,000 in compensation for the harm, humiliation, and loss of dignity resulting from his wrongful dismissal.
Tamahori also claimed commission payments on gross sales totaling $1.8 million in 2020 and $1.6 million in 2021, but Nuttall ruled the affected sales did not meet the sales threshold above 1. .5 million dollars.
The costs were reserved.