Authority Rejects Attempt To Cut CEO's Rights

Employment Relations Authority Rejects Attempt By Singapore-Owned NZ Company To Cut Down Ceo’s Rights On Dismissal

The Employment Relations Authority has thrown out an attempt by a Singapore-owned Auckland medical clinic to cut down a chief executive’s rights on dismissal following “loss of confidence” by a board of directors.

In February 2004 Centre for Advanced Medicine Ltd (an Auckland chelation therapy clinic wholly owned by Master Projects Pte Ltd, Singapore) summarily dismissed Chief Executive Dr Adrian Sprott. Dr Sprott has issued legal proceedings for unjustified dismissal.

At a hearing before the Employment Relations Authority on 21 February 2005, Centre for Advanced Medicine Ltd claimed that in view of Dr Sprott’s particular responsibilities, high salary and position as chief executive, the employer-employee relationship was ended as soon as the Board had “lost confidence” in him as CEO, and that therefore the dismissal procedures under the Employment Relations Act did not apply.

In a Decision issued on 25 February 2005 (Determination No. AA 71/05) the Employment Relations Authority roundly rejected this claim. Authority Member Marija Urlich stated:

“The [Employment Relations] Act makes no distinction between employees seeking resolution of their employment relationship problems on the basis of position, responsibility or level of remuneration. The principles to be applied to a claim of unjustified dismissal by an employee who holds the position of CEO are the same as for any employee.”

Dr Sprott, who is vigorously pursuing his claim for unjustified dismissal, welcomed the ERA’s decision. “The notion that Employment Relations Act procedures and requirements don’t apply to chief executives who ‘lose the confidence’ of their Board is risible,” he said. “Of course they apply.”

Dr Sprott noted that Centre for Advanced Medicine Ltd is wholly owned by an overseas corporation. “Perhaps the rules are different in Singapore,” he commented. “But I can’t imagine there are any New Zealand-owned employers who take the view that certain classes of employees fall outside the scope of the Employment Relations Act. The Act is quite clear that it covers all employees, regardless of status or pay.”

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