Whanau Tahi Ltd v Kiran Dasari
There has been a lot of media coverage recently of immigration issues with Indian students. This is one story where the student lost his job and work permit as a result of the employer’s actions. The facts of this case are not so exciting as my last article, but the legal arguments are really important.
Whanau Tahi is a wholly owned subsidiary of Te Whanau o Waipareira Trust and provides computer services to enable social and clinical groups to collaborate on their clients’ care. Mr Dasari applied for and was offered a job as a business analyst for the company and both he and his manager signed the employment agreement.
Before taking up the role with Whanau Tahi, Dasai was studying and had a work permit that entitled him to work part-time. When he finished his studies, the work permit was extended to full-time employment with Pizza Hutt. To be entitled to work for Whanau Tahi, he needed to apply to Immigration to change his permit to the new employer.
Whanau Tahi insisted that he resign from his existing employment and filled in the forms needed to make the change with Immigration New Zealand. The employment agreement that had been signed by both parties, went to the CEO for a further signature. Immigration New Zealand required the employment agreement to complete the process and the CEO refused to sign it without the required work permit. Dasari was stuck in a loop that he was unable to unlock.
Dasari was working at Whanau Tahi but the company decided it could not employ him without a work permit. Instead of sitting down with Immigration and Dasari to sort out the problem, they told Dasari to work from home until it was resolved but didn’t give him work and closed his access to the computer system. A few days later the employer advised Immigration they were withdrawing their support for his work permit, but again, they didn’t tell Dasari. Dasari sought advice and took a personal grievance.
Whanau Tahi hedged its bets and ran two arguments. First it argued that the employment agreement was an illegal contract because he didn’t have a valid work permit that entitled him to work for them. Secondly it argued that the contract was frustrated because, due to no fault from either party, they were unable to implement the contract. (In an employment context, frustration of contract most commonly applies when an employee dies or is unable to attend work for a prolonged period, often due to a medical condition or because they are in prison.)
The Employment Authority found for Dasari so Whanau Tahi took the matter to the Employment Court. It was a bad move because, unusually, the court agreed with everything the authority had concluded except the compensation awarded to Mr Dasari, which it increased.
The court did a detailed analysis of whether the employment was frustrated and whether the employment agreement was an illegal contract. With respect to frustration, it reiterated that there is a very high threshold required to prove that performance of the contract has become impossible, and that this situation has not arisen from any action or inaction of one of the parties. It was within Whanau Tahi’s ability to provide the employment agreement to Immigration New Zealand which had given a clear indication that the work permit would be approved. Furthermore, the employment had commenced without the work permit and therefore was capable of being undertaken, so it did not meet the definition of frustration of contract.
With respect to the illegal contract, the employer argued that because there was no work permit the contract was illegal. The court found that although the employment of Dasari without a work permit was illegal, ‘there is nothing in the Immigration Act expressly providing that a breach of its terms renders an employment agreement illegal’.
Whanau Tahi was ordered by the court to pay Dasari the two months of wages it had withheld, three months lost wages and $10,000 compensation for hurt and humiliation, up from the two months lost wages and $5000 hurt and humiliation the authority had ordered.
The employer could easily have dealt with this situation safely. Firstly, they should have fulfilled their part of the process to complete the Immigration New Zealand requirements. Secondly they should have communicated with Dasari much more openly, as required under the good faith provisions. Finally, the employment agreement included a provision that it was dependent on the employee having a work permit, if he had failed to secure his work permit he could have been dismissed with due process.