The court found the deduction was based on assumption, not contract interpretation

NZ employer deducted a worker's pay during lockdown without checking what he actually did. The Court of Appeal ruling says that process matters.

Kevin Breen joined Prime Resources Company Limited in April 2021 as general manager and head of sales and marketing on an annual salary of $150,000. The Auckland property developer tasked him with selling 92 apartments off a plan, and his employment agreement expected about 50 hours a week. That agreement also contained a clause allowing the company to deduct pay for hours not worked due to "personal matter or ACC etc."

Four months in, Auckland entered COVID-19 lockdown. On 17 August 2021, Breen notified managing director Mr Chung that he would keep working from home – handling client calls, emails and inquiries. But on 1 September 2021, Chung emailed him with different news: he was deducting $4,326.75 from Breen's August pay for an estimated 75 hours of missed work, citing that contract clause. The email also mentioned the company had been unable to obtain a government wage subsidy.

Chung never asked Breen what work he had actually completed during August before making that calculation. He later admitted it was a "best guess" based on the number of emails Breen appeared to be responding to, and that he had simply assumed all of Breen's work was captured by those emails.

Breen objected immediately and said he expected his full salary. The company...

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