Manawatu Motors 1970 Ltd v Renner

Manawatu Motors 1970 Ltd, trading as Robertson Isuzu, employed Mr Renner as a sales manager. His role involved building relationships with suppliers and customers, notably ShinMaywa. Mr Renner began considering leaving and was in contact with key business partners before his resignation took effect in September 2023.

After Mr Renner resigned, Robertson Isuzu discovered he had been communicating with customers and suppliers in ways that undermined their business relationships. The company took steps to investigate, including uplifting Mr Renner’s laptop and phone for forensic examination. The dispute centred on whether Mr Renner breached his employment duties and whether he was owed commission for sales completed after he left.

The Employment Court found that Mr Renner breached his duties of good faith, fidelity and loyalty by undermining Robertson Isuzu’s relationships with customers and suppliers. His conduct caused the business to lose the chance of a smooth transition and resulted in damages.

The Court also confirmed that commission was payable for sales agreements entered during Mr Renner’s employment, even if the sale completed after he left. The amount of commission was to be calculated based on unconditional sales agreements. The Court reserved costs and directed the parties to resolve commission calculations, with interest payable on the balance due.

Commission disputes often arise when sales are completed after an employee leaves. The Court clarified that commission is earned when a sales agreement becomes unconditional during employment, regardless of when the sale is finalised or payment is received.

Employers should ensure employment agreements specify when commission is earned and payable. Employees should keep records of sales agreements and their status at the time of departure to support any claim for commission.

Employees owe duties of good faith, fidelity and loyalty to their employer. This means they must not undermine business relationships or divert opportunities for personal gain while employed. Breaching these duties can result in damages if the employer suffers loss.

Employers should monitor employee conduct, especially during notice periods, and act promptly if there are signs of misconduct. Clear policies and employment agreements help set expectations and provide grounds for action if duties are breached.

Employers may need to retrieve company devices for investigation if there is evidence of misconduct. The Court noted that Robertson Isuzu was entitled to uplift devices but must act transparently and in good faith about the reasons for doing so.

Employers should inform employees of the purpose of device retrieval and follow fair procedures. Employees should cooperate and seek clarification if unsure about the process.

Employment agreements should clearly set out commission terms, duties of loyalty, and any post-employment restraints. This helps prevent disputes and provides a basis for enforcement if obligations are breached.

Employers should regularly review agreements and update them to reflect business needs. Employees should understand their obligations and seek advice if unsure about restrictions or entitlements.