The Bay of Plenty District Health Board has been ordered to pay a former assistant nurse more than $8000 after it misjudged the difference between a casual and permanent employee.
The Employment Relations Authority has ruled Wendy Rahiri was constructively dismissed.
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Ms Rahiri could only work night shifts at Tauranga Hospital because of family obligations.
After a night shift in March last year, she was told a complaint had been made about her involving an incident with a patient.
She was not told what the nature of the complaint was, despite trying to find out.
Her boss told her she had to start working morning shifts while the incident was investigated for "safety" reasons.
When she declined a morning shift, her hours suddenly dried up.
Further attempts to find out what the complaint fell on deaf ears until a meeting several weeks later, where she was told it was a colleague who had made a "minor" complaint rather than a patient.
When she denied any accusations, she was told there would be a formal investigation and she could be dismissed.
She soon resigned.
The Employment Relations Authority has now ruled she was constructively dismissed and awarded her $7500 to cover humiliation, loss of dignity and injury to feelings, and two weeks' wages.
It found because Ms Rahiri was relied on for regular hours, she was essentially a permanent employee and her casual contract did not matter.
It also found the DHB should have told her what the complaint was sooner.
Public Service Association national secretary Erin Polaczuk said the case was a good example of a court disregarding a contract.
"Even if an employee and an employer have agreed, a court may not. That's something both sides need to be aware of."
She said there were many people who were on casual contracts who should not be treated as such.
"We're glad to hear the courts are taking a stand," she said.
"This will stop, we hope, employers taking advantage of this government's insistence on flexibility."
Bay of Plenty District Health Board legal counsel Gail Bingham said in a statement the DHB would appeal the ruling "as we do not believe it is supported by legislation or practice".