Chefs win six-figure payout after catastrophic failure by employer to follow due process
Tuesday, 3 March 2026
Failing to follow employment law processes has cost an Auckland waterfront cafe $100,000 in payouts to two chefs — and such cases are becoming increasingly common at a time of higher unemployment.
The husband and wife in this case, Aaron and Phonesavanh (Ponsy) Wallace, took their personal grievance cases to the Employment Relations Authority after they were dismissed from their respective roles as head chef and sous chef at Buoy Cafe.
The cafe’s owners, Tang & Son Limited (TSL), said its general manager Sikuong Khammy acted justifiably in dismissing Aaron Wallace “for repeated misconduct, dishonesty and refusal to comply with reasonable instructions”.
Ponsy was dismissed for alleged “dishonesty, misconduct and negligence” and colluding with her husband “to cause trouble” and not attending work for a meeting, after she was sacked.
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But employment lawyer Shelley Eden said the case was an example of a catastrophic failure by the employer to follow any employment dispute process, and had cost the business dearly.
The case stood out on two points, Eden said. First, the company referred to the fact that the employment agreement allowed for dismissal without notice - but regardless, a fair process must still be followed.
The other point of note was that Aaron was awarded $40,000 in lost wages, covering the six months he spent actively looking for work, while Ponsy was unable to find work for four months.
Eden said in an economic environment where redundancies were increasing and fewer job opportunities available, “we're going to see more of those higher awards” where there had been an abject failure of fair process by the employer.
The Wallaces were originally employed by the previous owner of the cafe. When TSL took over the business in June 2023 the couple signed new employment agreements and continued in their existing roles.
But authority member Robin Arthur found the eventual dismissals of the Wallaces was the result of tensions that developed between Aaron, as head chef, and Sok Heang (Irene) Toun, as store manager, over their respective expectations and views on how the cafe should be operated.
Relationships appeared to have soured to the point that Aaron complained that Toun had “smacked me on the back very hard with an open hand” during a discussion on why he had put some food-soiled cardboard pizza boxes in the general rubbish, rather than the recycling bin. He said he asked her not to hit him again but “she did it two more times”.
Toun said she only tapped his back as she passed by Aaron in the kitchen “to avoid an accident” and had not intended to cause any pain.
A further interaction, which Aaron considered indicative of problems in his working relationship with Toun, occurred in April 2024, when he asked for two days off to be with his wife who had had a miscarriage which required surgery.
He was upset by what he felt was an “incredibly insensitive” response from Toun who he said asked him: “Why do you need two days? You’re not the mother.” In her later evidence Toun told the authority she did not remember making those comments and “would not say it is not true” but did not think she would have said that.
Eden said the request would have been justified sick leave, and showed a lack of understanding of the law by the business owners.
The key elements of this case were the importance of process. And secondly, an understanding of the law and importance for employers to seek advice before they dismissed employees, Eden said.
The Wallaces’ employment agreement included a common statement that in the case of serious misconduct, the employer could dismiss the employee without notice - but there was still a legal requirement for a process, including an investigation of the allegations, she said.
The authority could award up to three months' lost wages, but more could be justified in some circumstances. The employee must try hard to find work, and provide evidence of their effort as had been the case here, Eden said.
Given the current difficult job market, “we are going to see claims at this level and higher coming up”.
Compensation for lost wages was “an interesting remedy, because it's the actual wages lost. So if they both got jobs the next day, then they wouldn't have been awarded anything. But because they were out of work for an extended period, they got awarded significant amounts,” Eden said.
The failure to carry out a fair process and possibly failing to take advice and failing to understand the legal environment, had been extremely costly for this small business.
“It's not that the concerns here weren't valid. They just actually weren't looked into properly, and the employees weren't given the opportunity to respond to them,” Eden said.
The authority awarded combined remedies of $95,448, plus lawyers’ fees. “So it's $100,000 series of mistakes,” she said.