On 29 April 2024 two directors of a passive fire protection company went to the home of a fellow director and his wife and handed each of them a letter. The letters suspended them both. They gave no reasons. They told them to stay away from the premises, to stay off the company’s systems and its bank accounts, and not to speak to its customers or suppliers. Five weeks later both were summarily dismissed for misappropriating the company’s money.

On 25 September 2026 the Employment Court found both dismissals unjustified. The figures that got attention were the compensation awards: $55,000 to Mr Gouws and $50,000 to Mrs Gouws for humiliation, loss of dignity, and injury to feelings. Both sit in the top band, and both are worth noting.

But they are not the number that should keep an employer awake. That number is not in the judgment at all, because the Court left the parties to calculate it (with leave to come back if they cannot agree, and given the history here, we would not bet on agreement). The pieces are all there, though, and they run for almost two and a half years.

The company and the people in it

Optimal Fire Ltd was set up in 2019 by Mr Gouws and one other director. Two more joined later, and by 2024 each of the four held 25 per cent of the shares and worked in the business. Mr Gouws was one of them, and from March 2022 he was also employed full time as Assistant Commercial Manager. Mrs Gouws had worked for the company since 2019 and by 2024 was in human resources.

The company was run informally. There was no shareholders’ agreement and, it seems, no formal policies. The directors were paid partly by salary and partly through payments to their spouses or to consultancy companies they controlled. Part of Mr Gouws’s pay came through his own company, JAG Consult Ltd. That detail matters later.

How it unravelled

It began with bicycles. In March 2024 one director came back from leave to find that Mr Gouws had bought bikes for staff under a work-ride scheme the directors had discussed but not approved. He called a directors’ meeting. At the meeting the company’s accountant said Mr Gouws was owed $40,000, payable to JAG, and the questions widened from there. By the end of April a dispute about bicycles had become an inquiry into how the company’s money had been used since 2019.

Mr and Mrs Gouws knew nothing of it until the letters arrived. Five days after the suspension, each was sent the same spreadsheet of transactions reaching back to June 2019, with no explanation of what was wrong with any of them. At separate meetings on 7 May the list came down to 24, some marked with little more than the word “CLARIFY”. They answered in writing on 20 May. Two days later the company rejected their answers and wanted more by noon the following day.

Their lawyers asked for time, and they asked for information. They asked for the WhatsApp messages between the directors, which was how the directors usually communicated, and were told WhatsApp was beyond the company’s control. They asked for the Xero records and the shared drive, and were refused. They asked what the other directors had charged to the company, and were told the other directors were not the subjects of the investigation. On 31 May the company called the requests a delaying tactic and dismissed them both the same day.

From the Authority to the Court

The case did not start in the Employment Court. It started, as nearly all employment grievances do, with the Employment Relations Authority.

The counterclaim is its own small story. It began at $868,852.76. By the time of the hearing it had come down to about $280,000. It failed entirely.

Where the investigation went wrong

The Court found the dismissals unjustified on process and on substance. Three findings matter for any employer.

The comparator file stayed shut

Mr Gouws’s answer, from the start, was that the directors all did the same thing. Each had personal expenses paid by the company, and each set them against what the company owed him. He said the company owed him a good deal, because there had been long stretches when he took no salary or drawings and the others did.

The company would not look. When the evidence finally came out at the hearing, the other directors had the company pay for immigration costs, spending on an overseas holiday, dental bills, and a barbecue. One of them had a private invoice made out to the company, which was the very thing Mr Gouws was accused of. And a WhatsApp exchange from March 2023 showed the directors knew that a $61,916.13 payment was for the Gouws house. Nobody raised it. The investigation began more than a year later. The Court accepted that Mr Gouws had a credit balance of something over $339,000 to draw against, which was more than the company ended up claiming.

The Court described what the company had run as a “lopsided investigation”. The lesson reaches well beyond family companies. If the employee’s defence is that everyone does it, the employer cannot test that without looking at everyone, and refusing to look does not make the defence go away. It only means the employer never finds out whether it is true.

Four cream files laid in a row on a dark stone table in low warm light. Only the nearest is open, its ruled pages lit; the other three stay closed, joined to it by a thin burnt-orange line, beneath a faint map of New Zealand on the wall.

A marriage is not evidence

Mrs Gouws was dismissed on an almost identical letter, for the same conduct, as her husband. The Court found no separate analysis of her position at all. The company had simply inferred that, because they were married, his actions could be laid at her door, and the Court said that inference was inconsistent with s 103A. Her evidence was that she left the family finances to him, and the Court accepted it.

Each employee’s conduct has to be investigated, and decided, on its own facts. That holds even when two people share a surname, a house, and a bank account. Perhaps especially then, because that is when the shortcut is most tempting.

“Preserving evidence” needs evidence

The company said it had to suspend both of them without warning so that no information would be deleted. The Court did not accept that this was the real reason. The company had been looking into the transactions for about a fortnight before it acted, and it could point to nothing suggesting that either employee had tampered with its records or was likely to.

For Mrs Gouws the reasoning was thinner still. The company said she had access to its financial information, and even that was not quite right. But the deeper problem was that nothing tied her to the alleged risk except her marriage. The Court described her as swept up in an assumption that she must have been involved and posed the same risk as her husband, and it found no evidence for that assumption. A spouse does not become a risk by marriage. If an employer cannot point to something the employee herself has done, there is nothing to suspend her for.

Suspending someone without first hearing from them is not ruled out entirely, but it is the exception, kept for cases where the danger is real and pressing and cannot wait even briefly. Here the company asserted the danger and never showed it.

The meter

Reinstatement was declined. The relationship between the directors had broken down completely, and the Court was realistic about it. That is where many employers stop reading, and it is the wrong place to stop.

For Mr Gouws, the Court ordered the company to pay, among other things:

This is where the Authority’s interim orders come back in. They put Mr Gouws back on the payroll for his salary and nothing else. The JAG payments and the benefits were left for the full hearing, because their status was disputed. So the salary claim stops in August 2024, and everything else kept running.

A vast dark stone hall in late golden light: a single small stone block on the polished floor casts a long shadow towards the viewer, with tall pillars, a staircase, and a faint map of New Zealand on the far wall.

The exact sums are still to be calculated. Our own rough arithmetic, using the rates the Court set and the period from dismissal to judgment, puts the items listed above at about $670,000, before interest, any bonuses, holiday pay, and costs. That is our estimate and not a finding, and the parties’ own figures may differ. But the order of magnitude is the point. Set it beside the $55,000 that made the headlines.

Mrs Gouws received $50,000 in compensation and $59,575.02 in lost wages, with holiday pay and interest. Neither award was reduced for contribution.

There is a lesson in this about how pay is structured. In a closely held company, an employee’s real remuneration often sits in several places: a salary, a consultancy company, allowances, a car, insurance. When the dismissal was found unjustified, the Court looked through the structure to the whole package, and the whole package ran until judgment.

A note on the 2026 amendments

The dismissals happened in May 2024, so the case was decided under the law as it stood then. The Court noted the February 2026 changes to s 103A, the new obstruction factor and the reworded test for procedural defects, and said neither would have made a difference. That is worth noticing. These were not technical slips the new s 103A(5) might forgive. The Court found the failings were more than minor and that both employees were treated unfairly.

One further point, offered as our reading rather than settled law. The new $200,000 high-earner exclusion measures annual remuneration by what the employer has paid the employee, including PAYE income payments (s 67I(4) and (5)). Mr Gouws’s salary was $100,000, and much of the rest came through his consultancy company. Whether invoices paid to an employee’s company count towards the threshold has not, as far as we know, been tested. If they do not, then the arrangement that kept much of his pay off the payroll would also tend to keep him under the threshold, while, as this case shows, the Court can still treat those same payments as part of his loss. Employers with director-employees paid this way should not assume the threshold protects them.

What to take from it

An allegation needs particulars before it needs an answer, and a spreadsheet covering five years of transactions is not an allegation. Where the employee’s defence is consistency, consistency is what has to be investigated, and the comparator file has to be opened or its irrelevance shown on evidence. Where two employees are connected, each still needs a separate inquiry and a separate decision. A reply due by noon the next day is not a reasonable opportunity to respond. And before any dismissal in a business like this one, the honest costing is not the compensation band. It is the whole remuneration package, multiplied by the time it takes to reach judgment.

The company believed it had uncovered a fraud, and it may well have believed it sincerely. But believing is one thing, and finding out is another. It suspended before it asked, and it dismissed before it looked, and the bill for that is still being added up.

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Sources

This article provides general information and commentary. It is not legal advice.