ERA confirms dismissal justified for misuse of staff discount despite long service
A decision handed down on the 21st January 20026 between DLH and The Farmers Trading Company Limited at the Employment Relations Authority (ERA) provides helpful guidance for employers on the management of staff discount schemes and the limits of leniency for long-serving employees. The Authority confirmed that dismissal was justified where an employee deliberately misused her staff discount to benefit third parties, in breach of a clear workplace policy.
The employee had worked as a sales assistant for The Farmers Trading Company (FTC) for approximately 11 years. During a staff discount weekend in April 2024, concerns were raised following a review of CCTV footage by loss prevention staff. The footage showed another person handing cash directly to the employee at the checkout, indicating that the staff discount was being used on behalf of someone else.
Breach of staff discount policy
Further investigation revealed that the employee had processed three discounted transactions over the course of the day, totalling more than $600. Two involved clothing items paid for by her daughter and her daughter’s partner. The third transaction occurred after her shift and involved the purchase of a child car seat with a retail price of approximately $900, which was purchased for around $450 using gift cards. The employee acknowledged that a friend had contributed funds towards the purchase, which was intended for that friend’s family.
FTC’s staff discount policy expressly required employees to pay for discounted items themselves and prohibited friends or family members from benefiting from the discount. The policy stated that such conduct could amount to serious misconduct. The employee had signed an acknowledgement of the policy and had completed refresher training only a few months prior to the incident.
Disciplinary process and dismissal
The employer conducted a formal investigation and disciplinary process. The employee was provided with the allegations and supporting evidence, including CCTV footage and transaction records, and was given the opportunity to respond. She accepted that she had “got it wrong” and later acknowledged that she had abused her staff discount.
After considering the employee’s explanations and her length of service, the employer concluded that the conduct had caused an irreparable breakdown of trust and confidence. The employee’s employment was terminated in May 2024, and she subsequently challenged the dismissal as unjustified.
ERA findings
The ERA found that the employer had acted fairly and reasonably in both its process and its decision to dismiss. The Authority emphasised that the staff discount policy was clear, well-communicated, and reinforced through training. It also placed weight on the deliberate nature of the conduct and the value of the goods involved.
While the Authority accepted that a lesser disciplinary outcome may have been available, it held that dismissal fell within the range of responses open to a fair and reasonable employer in the circumstances. The employee’s long service did not outweigh the seriousness of the breach of trust.
Key lessons for employers
This decision underscores the importance of having clear and consistently enforced policies governing staff benefits and discounts. Employers should ensure that employees receive regular training and understand that misuse of staff privileges may result in serious disciplinary consequences.
The case also highlights the value of a thorough and procedurally fair disciplinary process. Where employers rely on objective evidence, clearly communicate allegations, and genuinely consider employee responses, the ERA is likely to support robust disciplinary outcomes — even where dismissal is imposed on a long-serving employee.
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