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FYI
Employment Law
01 May 2008
Avoiding the Pitfalls When Dismissing or Disciplining Staff
Ensuring a dismissal or disciplinary action against one of your employees can withstand the scrutiny of a challenge has become increasingly more difficult in recent years. Has your organisation kept up with the changes to the law and the recent cases? Set our below is a summary of the key points you need to know to help you stay on the right side of the law.
The starting point for any such discussion is section 103A of the Employment Relations Act 2000 (ERA). This section sets out the test for justifying dismissals and disciplinary action, and has given rise to some additional procedural steps that must be worked through, before you can take disciplinary action. In essence, section 103A states that whether such action is justifiable must be determined, on an objective basis, by considering whether the employer's actions, and how the employer acted, were what a fair and reasonable employer would have done in all the circumstances at the time.
So, what does that mean in practice? The cases that have considered section 103A have highlighted the increasing importance of the process you must follow in coming to your decisions. The Employment Court has made it clear that how an employer reaches its decision is an important consideration under section 103A, particularly when read in conjunction with the obligations of good faith under section 4 of the ERA.
So, one of the key implications of section 103A is the need to ensure separate consideration is given to both the alleged misconduct and to what the appropriate disciplinary action is, in the circumstances. It is no longer appropriate for you to say that a finding of serious misconduct must automatically lead to summary dismissal.
Although section 103A does not give the Employment Relations Authority and Court the unbridled power to substitute its view for that of you as the employer, the cases certainly demonstrate that such a power exists, at least to some tangible degree.
Procedural "Dos and Don'ts"
Useful procedural points can be taken from the Employment Court decisions on the application of section 103A. We have referred below to the Employment Court's decisions in:
- Dr White v ADHB (where a senior clinician was reinstated after being dismissed for emailing photos of his genitalia and a pornographic calendar from his work computer);
- Angel & Hutton v Fonterra (where two employees were reinstated after being dismissed for breaching health and safety procedures);
- Morrison v NZ Post (where an employee was unjustifiably dismissed for stealing a cellphone); and
- Air NZ v Hudson (where an employee was unjustifiably dismissed for pushing a co-worker)
In light of the above cases, a full and fair process will now include the following elements:
- Careful compliance with employer's policies and agreements
The cases confirm that you must follow your own policies, procedures and agreements to the letter. Before commencing an investigation you should undertake a full review of all potentially applicable policies, along with the specific terms of the employee's employment agreement.
If you have any specific rules or policies regarding who, within the organisation, is able to make a decision to dismiss, you must take care to ensure these are followed. In Dr White, the ADHB had a delegated authorities policy which required consultation with the Chief Executive before a decision was made to dismiss. The Court found that ADHB had not followed this policy, which was a factor in its decision that Dr White's dismissal was unjustified. - Enquiry into reasons why policy/procedure not followed
Where you are considering dismissing or disciplining an employee for failing to follow policy or procedure, Angel & Hutton makes it clear that it will not be enough for you to simply rely on the fact that the policy is in place and has been breached. In that case the employees claimed that they had not received training as to the safety procedures which they were alleged to have breached. In the light of this, the Court held that Fonterra should have inquired into the reason why there had been a breach of those procedures. The Court found that the necessary training had not been given. - Provision of full details of allegations and information as to attendees at disciplinary meeting
Dr White makes it clear that you must make the employee aware (in advance) of all of the allegations against them, and clearly advise the employee of who will be attending the disciplinary meeting. In that case the ADHB had not told Dr White that a lawyer (representing ADHB) would be present. Further, Dr White was not informed fully in advance of that meeting of the reason the meeting had been called. - Opportunity to have support person/representative present
Dr White also highlights that, if an employee arrives at a meeting without a representative, you must take care to emphasise that the employee is entitled to support and to ensure that the employee does not wish to have representation. The Court found that the ADHB should have done more to ensure Dr White was represented, rather than simply proceeding with the meeting, particularly when the ADHB had their own lawyer present. - Allowing the representative/support person an active role
In Hudson, the Employment Court found that it was not fair to require an employee's representative or support person to take only an observer role. In that case, Air New Zealand had attempted to restrict the role of Ms Hudson's support person to that of "mute observer". It is clear from the Court's decision that a representative or support person must be allowed an active role in assisting the employee through the process. The need to ensure a support person be able to fulfil his or her role was again seen in Morrison. NZ Post directed the support person to sit through the meeting without saying anything, and to take no part unless he was questioned, or it was necessary to intervene because 'things got out of control'. The Court found that this direction deprived the employee of having a true support person in the meeting. - Disclosing all relevant material
In Hudson, Dr White, and Morrison, a key procedural failing consistently identified by the Court was the employer's failure to provide the employee with all relevant material. In Dr White, the employee sought, through his representative, copies of all witness statements from the employer's investigation. These were not provided. In Hudson, the employee had not been provided with the details of one of the complaints against her. In Morrison, the employee was not given the report from the investigative meeting, nor the results of an experiment testing her theory that she had not stolen a cell phone, but instead had picked it up inadvertently. - Interviewing all relevant people
Again, in Hudson, one of the procedural failings on Air New Zealand's part was found to be the fact that it had not interviewed Ms Hudson's team leader. The team leader had information relevant to the employer's investigation, and yet this was not taken into account in the decision-making process. - Positive engagement in dialogue/giving feedback
Crucially, in Dr White, the Court held that, in a disciplinary meeting, you cannot act as the "proverbial sponge", simply soaking up the information that is provided to you. You must actively engage in dialogue with your employee. In that case, the Court also emphasised the duty of good faith under section 4 of the ERA, which includes a duty to be responsive and communicative. In the disciplinary context, this will involve giving feedback to the employee about the responses they have provided, and entering into a genuine discussion with them about the issues. It is not enough to simply take notes of the employee's response and to not give feedback. - Considering whether alternatives such as behavioural corrective options, warnings, demotions etc are appropriate
The cases also place emphasis on the right of the employee to be consulted over the penalty you are proposing to impose on them. Further, you must consider whether there are any alternatives to dismissal which are available to it and are what a reasonable employer would do in the circumstances. In Dr White, the Court found that a fair and reasonable employer would have employed alternative strategies, such as behavioural correctives, rather than dismissing the employee.
In Unitec v Henderson, the Court made it clear that, under section 103A, in most cases a "discrete opportunity" for an employee to address the possible consequences of a finding of misconduct would be necessary "as an integral part of a fair process". Similarly, in Hudson, the Court said that the test for justification applies "at all stages including the employer's decision that misconduct has occurred and the employer's decision to dismiss".
It will therefore be important for you to show that you have had a full discussion with the employee regarding the possible penalty which may be imposed, and further, that you have considered whether there are appropriate alternatives, such as training, or perhaps a warning. You will need to show why these alternatives were not appropriate in the circumstances, if they have not been adopted.
In summary, there are a number of hurdles that must be overcome before you get into the position where you can make a decision to dismiss or discipline an employee. Carefully following the principles outlined in the above cases will be a good starting point to ensuring your organisation keeps on the right side of the law when navigating its way through a disciplinary investigation process.
Authors
Carl Blake
Senior Associate - Dispute Resolution
DDI: +64 9 977 5163
Mobile: +64 21 477 228
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Katherine Burson
Senior Associate - Employment
DDI: +64 9 977 5112
Mobile: +64 21 498 624
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In This Article:
The Employment Court has made it clear that how an employer reaches its decision is an important consideration under section 103A, particularly when read in conjunction with the obligations of good faith under section 4 of the ERA.
