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Employment Law
08 Jun 2009
Full Court Reviews Section 103A
The full Employment Court (comprising of all four Judges) has just issued its decision in the case of Air New Zealand Ltd v V, to determine an issue which "lies at the heart of the large majority of personal grievances".
The case concerned the interpretation and application of section 103A of the Employment Relations Act 2000. This section provides that:
" .. the question of whether a dismissal or an action was 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 the dismissal or action occurred."
The plaintiff, Air New Zealand, invited the Court to differ from the views expressed by the Court in previous decisions and conclude that, once serious misconduct has been established, the sanction an employer decides to impose should not be open to scrutiny by the Employment Relations Authority or the Court.
Background
V was employed by Air New Zealand in its cargo handling operation. This was a safety sensitive role. Air New Zealand operated a policy which required employees to be free from the effects of alcohol and other drugs at work. As part of this policy, employees in safety sensitive areas were subject to random alcohol and drug testing. In September 2006 V failed a random drugs test conducted by Air New Zealand, which produced a positive result for cannabis 20 times the threshold level for the test. The employee's employment record was previously unblemished.
Air New Zealand's drug and alcohol policy included the option of rehabilitation, at Air New Zealand's discretion, for employees found to have breached the requirement to be drug and alcohol free at work. However, Air New Zealand declined to offer V rehabilitation and summarily dismissed him for serious misconduct.
Authority's decision
The Authority found that V was guilty of serious misconduct but that Air New Zealand's refusal to provide him with a rehabilitation programme rendered his summary dismissal unjustified.
Employment Court's decision
Air New Zealand appealed the Authority's decision on two grounds:
- That the Authority erred in its interpretation of section 103A; and
- Even on the construction of section 103A applied by the Authority, V's dismissal was justifiable.
Air New Zealand argued that the proper meaning of section 103A is that, once it can be said that a fair and reasonable employer would have concluded that an employee had engaged in serious misconduct of a sort which would justify dismissal, the enquiry by the Authority or the Court must end. Once this point was reached, it was entirely a matter for the employer whether or not the employee was dismissed. By reviewing the employer's decision to dismiss in this case, the Authority had improperly substituted its judgment for that of the employer.
The Court made three key points about section 103A. The first is that the section requires the Court to determine the question of justification on an objective basis, and in all the circumstances at the relevant time. Second, the standard required of the employer by section 103A is what a fair and reasonable employer would have done in all the circumstances. The use of the word "would" imposes on the Authority or Court an obligation to judge the actions of the employer against the objective standard of a fair and reasonable employer, not the standards that the Authority or the Court might apply had they been in the employer's position.
Finally (and most importantly for this case), the Court held that the requirement in section 103A that the employer's actions be assessed "in all the circumstances at the time the dismissal or action occurred", necessarily includes an assessment of the dismissal or disadvantageous action itself. The Court held that based on the plain words of section 103A, the Court is required to examine the employer's inquiry and decision about whether misconduct occurred and its seriousness, as well the employer's decision about the appropriate sanction.
The Court held that this interpretation was consistent with the objects of the Act, including addressing the imbalance of power in employment relationships, as it permits all aspects of an employer's conduct which adversely affect an employee, to be subject to objective scrutiny and review.
Application to the Facts
Having confirmed that section 103A requires the Court to examine the fairness of the sanction imposed (and therefore found against Air New Zealand on that point of appeal), the Court then considered whether V's dismissal was justified on the facts.
The Court was critical of Authority's reasons for rejecting Air New Zealand's explanation for not offering rehabilitation. The Court held that once Air New Zealand reached a conclusion that there was serious misconduct, it was entitled at that point to consider whether V's employment should be terminated. Air New Zealand considered whether rehabilitation was appropriate, and decided that it was not based on a number of factors: including that Air New Zealand did not have any confidence in V adhering to a rehabilitation program; V was not fit to return to his job and there were no suitable alternatives; Air New Zealand's concern to reduce risk in a safety sensitive area; and V's conscious decision to risk dismissal by using cannabis before his shift.
The Court upheld Air NZ's appeal on this point and held that Air NZ's actions were in accordance with its drug and alcohol policy, and that its decision was one that a fair and reasonable employer would have made in all the circumstances. V was therefore justifiably dismissed. The court also noted that the duty to consider rehabilitation only applied “in the event the employee’s employment is not terminated.” As Air New Zealand had made the decision to dismiss, it was therefore not required to consider rehabilitation.
Conclusion
The Court's decision in this case confirms that an employer's actions will be subject to review by the Authority or Court both in terms of its decision about whether misconduct has occurred, and its decision about the appropriate outcome.
Authors
What next?
In This Article:
The plaintiff, Air New Zealand, invited the Court to differ from the views expressed by the Court in previous decisions and conclude that, once serious misconduct has been established, the sanction an employer decides to impose should not be open to scrutiny by the Employment Relations Authority or the Court.
