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Employment Law

07 Dec 2011

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"Would" v "Could" – Employment Court confirms that more than just one letter has changed

The Full Court of the Employment Court has just released its preliminary decision in the cases of Angus v Ports of Auckland and McKean v Ports of Auckland. This decision confirms that Parliament did indeed alter the test for justification of dismissals and other actions taken by employers when section 103A of the Employment Relations Act (Act) was amended on 1 April this year.

Up until 1 April 2011 the test under section 103A of the Act was what a reasonable and fair employer "would" have done in all the circumstances. From 1 April 2011, the test changed and the question became what a fair and reasonable employer "could" have done. The key question which the Full Court therefore considered in its preliminary decision was whether the change from "would" to "could" had resulted in an appreciable change to the section 103A test and, if so, how.

The Full Court concluded that while the change was not "dramatic", it was not an ineffectual or insignificant change. Importantly and helpfully for employers, the Full Court held that the new "could" test means that there may be more than one possible justifiable outcome and more than one possible justifiable method adopted by employers to get to that outcome. The Court contrasted this with the previous "would" test which indicated a single appropriate outcome.

The Full Court also observed that the assessment of an employer's actions under this section must be determined "on an objective basis". It held that this means that the Authority or the Court is not to decide how it would have acted in the same circumstances, or what it would have done if it was the employer.

If you would like to know more about the Ports of Auckland decisions or the implications for your business, please contact us.