Employment / Workplace

Justification Test: Is "Could" different than "Would"?

The objective test at Section 103A of the Employment Relations Act 2000 (Act) for justification of a dismissal or other action by an employer changed on 1 April 2011, to "...whether the employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred" (ie the word "could" has been substituted for the former "would" in an otherwise materially identical subsection).

Put simply, "could" indicates that there are a range of options open to an employer rather than one right way and theoretically, this new test makes it easier for employers to justify disciplinary action.

Angus and McKean v Ports of Auckland Limited applied the new test, with counsel in this case giving the following example of the how the terms differ:

"If the French had tried a bit harder, they would have won the Rugby World Cup;

If the French had tried a bit harder, they could have won the world cup".

The Court commented that "the legislation contemplates that there may be more than one fair and reasonable response or other outcome that might justifiably be applied by a fair and reasonable employer in these circumstances. If the employer's decision to dismiss ... the employee is one of those responses or outcomes, the dismissal ... must be found to be justified".

Section 103A also now includes a list of factors to be taken into account by the Court in determining whether procedural fairness has occurred, essentially codifying fair process, as follows:

  • "whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations against the employee before dismissing or taking action against the employee; and
  • whether the employer raised the concerns that the employer had with the employee before dismissing or taking action against the employee; and
  • whether the employer gave the employee a reasonable opportunity to respond to the employer's concerns before dismissing or taking action against the employee; and
  • whether the employer genuinely considered the employee's explanation (if any) in relation to the allegations against the employee before dismissing or taking action against the employee."

The Section goes on to state that procedural defects alone won't render action unjustifiable if the procedural failures were minor or did not result in the employee being treated unfairly.

Comment

The question we've been asked is, has this made any difference to employers? The short answer is yes - the changes ought to make it simpler to justify action taken with employees.

Codifying the procedural factors to be taken into account by the Court doesn't change the requirements of procedural fairness but rather should serve as a reminder for employers to be cognisant of the steps to be followed.

We recommend that employers seek advice before commencing a process with employees to avoid the risk of personal grievance action.

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