Australia: NZ Employment Bulletin

Last Updated: 11 December 2007
Article by Nicole Cooper

Parliamentary Update

The Employment Relations (Flexible Working Arrangements) Bill has passed through committee stage with a recommendation that it is passed. It is now going to a third reading so there is a strong chance this Bill will be passed sometime in the early New Year - although the recommendation is for it not to come into force until 1 July 2008.

A Quick Look

Why Written Employment Agreements Are Always Needed

If employers neglect this key part of the employment process they may find themselves dragged into a personal grievance process that they cannot win. In Williams v Camira Furniture Limited, the employer’s lack of formality, both at the beginning of the employment relationship and during the disciplinary process, caused a winnable case to end in a draw.

Camira hired Mr Williams without a written employment agreement but Mr Williams did not live up to the promise Camira saw in him. Mr Williams ran up $4,500 in personal internet use (through downloading music), and $135 in personal work charged to the company account. He also crashed the company car causing it to be impounded by the police.

Camira met with Mr Williams several times but did not explicitly tell him his job was in jeopardy as they thought that was an obvious inference to be drawn from the issues discussed. Unfortunately the ERA did not agree with Camira and found its disciplinary process less than adequate.

Mr Williams was unsuccessful in his claim for lost wages because during his employment with Camira he took on another job which would have made it impossible for him to continue to work for Camira. Unfortunately, the ERA said that Camira’s inadequate processes caused Mr Williams distress and embarrassment and it compensated him $5,000 less 30% for his contribution to these events! But the ERA also ordered Mr Williams to pay Camira the $4,635 he owed it.

The moral of this story is to formalise everything from pre employment documentation to written employment agreements and especially any disciplinary processes.

Unsuccessful Bid To Increase Annual Holidays

It had to happen. In Porter v JohnsonDiversy NZ Ltd, an employee argued that her IEA entitled her to an additional five days leave over and above the four weeks provided under the Holidays Act 2003 (HA03). The wording of Ms Porter’s IEA (entered into before the HA03 came into force) allowed three weeks paid leave per annum with an additional five days annual leave per annum granted after five years current continuous service. The Authority decided that because the IEA met the minimum standards required by the HA03 that Ms Porter, the company’s HR Manager, was not entitled to an additional five days leave over and above the four weeks provided as a minimum by the HA03.

This decision comes as a great relief to those employers with similar provisions in their standard IEAs. However, whether or not a person is entitled to additional leave will always turn on the wording of their employment agreement. If Ms Porter’s employment agreement had said that after five years service she would be entitled to an additional five days annual leave over and above that provided by the Holidays Act then the outcome of this case would have been very different.

Important Development

Secret witnesses

Generally a fair enquiry into serious allegations against an employee also requires full and fair disclosure to the employee of all material evidence. This includes the identity of those making the complaint of serious misconduct because there is always the concern that there may be a malicious motivation behind any anonymous informant.

Usual Rule

Traditionally, the courts take a very conservative line on the identification of witnesses. Informants, or ‘secret witnesses’ who do not want to be identified but nevertheless wish to make complaints or allegations against another employee, can cause a great deal of complication to an employer’s disciplinary process. In most cases an employer is not entitled to withhold the identity or factual statements of witnesses from an employee subject to disciplinary action. The refusal to disclose such facts has been said by the courts to be a procedural unfairness.

The Exception

The exception to this rule is where there is a strong and likely possibility of intimidation or harassing reprisals. But even when the secret witness’s identification is withheld, the specifics of the allegations cannot be if they are to be relied on by the employer in justifying disciplinary action. Without this information the employee is at an unfair disadvantage because they will not know of the allegations and so won’t have a proper opportunity to respond.

The Twist

Gillespie v Fox & Gunn Limited is an unusual case in that Ms Gillespie, who made the allegation against a fellow employee in confidence, raised a personal grievance. Fox & Gunn (F&G) disclosed Ms Gillespie’s identity during the disciplinary process. Ms Gillespie was then subjected to some confrontational behaviour by the accused employee. Ms Gillespie successfully claimed constructive dismissal and was awarded $6,000 in hurt and humiliation.

F&G stated that it felt it was in a bind trying to conduct the procedure that on the one hand protected Ms Gillespie’s identity and on the other avoided any pitfalls in the disciplinary process.

Ms Gillespie’s allegations were that the other employee had made some very threatening statements about his intentions to physically harm his manager. The offending employee was a large man (over 6ft.4) who was described by one witness. being a ‘very unstable character’ with mood swings.

Ms Gillespie had told F&G that she was reluctant to put anything in writing as she was scared of the other employee. She was assured that her written statement would be treated with confidentiality and that the other employee would not know she had made a written statement. As it transpired, the employer did not live up to its word.

During the disciplinary meeting the accused employee demanded to know who had been interviewed and F&G revealed Ms Gillespie’s name. At the conclusion of the disciplinary meeting the accused employee was dismissed and left unescorted. He stopped by Ms Gillespie’s desk and said to her aggressively ‘thanks a lot Jennifer it was you’. He later phoned Ms Gillespie and demanded to know why she had lied and why she was so scared of him.

The Decision

The Authority did not believe that F&G had taken reasonable steps to determine whether or not the employee under investigation was a real threat to Ms Gillespie. There was no evidence that F&G had discussed with Ms Gillespie the basis of her concerns about the other employee. The employer’s own investigation had revealed that the employee under investigation had made threats of violence directly to his manager. That information alone could have formed the basis for finding serious misconduct.

The Authority was satisfied that Ms Gillespie’s concerns were genuinely held and that those concerns were serious. This case was a situation where there was an exception applied to the general rule (that a witness’s identity should be disclosed).

The Lesson

Employers should be aware that procedural fairness in such matters usually requires the disclosure of the witness’s identity. Think twice before giving assurances of confidentiality. However, in limited circumstances the witness’s rights may outweigh the accused employee’s rights.

HR Toolbox – Checking References For Job Applicants:


  • Have a comprehensive pre-employment form
  • Have a policy that requires written authorisation from the applicant before contacting referees
  • AND publish this to all staff
  • Collect additional information directly from the applicant

Do not:

  • Collect information about the applicant that is not relevant to the job
  • Pass internal candidates’ information on to other managers without the applicant’s authorisation (they are entitled to the same level of privacy protection as external candidates)

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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