Dismissing an employee has never been an easy task even if their conduct has been unacceptable. For most employers, the decision to dismiss, or to take some other form of disciplinary action is not a decision made lightly or without serious thought. The new test for deciding whether disciplinary action is justifiable (section 103A of the Employment Relations Act 2000) looks set to make justifying dismissals even more difficult. The test means that employers must now, more than ever ensure they pull out all the stops in investigating an employee’s conduct, to protect themselves from liability in a personal grievance claim.

Air New Zealand v Hudson

The recent Air New Zealand v Hudson 2006 case illustrates the difficulty employers face in justifying the dismissal of an employee. This case concerned the decision made by Air New Zealand to dismiss Ms Hudson, a customer service agent, in December 2004. There had been a history of dissatisfaction with Ms Hudson’s conduct, culminating in two written warnings prior to 2004 and requests from some airlines asking that Ms Hudson not be rostered on their counters.

In making the decision to dismiss Ms Hudson, Air New Zealand had relied on three specific incidents:

  1. An allegation that Ms Hudson had pushed another Air NZ boarding agent at the gate of one of its flights;
  2. A complaint from LAN Chile airline who complained about Ms Hudson’s treatment of some of their business class passengers. LAN Chile asked that Ms Hudson no longer perform work for their airline; and
  3. A complaint from a passenger claiming that Ms Hudson required them to pay an unnecessary departure tax.

Despite these three incidents however, the Employment Court found that the decision to dismiss Ms Hudson was unjustified.

Out with the old, in with the new

Prior to 2004, an employer could justify the decision to dismiss an employee by simply showing that the decision fell within a range of options a reasonable employer could take in that situation. However, the new section 103A states that an employer’s actions are only justified where a fair and reasonable employer would have done the same, in all the circumstances at the time. As recognised in the Hudson case, this curbs the range of actions an employer may be justified in taking, by changing the rule from what a reasonable and fair employer could have done, to what a reasonable and fair employer would have done.

Improper investigation

The Court found that the process adopted by Air New Zealand in investigating the complaints against Ms Hudson was improper and unfair, making the decision to dismiss unjustified.

The Court said Air New Zealand had acted unfairly in several respects:

Air New Zealand had not immediately informed Ms Hudson of the specifics of the complaints, or given her an opportunity to comment on them as soon as they were made. This meant she was unable to clearly recall the incidents months later at the disciplinary hearing.

Air New Zealand had failed to interview Ms Hudson’s supervisor in relation to the pushing incident. The supervisor was not a witness to the actual incident but was present during a meeting between Ms Hudson and the boarding agent the next day, when the boarding agent accepted an apology made by Ms Hudson.

Finally, Ms Hudson was incorrectly told at the disciplinary meetings that her representative could not speak on her behalf. The Court said this was wrong, and as a result, Ms Hudson had not received adequate representation.

Due to these inadequacies, the Air New Zealand investigation into the allegations of serious misconduct was not one that a fair and reasonable employer would have carried out and therefore the decision to dismiss Ms Hudson could not be justified.

What does this mean for employers?

Although it has never been easy to dismiss an employee, section 103A makes it more difficult. To ensure a dismissal is not declared unjust and overruled by the Employment Court, it is important that an employer follows a fair and thorough procedure.

Some matters to always consider and address include:

Ensure the employee is told of the specifics of any complaint against them as soon as it is received, and give the employee an opportunity to explain or comment on the incident.

Ensure when contemplating dismissal, a full and thorough investigation is carried out into the alleged conduct and all surrounding facts and circumstances, including where appropriate interviewing people both directly and indirectly involved in any incident.

Ensure the employee has the opportunity for proper representation at disciplinary meetings. The representative must be allowed to speak on behalf of an employee, to intervene in the process, and to give explanations where necessary.

Ensure an employee is given ample warning of a likely dismissal if misconduct continues. If a decision to dismiss is made, the reasons for the dismissal must be communicated to the employee and they must be reasons upon which the employee has had an opportunity to comment.

In an unjustified dismissal case, it is important to remember that reinstatement is the primary remedy under section 125 of the Employment Relations Act 2000. This means that potentially, where a dismissal is challenged successfully, employers could find themselves in the unhappy situation of working with someone they had tried to fire.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.