New Law on Unfair Dismissal

In a decision dated 3 June 2009, all four Judges of the Employment Court, pronounced that the Employment Relations Authority and the Court could review the decision of an employer to dismiss instantly an employee found to have committed an act of serious misconduct. Individual Judges had been saying the same things certainly since 2005.

You might ask what is so remarkable about that: The fact is that the accepted practice amongst some practitioners was that once it was established that serious misconduct had occurred it was not for the Court to substitute its judgement as to what penalty should or should not actually have been imposed. In short, if the conduct amounted to serious misconduct then you were free to sack without fear that the Authority or Court might say “yes to serious misconduct but no to the instant dismissal”. Things have now changed: In fact had changed some years earlier.

In all the circumstances, would a fair and reasonable have dismissed the employee?" 

The law seemed odd to some employee clients. They questioned how the law could be so when the personal grievance they were raising was that they had been unjustifiably dismissed even though they accepted serious misconduct had occurred: Employer clients were so relieved that it appeared the oddity of it never entered their minds.

You might wonder why after 30 or more years of personal grievance law, the Employment Court changed its mind. The fact is that it hasn’t: The change in mind was that of the previous government.

In 2004 it amended the Employment Relations Act by defining the test of justification where dismissals or other actions causing disadvantage occurred as whether those 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”. In short and depending on your point of view, the Labour government should be blamed or applauded; not the Employment Court.

Is the change sensible? I will leave you to judge using two scenarios:

Scenario One:      An employee with a history of being late for work and in recent times uncommunicative hears his employer say “so you are late again”. He replies loudly with an outburst of offensive abuse that indicates that he did not appreciate the employers comment. The code of conduct says abuse amounts to serious misconduct for which instant dismissal can occur. The employer suspends him and convenes a meeting. The employee accepts that his language amounted to serious misconduct but explained that the night before his outburst his wife advised him she had terminal cancer and had twelve weeks to live: “I was” he said “very upset”. The employer, while expressing his sorrow for the circumstances facing the employee, terminated his employment because he had drawn a line in the sand which the employee had crossed.

Scenario Two:    This employee has similar employment history to the employee in scenario one. However, the employee is not abusive but the employer discovers that the employee had been paid $30,000.00 in commission on bogus sales the employee claimed he made over the previous three months. The code of conduct says dishonesty in any form amounts to serious misconduct for which instant dismissal can occur. The employee accepts that his conduct amounted to serious misconduct but explained that four months ago his wife advised him she had terminal cancer and had approximately twelve weeks to live. “I was” he said “very upset and can’t explain why I made the bogus claims.” His lawyer said it was a cry for help. The employee offered to pay the money back out of his wife’s life insurance. The employer, while expressing his sorrow for the circumstances facing the employee, terminated his employment because he had drawn a line in the sand which the employee had crossed.

I suspect the Employment Court would deal with each case differently under the new law: Sustained fraud of $30,000.00 over three months seems to be at the higher end of serious misconduct than a short burst of offensive abuse. In all the circumstances dismissal probably would be justifiable in the former case but not the latter, don’t you think?

Is the law here to stay? Well, for the moment, anyway. However, it is certainly worth a big bet that the National government will change the law when it launches its yet to be published employment law Act.