Employment Law Update – A softening of the law regarding disciplinary investigations

Home Insights Employment Law Update – A softening of the law regarding disciplinary investigations

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Contributed by: Kylie Dunn and Emma Peterson

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Published on: September 14, 2016


Late last week the Court of Appeal released its decision in A Ltd v H, providing what is now (at least for the moment) the conclusive word on the standard of investigation expected of an employer in a disciplinary matter.

The facts

The case involved an allegation of sexual harassment by Ms C against a fellow employee (Mr H). Mr H was subsequently dismissed by his employer (A Ltd) and raised a personal grievance. 

In reaching the decision to dismiss, A Ltd had favoured Ms C’s recollection and version of events to that of Mr H. The Employment Court found that there were several issues with the interviews A Ltd had conducted, and that these issues had affected the ultimate credibility assessment.  

The Employment Court held that Mr H’s dismissal was unjustified as A Ltd failed, among other things, to ensure all witnesses were questioned with the same level of detail. A Ltd was criticised in particular for different interview methods (Ms C was interviewed over the telephone, Mr A in person) and different recording practices (a transcript was kept of Mr A’s interview, but only notes taken from discussions with Ms C). These differences were said to have led to different weights being applied to the recollections of witnesses.

A Ltd appealed to the Court of Appeal.

The Court of Appeal’s decision

The Court of Appeal started by acknowledging and adopting previous case law regarding section 103A of the Employment Relations Act and the test for justification of dismissal, including Angus v Ports of Auckland Limited. In doing so, it noted that a court’s role is to determine whether an employer’s decision to dismiss was within a range of options open to a fair and reasonable employer, in all the circumstances. 

The Court of Appeal held that the Employment Court had made an error of law by requiring the same level of rigour to be adopted towards each witness in an investigation.  

The Court of Appeal noted that the test for justification of dismissal under section 103A of the Act required an assessment of what was fair and reasonable “in all the circumstances”. Consideration of “all the circumstances” should have included an assessment of the parties and their respective positions (including referring to the “inherent implausibility of an innocent purpose” for Mr H’s conduct). The Court noted that there may be a variety of ways of achieving a fair and reasonable result, and using different interview methods and recording interviews differently did not necessarily mean a dismissal was unjustified.

As a consequence, the orders made by the Employment Court (including reinstatement) were set aside, and the matter sent back to the Employment Court for reconsideration.

Implications going forward

The Court of Appeal’s judgment takes a more realistic approach to an employer’s obligations to fairly investigate employee misconduct.

The decision makes it clear that employers are not required to conduct a judicial inquiry and it does not impose a ‘one size fits all’ investigation process onto all scenarios.

An employer is still required to conduct a “full and fair” investigation into allegations of employee misconduct, but is no longer required to follow identical interview processes for both a complainant and the employee who is the subject of the disciplinary action. This gives employers more flexibility to adapt a process to the particular circumstances in issue. 

Please feel free to get in touch with a member of the team if you would like to discuss this, or any other, employment issue.

This publication is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice.

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