DON’T LET THE TRUTH GET IN THE WAY OF A GOOD STORY
The New Zealand Herald reported on 21 January 2013 about a manager at Independent Liquor (referred to using the Bond-esque title “Mr X”) who was accused of being drunk and misbehaving while representing the company, and then dismissed. The media’s interest was stirred as Mr X had been awarded $62,000 in compensation for his (unjustified) dismissal. Looking at just those facts, one could easily think that the world had gone mad.
The article was an intriguing story. The events apparently occurred at a charity “Fight For Life” boxing match. The Prime Minister even merited a mention as he was in attendance, and the company claimed that it was in “highly delicate negotiations” at the time in relation to the Government’s proposed alcohol reforms. Allegations were made by the company that Mr X was grossly intoxicated at the event and exhibited abusive as well as sexually harassing behaviour. Further, Mr X was held responsible for the “out-of-control” behaviour of a client who arrived already drunk.
The story then ended by simply saying that the Employment Relations Authority:
“found that Independent Liquor failed to follow proper procedures and ordered it to pay $58,118.70 in lost income and bonuses and $4000 in compensation for humiliation, loss of dignity and injury to feelings”.
Conscious that employment law often gets a ‘bad rap’, and that usually the reasoning for any decision is embellished or ignored by the media because it is never as interesting as the allegations themselves, we thought that we would take closer look.
Before we start, first things first. A procedural error alone will not make an otherwise justified action or dismissal unjustified, unless it results in the employee being treated unfairly, affects the substantive decision of the employer, or it means that the employer fails to comply with the four requirements of section 103A(3) of the Employment Relations Act 2000 (“ERA”). This section requires an investigation, raising the concerns with the employee, giving the employee an opportunity to respond, and genuinely considering the employee’s response before taking any action. How stringently these requirements are applied is coloured by the resources available to the employer (such as a large HR department or legal team).
Now let’s turn back to the case of Mr X.
First, the suspension of Mr X by Independent Liquor was successfully challenged as being an unjustified action. That is unsurprising, as Independent Liquor failed to advise Mr X that it intended to suspend him, failed to advise him of the allegations against him and its reasons for suspending, and failed to give him an opportunity to respond before suspending. Clearly the company breached the statutory requirements in the ERA.
The dismissal is a little more interesting. Independent Liquor raised the various allegations with Mr X for the first time within the disciplinary meeting at the end of which Mr X was dismissed. Independent Liquor later provided notes of the disciplinary meeting but Mr X disputed much of the content. However, even assuming the notes were an accurate record, the Authority found that Independent Liquor did not meet any of the basic requirements for justified dismissal. Independent Liquor was well resourced but did not sufficiently investigate and did not adequately raise the allegations. It did not provide sufficient detail when Mr X asked for it, even undertaking to come back to discuss an allegation further in response to a direct query and never doing so. It also appears that Independent Liquor could not (or would not) identify the source of a number of the key allegations that were relied upon. Where it did identify the source, neither of the managers conducting the investigation had actually spoken to the alleged complainants. Lastly, the company did not advise that one of the decision makers had spoken directly to a witness.
The Authority found that Mr X was not told that he could be represented at the meeting or that the allegations could result in his dismissal. In addition, as he did not know what the allegations were prior to the meeting, he was not given a reasonable opportunity to respond.
Mr X did do his best to respond, and the Authority considered whether Independent Liquor reasonably considered the explanation that Mr X gave. The decision to summarily dismiss Mr X at the end of the meeting was made, or at least contributed to, by two managers who were not present at the meeting at all. The Authority was unable to find that the managers who were in the meeting accurately conveyed the explanation that Mr X gave to the decision makers, especially as Independent Liquor’s notes of the meeting were not completed until some days after the dismissal. As a consequence, the Authority found that Independent Liquor could not have genuinely considered Mr X’s explanation before making the decision to dismiss.
The four requirements in s103A(3) of the ERA mentioned above were enshrined in the ERA from 1 April 2011. But they have been fundamental employment law requirements since 1983. Not satisfying any one of the four fundamental elements is likely to be fatal to justification. The Authority found that Independent Liquor did not satisfy any.
In short, Independent Liquor was simply in no position to form the view that it did with regard to Mr X’s conduct.
In Our View
It is easy to blame process, and the oft-called “onerous” procedural requirements of employment law, when dismissal goes awry. It is also easy for the media to report on the allegations, as they often make good story, rather than balancing the report with the actual reasoning and methodology followed by the Authority or Employment Court.
The requirements in s103A(3) are really just an application of natural justice, which in its broadest form means not reaching any decision until the employee has been given an opportunity to comment. Clearly an employee must have the details of what it is that he or she is expected to comment about, and a reasonable time to do so. The more serious the outcome or potential outcome, the greater the requirement is to detail the allegations and give an employee the reasonable opportunity to respond. It is not rocket science.
To a degree, particularly with serious misconduct, the application of the principles is proportionate. Not only must the process be more thorough when it is likely to result in a dismissal, but also the evidence relied on “must be as convincing as the charges are grave”.
The best advice for an employer is: be prepared to slow up the process to ensure that the decision is one that is open for you to make. That is, whether the decision is actually open to you given the allegations and details put to the employee and the employee’s response or explanation. That may seem straightforward but often an investigation may veer to a conclusion that has not been properly formed using the allegations actually made and put to the employee.
If you have any questions about dismissals and your obligations and/or rights, please give us a call on (09) 375 8699 to talk through your situation or email us at email@example.com