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employment

What constitutes "justifiable dismissal" in NZ?

Key Takeaway

In New Zealand, a dismissal is 'justifiable' if a fair and reasonable employer could have acted in the way the employer did, considering all circumstances at the time. This includes both the substantive reason for dismissal and the fairness of the process followed by the employer, upholding principles of good faith and natural justice.

What Constitutes Justifiable Dismissal in NZ?

In New Zealand employment law, a dismissal is considered "justifiable" if it meets the test of whether the employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred [Source: Employment Relations Act 2000, s 103A(2)]. This test applies to any action by an employer that gives rise to a personal grievance, including dismissal.

The Legal Test for Justification

The fundamental principle for determining whether a dismissal is justified is set out in the Employment Relations Act 2000. When an employee raises a personal grievance concerning their dismissal, the Employment Relations Authority or the Employment Court must determine whether the employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred [Source: Employment Relations Act 2000, s 103A(2)].

This test requires consideration of two main aspects:

  1. Substantive Justification: Whether there was a valid reason or basis for the dismissal.
  2. Procedural Fairness: Whether the employer followed a fair process in reaching the decision to dismiss.

Substantive Grounds for Dismissal

Employers may have various reasons for considering dismissal. Common substantive grounds include:

  • Serious Misconduct: This involves behaviour that fundamentally breaches the employment relationship, such as theft, assault, gross insubordination, serious breaches of health and safety, or serious misuse of company property/information [Source: Employment Relations Act 2000, s 103A(2)]. In cases of serious misconduct, summary dismissal (dismissal without notice) may be justifiable, provided a fair process is followed.
  • Repeated Misconduct or Poor Performance: For less serious issues, employers generally must provide warnings, offer support, and give the employee a reasonable opportunity to improve their conduct or performance before dismissal is considered [Source: Employment Relations Act 2000, s 103A(2)].
  • Incapacity: Where an employee is genuinely unable to perform their job due to illness or injury, and the employer has explored all reasonable alternatives and adaptations [Source: Employment Relations Act 2000, s 103A(2)].
  • Redundancy: While not a fault-based dismissal, a redundancy must be genuine and the process fair and reasonable for it to be justifiable [Source: Employment Relations Act 2000, s 103A(2)].

Procedural Fairness and Good Faith

The manner in which an employer carries out a dismissal is just as important as the reason for it. The Employment Relations Act 2000 places a strong emphasis on the duty of good faith between employers and employees [Source: Employment Relations Act 2999, s 4]. This duty requires employers to:

  • Be fair and reasonable: Act in a way that a fair and reasonable employer could have acted [Source: Employment Relations Act 2000, s 103A(2)].
  • Provide information: Provide employees with access to all relevant information relating to their employment relationship, including information about any issues that could lead to dismissal [Source: Employment Relations Act 2000, s 4(1A)(c)].
  • Provide opportunity to comment: Provide employees with an opportunity to comment on information about them and for those comments to be considered by the employer before a decision is made [Source: Employment Relations Act 2000, s 4(1A)(d)].

These good faith obligations underpin the principles of natural justice, which typically involve:

  • Informing the employee of the allegations: Clearly communicating the specific issues or allegations against them.
  • Conducting a fair investigation: Gathering relevant facts and evidence impartially.
  • Giving the employee an opportunity to respond: Allowing the employee to explain their side, present evidence, and question any allegations.
  • Considering the employee's response: Genuinely taking into account the employee's explanation before making a decision.
  • Allowing a support person: Enabling the employee to have a support person present at meetings where disciplinary action or dismissal is discussed [Source: Employment Relations Act 2000, s 4(1A)(c), s 4(1A)(d)].

Failure to follow a fair process, even if there appears to be a valid reason for dismissal, can render a dismissal unjustified [Source: Employment Relations Act 2000, s 103A(2)].

Unjustified Dismissal and Remedies

If a dismissal is found to be unjustified, an employee may raise a personal grievance [Source: Employment Relations Act 2000, s 103]. The remedies available for an unjustified dismissal can include:

  • Reinstatement: Returning the employee to their former position or a position no less advantageous [Source: Employment Relations Act 2000, s 123(b)(i)].
  • Reimbursement of lost wages: Payment for wages lost as a result of the unjustified dismissal [Source: Employment Relations Act 2000, s 123(c)(i)].
  • Compensation: Payment for humiliation, loss of dignity, and injury to feelings suffered by the employee [Source: Employment Relations Act 2000, s 123(c)(i)].

When to Seek Independent Legal Advice

Navigating employment law can be complex. Persons involved in employment disputes or considering actions related to dismissal should seek independent legal advice. Information about employment rights and obligations is available from government agencies such as the Ministry of Business, Innovation and Employment, and free legal assistance may be available through Community Law Centres.

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