It Is Not All Doom And Gloom For Employers In 2007…

It may seem that 2007 has increased the burdens on employers: the increase to four weeks' annual leave for all employees and the introduction of KiwiSaver.  However, the Employment Court in The Chief Executive of Unitec Institute of Technology v Henderson has finally bought some good news for employers.

A Fair and Reasonable Employer

Section 103A of the Employment Relations Act 2000 requires the Court to determine, on an objective basis, whether the employer's actions, and how the employer acted, were what a fair and reasonable employer would have done in all the circumstances at the time dismissal occurred. 

In recent times it may seem that there has been an undue focus on procedure.  However, the Court in this case held that under section 103A of the Act "procedural infelicities" are only a factor when considering whether an employee has been unjustifiably disadvantaged or dismissed.  The Court is required to make a balanced assessment of both the procedure and the substance.

In other words, lack of “text book perfect procedure” may not mean that a dismissal is automatically unjustified.

Facts of the case

Ms Henderson had an office romance with a Unitec colleague who was married to another Unitec employee.  All three employees worked in the same building.  Ms Henderson was dismissed from her position as a senior lecturer at Unitec after a two-way saga with her ex-lover's wife involving alleged assault, threats, letters and rumours.

Ms Henderson sent two "anonymous" envelopes to her ex-lover's wife.  The first envelope contained an "intimate" email to her from her ex-lover, the second envelope contained 300 emails that had been exchanged between the lovers.  While some of the emails were work-related, Chief Judge Colgan noted that the subject lines on others suggested they were "private and intimate exchanges between lovers".

Following receipt of these letters the couple made formal complaints of harassment to Unitec against Ms Henderson. 

Although the complaints contained a number of other allegations about Ms Henderson's behaviour, Unitec chose to limit its investigation to the two envelopes.  It considered the other allegations to be either too historic or that they had previously been investigated and resolved.  Ms Henderson admitted to sending the two envelopes and said that she sent the envelopes to show that it was her ex-lover and not her who had instigated the affair.

In applying the section 103A test, the Court found the decision to dismiss Ms Henderson for her behaviour was substantially justified.  It was satisfied "that it is what a fair and reasonable employer would have done in all the relevant circumstances at the time". As the substantive justification of the decision to dismiss is only one of the two elements that section 103A requires the Court to review, the Court went on to review whether a fair and reasonable employer would have reached this conclusion in the manner in which it did.

After an examination of the procedure Unitec had followed, the Court held that the procedure was flawed in that Ms Henderson was not given:

• information about all the allegations made against her, only the sending of the two envelopes;


• the opportunity to respond to certain allegations; and


• the chance to comment on Unitec's decision to dismiss her.

The Court also found that Unitec had not complied with its good faith obligation under section 4 of the Act, to be "responsive and communicative".

The Court found that the investigation and disciplinary process was not fair and lawful in every respect.  Despite these procedural flaws, it was satisfied on an objective basis, that the manner in which Unitec acted in investigating and deciding the complaints against Ms Henderson, was what a fair and reasonable employer would have done in the circumstances.  It therefore found that the dismissal was justified.

The Court recorded that not fully disclosing the serious allegations would usually be detrimental to a fair dealing with an employee.  In this case, however, the Court recognised and accepted that Unitec had limited its investigation and they did not rely at all upon those other allegations which were not disclosed to Ms Henderson.  The Court accepted that this was a rare case where Unitec's actions actually advantaged an employee by deciding to limit its scope of investigation and not disclose adverse material. 

Unitec interviewed a range of people in its investigation.  Not disclosing the information it received throughout the investigation would usually be fatal to the fairness of the process.  In this case as the essential facts of harassment were admitted by Ms Henderson, the information received in the inquiry did not affect this.

As a word of caution…

Despite this case, employers should not disregard the importance of following correct procedure.  Although the Court has now said that the section 103A test does not require the process to be scrutinised "minutely, pedantically and without sufficient regard to its overall fairness and reasonableness", this does not mean that employers should give any less attention to getting that procedure right.  The Court has simply said that there should be a balanced assessment of the procedure and the substance of the grievance.

For more information, please contact:

Erin Davies
Partner
t: +64 9 979 2177
m: +64 29 622 2300
e: Erin Davies

Last updated: 20 October 2008

This article is intended to be brief in nature and should be used for information only. It should not be relied on as legal advice.