Employers take hit over sackings

The Employment Relations Authority has come down hard on bosses in three cases where, it would seem, they were perfectly justified in sacking staff. Employment lawyers Jennifer Mills and Christie Hall explain where the employers tripped up.

The Employment Relations Authority has come down hard on bosses in three cases where, it would seem, they were perfectly justified in sacking their employees.

They include:

  • A manager who got very drunk and misbehaved at a client function, attracting a complaint of sexual harrassment.
  • A nanny who drove too fast and swore at the children.
  • Atechnician who faked his CV and nearly electrocuted an apprentice.

These are all scenarios where employers could well think they were justified dismissing an employee.

But when each of these scenarios played out in Kiwi workplaces recently, the employer’s decision to dismiss was found by the ERA to be unjustified, resulting in a substantial damages payments to the sacked employees of $62,000, $6000 and $10,000, respectively.
 
Where did the employer go wrong? 

In each of these cases, the employer made mistakes when it came to following the required procedural steps in addressing allegations of serious misconduct. 

The cases serve as a firm reminder to employers that no matter how badly an employee behaves, minimum fair process for dismissal must still be followed.

Employment lawyers Jennifer Mills and Christie Hall from Minter Ellison Rudd Watts explain where the employer tripped up in each of these recent cases.

Nanny who drives too fast and swears at children gets $6000

The nanny was dismissed after a night where both of the children in her care had telephoned their mother to express discontent. 

The mother had previously talked to the nanny about complaints from the children that she swore and drove too fast, but not in a formal disciplinary context. 

After the final complaint from her child, the mother concluded that the situation was not working out and sent the nanny a text message to let her know. The ERA considered the employer’s failure to comply with the principles of natural justice rendered the dismissal unjustified. 

In particular, there had been no raising of concerns, no discussion and no attempt to ascertain what had happened, or why, when the decision to dismiss was made.

Refrigeration technician who lies about experience gets $10,000

When it came to refrigeration technician Friedriech Gostmann his employer, Independent Refrigeration and Electrical, was criticised for not taking steps to improve the technician’s skills through a performance management or monitoring process. 

The employer was also criticised for not conducting more thorough reference checks, although the ERA also accepted that the employee was to blame for the inaccuracy of the references.

Manager drunk and inappropriate at a client function gets $62,000

The most troubling precedent for employers is the case of the manager whose employer dismissed him after allegations of drunken misbehaviour at a charity event sponsored by the employer. 

The allegations included gross intoxication, verbal abuse of Indian customers, verbal abuse towards a colleague and sexual harassment. 

Despite these numerous allegations, the dismissal was found to have been unjustified and the employee was awarded more than $62,000 in lost income and compensation. 

The theme of the determination was in line with those above – the employer had not sufficiently investigated the allegations, had not given the employee an adequate opportunity to respond to the allegations and had not genuinely considered the employee’s explanation before making the decision to dismiss.

Employers cannot afford to skimp on process.

Don't skimp on process when dismissing an employee 

Since 2011, the Employment Relations Act has codified the minimum requirements for a fair disciplinary process. In assessing whether dismissal is an action that a fair and reasonable employer could take in all the circumstances, the ERA must consider a number of factors, Ms Mills and Hall say.

The first consideration is whether, having regard to the employer’s resources, sufficient investigation has been undertaken. The better the resources of the employee, the more stringent the application of this section will be.  Essentially, large employers have no excuse for not investigating allegations, as they have the resources to competently do so. 

However, this does not mean that small employers are excused from the application of this test, the lawyers say. 

For example, in the case of the nanny, the ERA noted that the employer was an individual with no knowledge of employment law. Yet this did not “excuse significant deficiencies”, especially as she was “of means and could have obtained professional assistance”.

The ERA must also consider whether the employer raised its concerns with the employee and whether the employee was given a reasonable opportunity to respond. 

These two steps cannot be done at once. 

  • The employer must first raise its concerns with the employee and inform the employee in clear terms that dismissal is a possibility. 
  • The employee must also be provided with all relevant information regarding the allegations (including the identity of any complainant). 
  • he employer must then allow the employee time to consider the concerns, formulate a response and obtain legal advice if needed. It is also important that the employee’s explanation for any alleged misconduct is heard by the person who is making the decision as to whether or not to dismiss.
  • Finally, the employer must genuinely consider the employee’s explanations. 
  • The employer’s decision must not be predetermined and it must be reached without bias. 


In the case of the intoxicated manager, there were three decision makers and only one of those three heard directly from the employee. The decision maker did not take any notes during the meeting. In light of that information, the ERA held that the other two decision makers could not have genuinely considered the employee’s explanations.

In addition to the factors above, the ERA can also consider any other factors it thinks appropriate. Such factors could include the employer’s policies, the contents of the employee’s employment agreement and whether there had been any previous incidents that had been treated differently. 

It is therefore important that employers comply with their own policies and agreements and are able to justify any differences in treatment between employees, Ms Mills and Hall say. 

These recent cases provide a firm warning as to the dangers of assuming that some instances of misconduct are so obvious that a full and impartial investigation is not necessary. Having a substantive reason for dismissal is only one part of the equation.

Jennifer Mills is a partner and Christie Hall is a senior associate at Minter Ellison Rudd Watts

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