Employment Law

Valid reasons for dismissal

We are used to thinking that Australian and New Zealand laws are quite similar. Despite the difference in size, economy and labour market, we share a similar colonial heritage and have adopted many features of the English system. But when it comes to Employment Law, there are notably differences.

When it comes to dismissals, the test inNew Zealand is whether a reasonable employer would have dismissed the employee considering all the circumstances. Note that this test has recently changed to ‘could have dismissed’, meaning that instead of looking at one (the) action in question, the Court now considers all actions the employer could have undertaken. Note too that in practice, the test has not changed. Judges have always considered the alternatives when assessing an employer’s conduct. Which is logical when you think about it. You can’t conclude that a dismissal was unjustified without looking at what the employer could have done instead (giving a warning, demoting etc). And make no mistake – when the courts talk about the ‘reasonable employer’, they talk about themselves, the judges. Who else could they possibly mean? Who else is there?

Now, inAustralia, it’s a bit different. In a recent case Fair Work Australia (a tribunal body similar to that of the Employment Relations Authority) held that the test is

“not whether the respondent on reasonable grounds at the time of the dismissal believed there was a valid reason for dismissal but rather whether on the evidence in the proceedings before the tribunal it is shown that there was a valid reason for the dismissal”.

This seems to be fundamentally different to the test applied underNew Zealand law. It means that an employee is able to justify his conduct and to overturn a dismissal if he can evidence that in fact his misconduct was no misconduct at all. This is the same principle as in criminal proceedings, where an accused gets acquitted when evidence for his innocence are provided to the court.  In other words, even when the decision of the employer was justifiable on the facts available at the time, the employee can introduce new facts later. If these facts, had they been known at the time, make the dismissal unjustifiable, the employee wins and the employer has to reinstate the employee (objective test). InNew Zealand, it doesn’t matter whether the employee can later provide exonerating evidence. All what matters is whether  what they employer knew at the time was enough to justify dismissal (subjective test).

Note though that the decision is a bit unclear as to whether this is a universal principle. There seems to have been no consideration of the contribution of the employee, who didn’t not inform or talk to his employer, instead just did not show up for work. Under the ERA, this would have been a serious breach, probably not justifying dismissal, but also not giving rise to compensation either.

So it’s not only buyers beware, but also employers beware. Even when you are just across the ditch.



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