In 2004, Parliament changed s103A Employment Relations Act so that he test for dismissals or actions by an employer was
“whether a dismissal or an action was justifiable must be determined on an objective basis, by considering whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer would have done in all the circumstances.”
In the first decision under that (2004) legislation, the Court noted that it had to apply a purely objective test of what a reasonable employer would have done in all the circumstances, rather than placing so much weight on the “subjective assessment by the employer of the options open to it” (in Air New Zealand v Hudson (2006) 3 NZELR 155).
The latest 2011 changes of the Employment Relations Act now see s103A reverting back to pre-2004 with the operative word being ‘could’, not ‘would’. According to the still authoritative CA decision pre-2004 (W & H Newspapers Ltd v Oram  3 NZLR 29) the ‘could’ test envisaged that the role of the Courts was to determine, in any given case, whether the employer’s actions fell within the spectrum of reasonable responses to the situation (both in terms of responding to the substantive issue and the process adopted in doing so).
So, what does it all mean? Probably not much at all as at the end of the day the Authority or Court still has to consider whether the challenged action was fair in all the circumstances. However, once that is established, the ‘could’ test might, just might, in narrow cases swing the decision in favour of the employer. We will see.