The recent Employment Relations Authority determination of Sigglekow v Waikato District Health Board considered the new test for justifying dismissals (and other actions) by an employer.
From 1 April 2011 section 103A of the Employment Relations Act 2000 has changed and now requires an assessment of whether an employer's actions were what a fair and reasonable employer "could" do, rather than what a fair and reasonable employer "would" do.
The minimum requirements for a fair disciplinary process under the statutory test require the Authority to consider whether:
- having regard to the employer's resources, sufficient investigation has been undertaken;
- the employer has raised its concerns with the employee;
- the employee was provided with a reasonable opportunity to respond; and
- the employer genuinely considered the employee's explanations.
In addition, section 103A(5) now provides that the Authority or Court must not determine a dismissal or an action to be unjustifiable solely because of defects in the process, if the defects were minor and did not result in the employee being treated unfairly.
Sigglekow v Waikato District Health Board suggests that the Authority did not view the difference between "would" and "could" as being that significant in practice: well-resourced employers will need to take extra care to ensure that allegations are investigated thoroughly and that they get the procedural elements right.
Mr Sigglekow was employed by the Waikato District Health Board (WDHB) as a psychiatric nurse. He had worked there since 1997 and had an unblemished employment record. After suffering a heart attack, Mr Sigglekow had two months off work to recover before returning to work on a graduated basis in December 2010.
WDHB was concerned that on 13 January 2011 Mr Sigglekow left a shift early without prior notification or authorisation and he slept whilst on duty on that shift.
At a disciplinary meeting, Mr Sigglekow explained that he had been resting with his eyes closed (not sleeping) and that he had left work early due to feeling unwell and that he had advised other employees of this. Mr Sigglekow's explanations were not accepted and he was summarily dismissed on 21 April 2011.
The Authority concluded that Mr Sigglekow's dismissal was unjustified on both procedural and substantive grounds.
In relation to the new test of "could" rather than "would", the Authority held that this means it must consider, on an objective basis, what "a fair and reasonable employer in the circumstances of the actual employer could have decided and how those decisions could have been made".
The Authority found that WDHB's investigation was neither full nor fair and that its actions and its decision to dismiss were not what a fair and reasonable employer could have done in all of the circumstances.
The Authority found that WDHB had breached all four of the new statutory procedural fairness obligations, as well as well-recognised natural justice requirements. The Authority took into account WDHB's in-house HR expertise and the fact that it engaged its legal advisor at an early stage. On this basis it concluded it was not fair or reasonable for WDHB not to follow up on a number of obvious line of enquiries (summarised over four pages of the determination), which it viewed as capable of being easily undertaken with the time and resources available to WDHB.
In light of the above, the remedies awarded to Mr Sigglekow were surprisingly modest. His application for reinstatement (which is no longer the primary remedy) was declined and while Mr Sigglekow sought 9 weeks' lost remuneration, he was awarded only six weeks of this given his total failure to take steps to attempt to secure alternative employment. Mr Sigglekow did not provide any detailed evidence of the hurt and humiliation that he claimed to have suffered and was awarded only $2,000.
Reminders for employers
This case provides some useful reminders for employers to bear in mind when conducting disciplinary investigations:
- Suspension - Where allegations are serious, consider whether suspension is appropriate. Three months had elapsed between the incident and the decision to dismiss and during that time Mr Sigglekow was allowed to continue working as normal. The Authority noted that this was inconsistent with WDHB's assertions that his practices were unsafe and posed a risk to others.
- Disclosure of Relevant Information - Employers must ensure that all relevant information is put to the employee for comment. A Clinical Nurse Director provided advice and opinions to the WDHB decision-maker during adjournments. This information was held to be highly prejudicial and was not relayed to Mr Sigglekow for comment.
- Witness Statements - The Authority found that WDHB did not thoroughly "investigate" the allegations. In light of the responses provided by Mr Sigglekow, it should have questioned two witnesses further about their written account of events.
- Employer Policies - Policies must be clearly and consistently communicated to employees to justify disciplinary action for a breach. WDHB claimed Mr Sigglekow had breached its policy for leaving work early but was unable to point to any evidence to show that the policy had been communicated to Mr Sigglekow. WDHB had also not complied with its own disciplinary policy and the Authority noted that "a fair and reasonable employer would comply with the standards it set itself".
- Previous Lenient Treatment - There was evidence that suggested that Mr Sigglekow had previously slept at work on at least five recent occasions. The Authority found that WDHB had an obligation to make it clear that behaviour previously tolerated would in future be treated as serious misconduct, which may put his ongoing employment in jeopardy.
- Disciplinary Allegations - WDHB's reasons for dismissing Mr Sigglekow (breaches of policy and New Zealand Nursing Council regulations) did not align with the original allegations made against him. If new concerns arise during a disciplinary process, those must also be properly investigated and put to the employee for comment.
- Alternatives to Dismissal - Employers must properly consider sanctions short of dismissal. While WDHB did consider a final written warning and a performance management plan, they did not share with Mr Sigglekow the reasons why they did not consider this to be appropriate (including perceptions of his underlying attitudes and beliefs).
Watch this space!
The Authority recently referred another case (Angus v Ports of Auckland Limited) to the Employment Court on the questions of (a) how the new justification test should now be applied, (b) how the "would versus could" distinction applies in practice and (c) the implications of changing the status of the remedy of reinstatement on interim reinstatement applications.
A hearing before the full Court on the interpretation and application of the new amendments took place on 7 November 2011. The Court's decision will provide further useful guidance to employers going forward and we will of course provide an update as soon as the decision is available. In the meantime, the Court has already noted (in its interlocutory decision) that:
- Changes to the remedy of reinstatement are likely to affirm practice rather than effect change;
- The minimum process considerations now provided for in the Act reflect and express the longstanding approach already expected of employers;
- The new provision (actions and/or dismissals must not be considered unjustifiable solely because of minor defects in the process) is simply reflective of well-established case law that an employer's process should not be held to "pedantic scrutiny"; and
- Parliament changed the test from "would" to "could" in an effort to make it easier for employers to justify dismissals.