An employee may be dismissed for a variety of reasons, the most common of which are poor performance, misconduct, and redundancy. However, the employee may challenge their dismissal and claim that it was unjustified, in which case the employer’s actions may be put to the test of justification.
A dismissal may be unjustified because of the reason behind it and/or the way in which it was carried out. In some case, a resignation may be held to be an unjustified (constructive) dismissal.
Personal grievances
Section 103(1)(a) of the Employment Relations Act 2000 states that an employee can bring a personal grievance against their employer if they believe they have been unjustifiably dismissed.
Employees must first establish that they have been dismissed. Having done this, the burden shifts to the employer to prove the dismissal was justified. For a dismissal to be justified the employer must show:
- There was good cause for the dismissal (ie a valid reason); and
- The dismissal was carried out in a procedurally fair manner (ie warnings, an opportunity to comment, an opportunity to improve, etc).
The duty to act in good faith (section 4 of the Employment Relations Act 2000) applies to all aspects of the employment relationship, including dismissal. The duty of good faith includes the requirement to be responsive and communicative in the employment relationship.
Statement of reasons for dismissal
Employees can (but do not have to) ask the employer for a written reason for their dismissal. This must be done within 60 days of the dismissal. The employer must respond within 14 days. Failure to do so gives the employee grounds to claim there are exceptional circumstances that justify submitting the grievance outside of the 90-day time limit.
Time limit
A personal grievance must be raised by the employee within 90 days of the date on which the action alleged to amount to a personal grievance occurred (ie the dismissal) or came to the employee’s notice, whichever is later. The employer can agree to an extension of the 90-day period.
Raising the grievance
The employee can raise the grievance verbally or in writing. The employer does not have to respond and the grievance can go straight to mediation.
Mediation
In most cases, mediation between the parties to try to resolve the grievance is expected before the Employment Relations Authority will investigate. Free mediation services are provided by the Department of Labour.
Employment Relations Authority
The Authority investigates the problem as it sees fit and may direct the parties to try mediation if they haven’t already. It can reject a personal grievance claim if it considers it to be frivolous or vexatious.
After investigating, the Authority will issue a determination as to whether or not the dismissal was justified. If it was unjustified, the Authority will determine what remedies the employee is entitled to, if any.
Either party can appeal to the Employment Court within 28 days of the Authority’s decision.
Test of justification
When determining whether or not a dismissal was justified, the Employment Relations Authority and Court must apply the test of justification laid down by section 103A of the Employment Relations Act 2000.
Section 103A provides that the question of whether a dismissal 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 could have done in all the circumstances at the time the dismissal occurred.
From 2004 until 2011, the test was a narrower one, in that it was whether the actions were what a fair and reasonable employer would have done.
Remedies
The remedies for unjustified dismissal that may be ordered by the Authority or Court are:
- Reinstating the employee to their job, or a job that’s no less advantageous.
- Reimbursing wages and other money lost by the employee as a result of the grievance (this is generally either the actual sum lost or 3 months’ pay, but in some circumstances it may be more). The amount will depend on the extent to which the employee tried to mitigate their loss by looking for another job.
- Compensation for humiliation, loss of dignity, and injury to feelings as a result of the grievance. The level of compensation under this head varies considerably and may be reduced (sometimes to zero) if the employee contributed to the situation that led to the grievance. A typical award would be in the region of $5,000 to $10,000.
- Reimbursing of all or part of the employee’s reasonable costs (eg legal fees) of pursuing the grievance.
Minimising the risk unjustified dismissal claims
There are steps that employers can take that may help to minimise their risk of unjustified dismissal claims:
- Refine employee evaluation systems to ensure honest and accurate appraisals of employee performance.
- Utilise progressive disciplinary procedures to warn employees of unsatisfactory performance and to provide opportunities to correct the problem.
- Prepare written reasons for an employee’s termination. After thoroughly discussing and explaining them, provide the employee the opportunity to review, comment, and sign the termination notice.
- Avoid spur-of-the-moment terminations when emotions are running high by requiring at least one other supervisor or the personnel manager to participate in and/or review each termination.
- Be consistent in applying disciplinary and termination procedures. Avoid disparate treatment of employees in similar circumstances by appointing one senior officer to review all terminations.
- Make sure the exit interview deals with any and all questions the employee may have.
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