At some point in their working life, an employee may find themselves dismissed for one reason or another, eg redundancy, poor performance, medical incapacity, or misconduct.
Under New Zealand law, an employee who believes their dismissal was not fair (by reason and/or process) can claim unjustified dismissal. People often use the terms “unfair dismissal” or “wrongful dismissal”, but the term used by legislation in New Zealand (the Employment Relations Act 2000 (ERA 2000)) is “unjustifiably” dismissed.
What can an employee do?
If an employee believes they have been unjustifiably dismissed, they can raise a personal grievance against their (former) employer (section 103(1)(a) of the ERA 2000).
Before the ERA 2000 came into effect, an aggrieved, dismissed employee could sue for “wrongful dismissal”. However, the ERA 2000 removed the option to sue for wrongful dismissal, and the only way an employee who is dismissed can challenge this decision is by bringing a personal grievance.
A person who is given notice of dismissal during a 90-day (or less) trial period that complies with sections 67A and 67B of the ERA 2000 is not able to raise a personal grievance for unjustified dismissal .
Raising a personal grievance
There is a 90-day time limit for an employee to raise their personal grievance with the employer. For unjustified dismissal claims, this will generally be within 90 day of the employee being dismissed.
Resolving a personal grievance
If possible, the parties should try to resolve the personal grievance between themselves. If this is not possible, the next step is mediation. The parties can either arrange mediation with the Ministry of Business, Innovation and Employment’s free mediation service, or choose an independent mediator.
Mediation may be carried out by the parties meeting in person with a mediator, or by telephone, fax, or email. Once a settlement has been made, the mediator will sign it on request and it will become final and binding on both parties.
If mediation fails, the next step in the resolution process is to apply to the Employment Relations Authority (ERA) for a determination. The aim of the ERA is to resolve employment disputes in a fast and informal way, without having to take account of the legal technicalities in the way that a court would.
Once the ERA has considered all the relevant facts, it will issue its determination or refer the parties back for mediation, regardless of whether mediation has already failed. Either party can appeal to the Employment Court within 28 days of the determination if they are not satisfied with the ERA’s decision.
Was the employee dismissed?
If the claim goes before the ERA, the employee will first have to establish that they were dismissed. In some cases, it will be obvious (eg where there is a letter of dismissal), although it is not always clear-cut. In some circumstances, a resignation may be held to be a dismissal if the employer forced the employee to resign. This is known as a “constructive dismissal”.
Once the employee has established their dismissal, the burden shifts to the employer to prove the dismissal was justified.
For a dismissal to be justified the employer must show:
- The dismissal was substantially fair (ie there was a valid reason for dismissing the employee); and
- The dismissal was carried out in a procedurally fair manner (ie warnings, an opportunity to comment, an opportunity to improve, etc).
The ERA will apply the test of justification (laid down by section 103A of the ERA 2000) when deciding whether or not a dismissal was justified. Amongst other things, the ERA will assess the employer’s actions against the standard of what a “fair and reasonable employer” could have done in the circumstances.
The ERA will also consider whether the employee’s actions contributed to their dismissal, and if so will decide what (if any) deduction should be made from the remedies to allow for this contribution (100% contribution, ie no compensation for wages or hurt and humiliation, has been known).
Remedies for unjustified dismissal
The remedies that the ERA can order include:
- Reinstatement of the employee to their position, or one that is no less advantageous to them;
- Reimbursement for lost wages, benefits, and other money lost as a result of the dismissal;
- Compensation for hurt, humiliation, loss of dignity, distress, etc;
- Costs, eg legal expenses, incurred in pursuing the personal grievance.
