Conducting a fair employment investigation

15 Sep 2016 |

The Court of Appeal has provided some helpful guidance for employers when conducting an employment investigation in the recent decision of A Limited v H [2016] NZCA 419.

The justification test

Employers are required to undertake a fair process before taking any adverse action against an employee, including dismissal. They must also have substantively justified grounds for taking the action.

Section 103A of the Employment Relations Act 2000 (the Act) sets out the test the Employment Relations Authority will apply when considering whether an employer’s decision is justifiable. The test is whether the employer’s actions were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.

It is relevant whether the employer sufficiently investigated the allegations against an employee before dismissing them. This includes assessing whether:

  • the employer fairly raised the allegations with the employee (by giving them all relevant information);
  • the employee had a reasonable opportunity to respond to the allegations; and
  • the employer genuinely considered the employee’s response to the allegations

before the action is taken or the decision to dismiss is made.

A Limited v H

The Court of Appeal in A Limited v H looked at the Employment Court’s approach to the s103A test.

Mr H, a 56 year old pilot was employed by A Limited. A colleague and flight attendant, Ms C, complained to their employer, A Limited, that Mr H had breached the company’s sexual harassment policy while they were on an overseas layover. She alleged he had entered her hotel room and touched her leg in a sexual way.

A Limited dismissed Mr H after following an investigation and finding he had engaged in serious misconduct by sexually harassing the 19 year old woman.

Mr H claimed his dismissal was unjustified in that (among other things) A Limited had not conducted a procedurally fair and justifiable investigation. The case has traversed the Employment Relations Authority, the Employment Court and now the Court of Appeal. Mr H was unsuccessful in the ERA; successful in the Employment Court; and unsuccessful in the Court of Appeal.

The investigation

The Employment Court was critical of the investigation followed by A Limited. It held that the investigator applied different standards to assessing the explanations given by different witnesses. The key query was whether the touching was accidental (Mr H didn’t deny the touching happened). The investigator placed different emphasis on the versions of events given by witnesses.

The Employment Court held that the investigator didn’t account for inconsistencies in witness statements, but rather focussed on the overall implausibility of a 56 year old pilot being in a 19 year old junior flight attendant’s hotel room for an innocent purpose.

It found the failings of the investigator meant that the decision to dismiss Mr H was unjustified.

The Court of Appeal decision

The Court of Appeal had a different view. It considered the statutory test in some detail, including the 2010 amendment to the Act, which changed the test from “what a reasonable employer would do in all the circumstances” to the new test of “what a reasonable employer could do”.

The Court reinforced that the test is an assessment of what is fair and reasonable “in all the circumstances”. It found the investigator was entitled to structure his approach to the investigation around the implausibility of an innocent purpose and accidental touching in the circumstances. A pedantic scrutiny of evidence is not required, provided the overall objective of fairness is achieved.

Key guidance

The Court noted there are a “variety of ways of achieving a fair and reasonable result in a particular case”. For example, it may not be critical to an investigation that some interviews are recorded in a different manner, provided the investigator accurately captures the evidence.

Overall consistency of witnesses may be sufficient for an investigator to form a reasonably held view of the allegations.

In some cases, “a more rigorous” investigation may be required to enable the employer to genuinely consider the employee’s explanation. However, employers can breathe a sigh of relief that investigations do not need to be perfect, provided they are fair.

When an employee first makes a complaint, it is particularly important that an employer doesn’t unintentionally indicate a bias toward the complainant. It is very easy to sympathise with an employee in a manner which suggests any outcome is predetermined. It is always helpful to take advice at the outset of an employment investigation, even if just to assist with forming a clear view on the way the investigation is to be conducted.

If you have any employment related queries, please contact one of our employment team.

PDF version : conducting-a-fair-employment-investigation