Drug and Alcohol Rules: Avoiding Holiday Headaches

The holiday season is here, time for BBQs, beach days, and a few celebratory drinks. But while we’re all winding down, it’s worth remembering that workplace expectations don’t take a holiday and showing up fit to work is non-negotiable.

The festive season is a great reminder of why clear drug and alcohol policies matter. Drug and alcohol management in the workplace is evolving fast. Oral fluid testing is now widely used as a quick and less invasive screening option, medicinal cannabis prescriptions are more common, and the AS/NZS 4308:2023 standard is being phased in. All of this makes now the ideal time to review your approach and practices.

Recent Cases

In C3 Limited v O’Brien[1], Mr O’Brien worked as a stevedore in a hazardous port environment, operating heavy machinery such as cranes, top lifters and forklifts. He was dismissed after a random drug test produced an invalid urine sample (cool temperature, no thermal strip reaction, low creatinine). C3 relied on its policy allowing dismissal where a sample’s integrity was suspect.

Mr O’Brien challenged the dismissal and sought reinstatement. The Employment Court found he had an arguable case, noting a fair employer would likely have taken a second sample as recommended by the relevant standards. The Court also said C3 failed to properly consider his explanation that tampering was not feasible during a monitored, no-notice test, and expert evidence raised concerns about the reliability of the testing process.

The Court declined interim reinstatement to the workplace due to health and safety risks but ordered payroll-only reinstatement until the substantive hearing.

In Hadfield v Atlas Concrete Ltd[2] it was common ground that Mr Hadfield held a safety-sensitive role as a concrete truck driver. He was selected for a random drug test and produced a non-negative result, after which he was sent home immediately. Once the laboratory confirmed the result exceeded the policy cut-off levels, he was dismissed.

Mr Hadfield challenged his dismissal. While he admitted smoking cannabis during the weekend prior to the Monday test, he claimed his employer wrongly concluded he was under the influence of drugs. He maintained he was not impaired while at work.

The Authority found the dismissal substantively justified in a safety-sensitive context. Expert evidence confirmed urine testing cannot pinpoint impairment because it only detects the presence of a substance, not whether the person is currently affected. The Authority accepted that while the test could not prove impairment, the nature of the role, driving heavy concrete trucks, meant any risk was unacceptable. This justified the employer’s reliance on the prescribed cut-off levels and its zero-tolerance approach in a safety-sensitive environment.

However, Mr Hadfield’s personal grievance succeeded on procedural grounds. The employer’s process was flawed in several ways:

• Suspension was rushed and imposed without proper consultation.
• The employer closed its mind to alternatives to dismissal and did not properly consider other options.
• The letter sent to Mr Hadfield was deficient and failed to advise him of the possible disciplinary consequences of the non-negative test.
• The policy required all employees with a positive result to be referred to a rehabilitation programme, but this did not occur.

Due to these procedural breaches, the Authority awarded Mr Hadfield lost wages of $7,310.12, compensation for injury to feelings of $16,000, and a contribution towards legal costs.

In Vulcan Steel Ltd v Manufacturing & Construction Workers Union[3], the Court considered who decides the method of drug testing. The company’s policy referred to both urine and oral fluid testing and incorporated standards for each, but they did not specify who chooses the method. The union argued employees could select oral fluid testing, while Vulcan Steel claimed the employer had that right. The Court found the parties had included both references because it had been unable to agree to a preferred method of testing during bargaining and declined to imply a term giving the employer sole discretion.

In this case, gaps and ambiguity in the policy created uncertainty. Simply referencing multiple testing methods does not give employees the right to choose, nor does it automatically grant employers discretion.

Lastly, in Cummings v KAM Transport Ltd[4], the Human Rights Review Tribunal awarded an employee $30,000 after his refusal to take a random drug test was disclosed internally, leading to rumours across the company. The Tribunal confirmed that drug and alcohol testing information is personal information under the Privacy Act and must be kept confidential.

Check your internal processes to ensure that information sharing is genuinely on a need-to-know basis, preventing unnecessary disclosure.

The AS/NZS 4308:2023 Standard

The new AS/NZS 4308:2023 Standard that is being phased in introduces updated cut-off levels for certain substances, including benzodiazepines and cocaine. A “non-negative” test result will also now be reported as “not-negative” under the updated standard.

Employers who use drug testing should confirm with their providers that testing processes meet the new standards, so results can be relied upon in employment decisions and provide accurate information for workplace safety decisions.

Practical Tips for Employers

A little clarity now saves a lot of trouble later. Make sure your policy spells out when testing can happen, what consent looks like, and what happens if someone breaches the rules. As you can see from the snippet of cases above, the Courts take a strict approach when interpreting drug and alcohol policies and testing procedures. That’s why it’s crucial to train managers so they know their obligations and can apply policies consistently. Training should also help them spot potential impairment risks early and deal with them appropriately. And don’t forget to reinforce the basics: fair process, clear communication, consent, and privacy protections.

[1] C3 Limited v O’Brien [2024] NZEmpC 6

[2] Hadfield v Atlas Concrete Ltd [2023] NZERA 470

[3] Vulcan Steel Ltd v Manufacturing & Construction Workers Union [2022] NZEmpC 78

[4] Cummings v KAM Transport Ltd [2025] NZHRRT 8

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