Employer Pays for One Small Error in Dismissal Process

A case[1] recently before the Employment Relations Authority has seen a small error in the process by the employer resulting in a compensation payment to an employee with a negative attitude who also operated his own business during the employer’s time.

The employer was unhappy with the employee’s performance and conduct. He had a negative attitude towards management and the business and was unreceptive and unresponsive to attempts made by the employer to get him to understand their concerns.

The other part to this saga is that the employee had recently set-up his own business and the employer was concerned he was operating that business during the employer’s work hours.

The employer wrote to the employee setting out their concerns and asking him to a meeting to have a respectful positive discussion with the ultimate aim of “putting the train back on the track”. You may not be surprised to learn the employee did not behave respectfully and instead, was closed and defensive.

Following the employer’s genuine attempt to resolve issues in a constructive way, the employer commenced a disciplinary process. The disciplinary process was to address the employee’s external business interests and his attitude towards health and safety matters and towards management and the company.

At the end of the disciplinary meeting the employer dismissed the employee with immediate effect because they had lost trust and confidence in him. The employer made this decision because they believed the employee to have been untruthful about his involvement in another business and could not be believed when he indicated he would absorb the concerns the company had raised about him and change his conduct.

The Authority agreed with the employer’s conduct and decisions throughout except for one small error which, unfortunately, had a significant impact on the employee, namely his dismissal. The result was the Authority determined the employee had been unjustifiably dismissed.

What was that small error? The employer failed to put, specifically, to the employee at the disciplinary meeting, the allegation that he was being untruthful and could not be believed. The employee had no opportunity to respond to that accusation if he wished.

In considering compensation for unjustified dismissal, the Authority took into account the employee’s substantial blameworthy conduct and reduced the compensation by 75%. But still, the employee was awarded $4,500 in compensation and four weeks’ wages being the period of notice which could have been given with a justified dismissal for loss of trust and confidence.

It was heartening to note the Authority’s comment that an employer is entitled to address concerns with an employee, provided the concerns are genuine and they are addressed reasonably, ie the first meeting to “put the train back on the track”. The Authority also noted the employee was not disadvantaged in his employment by the way the employer moved from trying to address concerns about the employee, to conducting a disciplinary investigation based on those concerns.

As always, our bottom line message is “it’s all about process, process, process”. Please do call us if you need help navigating an employment relations “process”.

[1] Dally v Fluid Chemicals NZ Ltd, [2023] NZERA 2 (2023)