Court of Appeal Scales Back Procedural Fairness Requirements – Sep 2016

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Court of Appeal Scales Back Procedural Fairness Requirements

In recent months a handful of decisions from the Employment Court had raised concerns regarding the level of scrutiny being applied to employer’s disciplinary processes.

The Court of Appeal was called upon to consider this issue in its recent judgment in A Limited v H (the identities of the parties are subject to non-publication orders).

H, a pilot, was dismissed following an investigation into a complaint of sexual harassment. His claim was dismissed by the Employment Relations Authority, but his challenge to the Employment Court was successful. The Employment Court held that A Limited had not investigated the complaint sufficiently. In particular, it held A Limited had not tested the accounts of the complainant and another witness as vigorously as the account given by Mr H. Mr H was reinstated and awarded payment of reimbursement for lost income and compensation for hurt and humiliation.

On appeal to the Court of Appeal, A Limited argued that the Employment Court had failed to apply the proper test for justification. It said the level of detail considered by the Employment Court meant it effectively substituted its own decision for that of the employer.

The Court of Appeal allowed the appeal. It applied the test for justification set out in s 103A Employment Relations Act 2000, being whether the process and decision were what a fair and reasonable employer “could have done in all the circumstances”. This means there is a range of reasonable responses open to an employer. The Court of Appeal held that the requirement is for overall fairness and reasonableness rather than “minute and pedantic scrutiny” to identify any procedural shortcomings.

Applying that test, the Court of Appeal held A Limited’s process was fair and reasonable. It had applied a proper level of scrutiny to the complainant’s account. Although aspects of her version of events changed, as to key elements her account was consistent. A Limited was also entitled to take into account the “inherent implausibility” of Mr H’s explanation as to why he was in the complainant’s hotel room.

The case has been sent back to the Employment Court for reconsideration of remedies.

This decision should provide some reassurance to employers regarding disciplinary investigations. It reiterates that employers do not need to conduct forensically precise investigations. The test instead has been refocused on overall fairness and reasonableness.

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