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Disciplining & Procedural Fairness

Published 08 Mar 2016

The law places stringent obligations on an employer to act fairly and reasonably and to follow strict procedural requirements when issuing a warning to, or dismissing an employee,.  An Employer who breaches their obligations and ‘jumps the gun’ too early may find themselves having to defend personal grievance claims – the penalties of which can be severe.  The employee may have grounds to allege a personal grievance against their employer for:

  1. An Unjustifiable Disadvantage
  2. An Unjustifiable Dismissal
  3. Constructive Dismissal.

Unjustifiable Disadvantage
A personal grievance for unjustified disadvantage requires an employee to show that their employment has been affected to their disadvantage by some unjustifiable action of their employer e.g. not following proper process in warning an employee causing the employee to be disciplined in an unjust manner.  If an employee makes a successful claim against their employer for their unjust warning, they are entitled to compensation for hurt, humiliation, and distress (in the most recent year of records, 2014, the average award was $7,500) and reimbursement of their legal costs (average of $5-10,000).  The employer will also accrue their own costs in paying representatives to defend the claims, or negotiating settlements, and the unquantifiable, but as damaging, costs arising from the stress, and diversion from business, the claim has directly caused. 

Unjustifiable Dismissal
If the employer then dismisses the employee, relying on the unjust and procedurally incorrect warning to show a historical pattern of behaviour, they may face a personal grievance for an unjustifiable dismissal.  In addition to the compensation outlined above, an employee would also be entitled three months’ lost wages.

Constructive Dismissal
An employee who has been given a warning without the being given the opportunity to explain themselves or having the employer properly investigate the matter, may feel bullied, harassed, or in a position where they feel that they are unable to continue to work in such an environment and are forced to resign.  In these circumstances the employee would have grounds to allege a constructive dismissal against their employer - for which they are also entitled to three months’ lost wages, compensation for hurt, humiliation and distress, and legal costs.

The dangers and real risk of this behaviour is clearly demonstrated in the case of Shan Mohammed Ali v AAA Parts & Auto Services Ltd AA 103/07.  In this case Shan Mohammed Ali took action against his employer following his dismissal for poor performance.  The employer relied on the three previous warnings he had been given.  Although it seems there may have been grounds for concern about his performance, the Employment Relations Authority found that the employer went about it the wrong way.  The warnings were given straight to the employee and it was clear the employer had already made up their mind about the warnings without having an open mind and considering any explanation that he gave.   Shan Mohammed Ali received $4,000 in compensation for the distress, $14,731.20 in lost income, and legal costs.