Pam Nuttall AUT University NZ Employment Relations Society 9 June 2010

1. Changes To The Personal Grievance System And Employment Law: Implications And Applications Pam NuttallAUT UniversityNZ Employment Relations Society9 June 2010

2. Overview • Overview of frameworks • Historical survey of the personal grievance process • Statutory test for unjustifiable dismissal • Rationale • Wording and interpretation • Reponses to the statutory test • Comment

3. Employment relationship frameworks • Conciliation and arbitration model • Collective “laissez-faire” • Social partnership • Common law • Employment at will

4. Personal grievance procedures: introduction • Introduced in Industrial Conciliation and Arbitration Amendment Act 1970, s 4, and the Industrial Relations Act 1973, s 117 • Context of conciliation and arbitration system • Industry wide wages and conditions set by centralised bargaining and arbitration • Contained in “Awards” read as statute. • Unqualified preference clauses: effectively compulsory unionism • Apply to workers below a set income level • Grievance taken by union. Procedures included in awards • “Access to a personal grievance procedure is a benefit of union membership” s209 Labour Relations Act 1986

5. Personal grievance procedures under ECA 1991 • Legislative policy of economic efficiency • Initial attempt to introduce employment at will • Contractual basis= formal legal equality • Awards etc totally dismantled, no specific role for unions • Employment institutions and personal grievances retained as compromise • Personal grievances separated from union membership • Extended to all employees regardless of income level • Process becomes more legalised/large law firms acquire employment law partners and departments

6. Personal grievance procedures under ERA 2000 • Continuity of specific wording of PG provisions from ECA 1991 • Embedded in legislation with different legislative policy • Objects section of ERA ... • recognise legislative requirement for good faith behaviour • acknowledge and address inherent inequality of power in employment relationships... • promote mediation • reduce need for judicial intervention... • Statutory definition of justifiable dismissal s 103A enacted 2004.

7. Rationale for statutory test for justifiable dismissal • W & H Newspapers v Oram [2000] 2 ERNZ 448; [2001] 3 NZLR 29 (CA). Culmination of a shift in the common law test for unjustifiable dismissal from an objective test to a more subjective one allowing considerable scope for employer discretion. • Select Committee report clear that the intention of the statutory test is to reverse the effect of the Oram decision. • Oram follows UK common law precedent that employer may act within a band of reasonable responses by applying the test of whether the reasonable employer ”could” have acted in this way.

8. Wording of statutory test 103A. Test of justification For the purposes of section 103(1)(a) and (b), the question of whether a dismissal or an action was justifiable must be determined, on an objective basis, by considering whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer would have done in all the circumstances at the time the dismissal or action occurred.

9. Interpretation of statutory test Air New Zealand v Hudson [2006] ERNZ 5124 leading case. • Objective basis requires the viewpoint of a neutral observer • Evaluate all of employer’s actions in all the circumstances against what a fair and reasonable employer would have done • “Would” rather than “could” a statutory curb on the range of employer responses • Full and fair investigation necessary—conduct disclosed must be what fair and reasonable employer would consider serious misconduct • All stages of the employer’s decision open to scrutiny

10. Reaction to the statutory test and to Hudson • Statutory test vigorously opposed during enactment • One position that common law test always objective, including Oram case and that ‘could’/ ‘would’ an unnecessary distinction • Hudson decision critiqued on this basis. Analysis of case law in decision indicating move to more subjective basis of common law test considered erroneous • Air New Zealand v “V” [2009] ERNZ 185. Challenge to Employment Court’s interpretation in Hudson and other cases. Plaintiff argued for employer discretion once serious misconduct established and that this view supported by analysis of case law and legislative materials around enactment of amendment.

11. Air New Zealand v “V” • Decision reiterates judgement against objective standard of what Court or Authority conclude a fair and reasonable employer in the circumstances of the actual employer would have decided and how “in all the circumstances at the time the dismissal or action occurred”. • Includes decision to dismiss • Meaning of s103A clear on its face and in light of previous common law • Plain meaning of s 103A ERA is consistent with purpose of enactment in addressing the imbalance of power in employment relationships. Subjects all aspects of an employer’s conduct to scrutiny.

12. Comment • Personal grievance processes were first introduced in a context which recognised redress of power imbalance as valid aspect of employment law • Ambit of employer prerogative extended by common law developments during the 1990s • Impact of extension to all employees • s 103A as interpreted by the Employment Court has returned PGs to intended function • Enactment of 90 day trial period and its possible extension and the assumptions of the review document undermine the effective operation of personal grievance process.