Up to now, employees who did something dangerous, violent or stupid, that got sacked either on the spot or with a poor process, could challenge that dismissal. And when they won, even if the dismissal itself was justified, they still got ‘remedies’. This was a source of continual frustration for employers, who had a justifiable reason for firing someone, but messed up the process, or fired someone in the heat of the moment.
Those remedies could be:
- reinstatement
- lost wages, for example if they haven’t been able to work or find a job
- compensation for hurt and humiliation
- payment for any loss of benefits
The law says that when awarding remedies, the Employment Relations Authority must consider how much the employee contributed to the situation and then reduce the remedies accordingly.
We’ve seen reductions of 10% to about 30% – which is not much. The payments have been upwards of $25,000 lately; usually around $15,000 for hurt and humiliation, then $10,000 or more for lost wages. In some cases this lost wages remedy is awarded because someone was severely traumatised by the dismissal, or because they haven’t been able to find another job … which in the current labour market is a real possibility.
The Employment Relations Amendment Bill has passed it’s third reading in parliament, and will be law very soon. This brings a dramatic shift in the way serious misconduct can be handled … that said we always recommend exercising caution and getting advice before firing anyone.
The Employment Relations Amendment Bill (ERAB) removes some remedies entirely.
First up, if the employee wins the PG, but the dismissal was proven to be for serious misconduct, they would not be awarded any remedy at all. So, any win would be a moral victory only.
Second, if it’s not serious misconduct, but it’s clear that the employee contributed to the situation, then the only remedy they could get is for lost wages. No reinstatement, no hurt and humiliation payment and no payment for loss of benefits. Important to note though, is that the ERAB says the remedy could be reduced by 100%.
Final point – I thought that there was going to be a requirement for the Employment Relations Authority to consider whether the employee obstructed any processes when deciding on remedies. But I’ve been unable to find anything on that in the final version of the Bill.
The known-knowns
You can be sure that if the employee actually did something terrible and you have rock solid evidence, you can feel confident that you at least won’t have to pay a $15,000 hurt and humiliation payment. We also know that employees retain the right to raise a personal grievance and you must also still act in good faith which means that you probably still have to at least follow some kind of process.
The known-unknowns
Many organisations will have a policy or procedure around misconduct and serious misconduct. But how robust is it? And will the law agree with you on what is, and is not serious misconduct? A definition for serious misconduct is not provided for in law … for now. This means that for now, we’re not really sure if you can actually fire people on the spot for serious misconduct. We’ve already seen a case prior to this law change, where the ERA has disagreed that what the sacked employee did was serious misconduct, and the employee went on to win their case, and were awarded tens of thousands of dollars.
What you need to do now
Review your policies, in particular your serious misconduct policy and procedures. Check that the misconduct list is robust and represents the nuances and nature of your business and industry, rather than a generic list. And also make sure any supporting policies, eg drug testing and your code of conduct don’t contradict your serious misconduct policy. It’s essential to also make sure that everyone knows and understands all of your policies, and that you are applying the rules consistently across your workplace.
Don’t have a policy or would like help reviewing it? Check out our employment compliance services or contact us for help.
You may also be interested in our employment law training, to check that all of your people-related processes, and how you handle some day to day queries, are all legally compliant.
And if you’re thinking of dismissing an underperformer, you might want to explore our support for managing poor performance.
