Saturday, October 10th, 2009

Have I got enough to fire him yet?

I doubt whether many employment advocates have not been asked that question from time to time.

In my experience, once the factual circumstances have been properly analysed and assessed, the answer will be” “no”. This is primarily because few employers really understand the need for a fair and thorough investigation, whether the issue is one of non-performance or misconduct.

So often there is some festering discontent about non-performance where the employee is unaware of the requisite standard or a sense of outrage over a particular event where judgement is made on an initial hypothesis (usually involving assumptions of wrongdoing) and facts are selected to fit that hypothesis.

This article emphasises the need for a thorough and fair investigation process.  A recent Employment Court case clearly illustrates the consequences of failing to meet the standard.

Allan v Transpacific Industries Group Limited[1]

Mr Allan was employed by Transpacific Industries Group Limited as a driver.  He was on the night shift.  His job involved collecting medical waste for disposal from various hospitals.

Employees used a card to clock in and clock out.  The company did not monitor hours worked.

On 24 January, 2007, Mr Allan clocked in at 9:30 PM but a supervisor reported that he appeared not to have arrived for work until at least 11 PM.

On 25 January, 2007, Mr Allan clocked in at approximately 9:30 PM.  He was not, however, present and his truck had not left the plant.  Attempts were made to contact him unsuccessfully.  Eventually he made contact at approximately 10:40 PM and arrived back at work at 10:45 PM.

The company convened an investigation hearing shortly after the end of his shift.  He was suspended and another meeting convened.  That meeting appears to have been relatively brief.  Mr Allan gave an explanation for his absence.  The Company did not believe him and summarily dismissed him for falsifying company records (his time sheets)

The company concluded that there was a high probability of collusion — somebody else was clocking him in.

Mr Allan was unsuccessful before the Employment Relations Authority but was successful in the Employment Court.

Lessons to be learned

The Employment Court decision  highlights the approach that will be taken by the Employment Relations Authority when considering the decision of the employer.

The Employment Relations Authority will not review all of the evidence and make a decision on the merits of the case.  Its function is to look at the substance and procedures leading to the decision made by the employer.  Having done that, the Employment Relations Authority must apply an objective standard to that decision and decide what a fair and reasonable employer would have done and how the employer would have done it, in all the circumstances at the time.

You may well ask whether there is a difference between the two approaches . The critical difference is that except to a limited extent, the Employment Relations Authority cannot take into account evidence which second guesses the employer’s decision (either by reinforcement or condemnation).  The Employment Relations Authority can only look at the evidence that the employer relied on at the time.

The exceptions are:

  1. The Employment Relations Authority will consider evidence that the employer ought reasonably to have known but did not (for example, as a result of an inadequate investigation) and
  2. The Employment Relations Authority may take into account previously unknown evidence when deciding on remedies.

An  employer cannot look at the personal grievance process as an opportunity to have a second bite at the cherry.  A bad process is likely to lead to a bad decision.  An employer takes a considerable risk by ignoring process.

The Employment Court has previously indicated that where an employer has failed to carry out a fair and full investigation, it will usually not be possible for the employer to show that the decision to dismiss was one of that a  fair and reasonable employer would have taken.  That is simply because a fair and reasonable employer would not make a decision to dismiss except as a result of a full and fair investigation.

In the Allan case, the Employment Court made the following findings:

  1. The employer did not comply with the procedure contained in the employment agreement.  That agreement contained a process of investigation.  The employment agreement is the first port of call.  Failure to comply with the provisions of employment agreement as to process may even result in the imposition of penalties.
  2. At the first investigation meeting, the employer mentioned only one of the alleged incidents.  The employer asked for an explanation of the events of 25 January.  It did not mention the events of 24 January.  An employer must advise the employee of all matters of concern so that the employee has the opportunity to comment.
  3. The employer conducted the first investigation meeting very shortly after a 12 hour shift.  This was inadequate notice.  The inadequacy was compounded by the fact that not all allegations were put to the employee.
  4. The employer did not believe the employee’s explanations but made no comment to the employee.  The employer should have advised the employee that it had difficulty accepting the explanations and why.  The employee must be given the opportunity of clearing up any doubt if possible.
  5. The employer had failed to interview other staff members who could have given evidence that would have assisted the employer’s decision.
  6. The employer had made various assumptions about the behaviour of the employee.  All assumptions were consistent with the hypothesis that employees were involved in some form of rort which involved clocking up hours that were not worked.  Evidence inconsistent with those assumptions were either ignored or not sought out.  An employer must test all assumptions in order to ensure that they are based on sound fact.
  7. The focus is on what the employer honestly believed from the information that it knew or ought reasonably to have known had it conducted a fair and reasonable enquiry.
  8. The Employment Court did make some findings against Mr Allan.  For example, on one of the  days in question, Mr Allan had forgotten his keys.  He returned home.  He did not clock out when returning home.  He had expected his employer to meet the cost of his mistake.  When returning home he was not working for his employer.  He was paying the price of  having forgotten to bring the keys.  Although he had a reasonable explanation for his absence, he did not have a reasonable explanation for not recording, properly, his absence from work for personal reasons.
  9. On the second occasion, he said that he was having a meal break.  He acknowledged that his meal break was excessive.
  10. These criticisms were relevant in reducing the compensation payable to him.  They were not relevant to the issue of justification of his dismissal.  He was dismissed for falsifying his time records by having somebody else clocking in for him.  He was not dismissed for having an excessive meal break or charging his employer for the time he spent collecting keys left by mistake.

Despite the criticisms, Mr Allan received compensation for loss of wages in the summer $17,000 and compensation for non-economic losses (embarrassment, humiliation etc) amounting to $20,000.


It is possible that employees were involved in a rort.  The employer made that assumption.  However, it did not carry out a proper investigation.  It did not test its assumptions.  It did not satisfy itself on the balance of probabilities that allegations against the employee were correct.  It did not have regard to the gravity of the allegation and the need for the proof to be as convincing as the charge was grave.

These failings were fatal and extremely expensive.

[1] Employment Court ARC 30/08