When employees’ misconduct or bad behaviour matters

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When an employer fires an employee for misconduct but gets the process wrong, the first thing they tend to ask us is “Doesn’t the employee’s bad behaviour matter at all?”. The answer is a little complex – but it usually boils down to a matter of how much the bad behaviour contributed to the situation.

In cases where the employer has not followed the correct process but the employee has clearly done wrong, the Employment Relations Authority (ERA) typically finds the dismissal as being unjustifiable but then gives a percentage reduction of the lost wages/compensation awards to show that both parties have gotten it wrong. In some very rare cases that contribution will be 100% – such as where a worker on a dairy farm was abusing the stock (Waterford v Morunga). As the traditional family-owned farm moves towards a more corporate model we expect to see more of these types of cases arising out of the farming community.

In a recent case involving more bad behaviour on a dairy farm, Smith v Muir, the ERA has gone a different way, deciding that the employees’ behaviour was so bad no award should be given at all.

What did each party do wrong?

Mr Muir hired Mr and Mrs Smith to work on his dairy farm but later fired them. At the time of their interview the Smiths provided Mr Muir with CV’s showing they had worked for four farms between 2008 and 2017. The CV’s provided references for each farm however Mr Muir was only able to contact one of the references who gave positive information about the Smiths. The Smiths signed their employment agreements which contained a 90-day trial period.

Following numerous instances of poor performance and aggressive behaviour Mr Muir invoked the 90-day trial clause and terminated the Smiths’ employment. Following their dismissal, Mr Muir learnt that the Smiths had provided false information on their CV’s.

The case then went before the Employment Relations Authority on the grounds of an Unjustifiable Dismissal. The Authority found that Mr Muir had unjustifiably dismissed the Smiths because their 90-day trial period was invalid (find more on this here) and that he failed to follow any sort of fair process in the termination.

The interesting part is the ERA’s decision not to award any remedies to the Smiths based upon their misconduct for two reasons:

  • Knowledge of the invalidity of the 90-day trial clause
  • The misrepresentations of the Smiths in their CV’s.

In respect of the 90-day trial clause, the Smiths were found to have known due to their past work experience that the clause was invalid. The ERA found that the Smiths purposely delayed signing their employment agreement to ensure that the 90-day trial provision clause was invalid. Even if this was incorrect the Smiths owed a duty of good faith to Mr Muir to inform him the clause was invalid as they knew that Mr Muir believed the clause to be valid.

The ERA also found that the Smiths had made false representations on their CV’s which led to them obtaining a job they might not otherwise have obtained. Their conduct in doing this was “disgraceful”.

On the basis of those two areas the authority found that because of the nature of the misconduct of the Smith’s, despite them being unjustifiably dismissed they would not make an award of damages.

The overall outcome of the decision was that Mr Muir did not have to pay any damages, but did end up with a sizeable legal bill because he failed to get the basics right.

Take home message

This case is important in that it recognises the misconduct of employees in awarding damages. However, it is an unusual and rare case which does not undermine the importance of employers ensuring they get the process right in the first place.

If you are unsure about how to go about the disciplinary process or would like further information give our employment team a call. We work with employers to ensure they get the disciplinary process right to avoid the risk and cost of a personal grievance in the first place.

Our thanks to Simon Davies-Colley for writing this article.