The Court of Appeal addresses the standard of proof imposed on an employer when carrying out workplace investigations.1 The relevant standard is reasonableness only.

In Short


  • The legal standard of proof should not be applied in employment investigations. The relevant standard is that of reasonableness alone as set out in s103A Employment Relations Act 2000.
  • The Court of Appeal applied Z v Dental Standards Assessment Committee to reject the notion of a flexible burden of proof.
  • A distinction was made between an employer’s inquiry into an employee’s conduct, and the Court’s inquiry as to the employer’s process and decision-making to mitigate the risk that an employer’s views reasonably held are overridden by the Court. This would be counter to the purpose of s103A.

Background


IDEA Services Limited employed Ms Cowan as a support worker for service users with intellectual disabilities.  One service user, Mr M, reported hearing a slapping sound from a nearby room where Ms Cowan was attending to another service user, Mr C.  The service manager prepared an incident report and spoke to Mr C.  Mr C confirmed that Ms Cowan had hit him.

IDEA notified Ms Cowan of the allegation and called her to a meeting with the service manager.  Ms Cowan confirmed she had been in Mr C’s room at the relevant time but denied hitting him.  IDEA informed Ms Cowan that a workplace investigation would be conducted and suspended her, pending its determination.

IDEA carried out an investigation which included a series of interviews with Mr M, Mr C and other staff, a re-enactment of the incident where Mr M was asked to identify which of three sounds he heard, and an opinion regarding Mr M’s likelihood of lying.  IDEA provided Ms Cowan with this information and afforded her the opportunity to comment.

At the conclusion of the investigation the service manager found that on the balance of probabilities, Ms Cowan had hit Mr C and that there was a pattern of behaviour by Ms Cowan regarding her communication and conduct toward service users which fell short of the expectations of a support worker.  IDEA terminated Ms Cowan’s employment.

Ms Cowan brought an unsuccessful claim to the Employment Relations Authority for unjustified dismissal and a de novo challenge to the Employment Court.  She sought leave to appeal the Employment Court’s decision to the Court of Appeal.

The Legal Issues


Section 103A(2) sets out the test for determining whether a dismissal is justified:

The test is whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.

Judge Corkill in the Employment Court judgment cited several authorities on s103A and from those extrapolated the following principles:

  • It is not for the Court to substitute its decision about what a fair and reasonable employer could have done in the circumstances.
  • A range of reasonable responses are open to a fair and reasonable employer.
  • The requirement is for substantive unfairness, not a pedantic scrutiny to identify failings.
  • An employer may be presented with conflicting accounts, but this does not call for the application of any standard of proof.
  • There is a distinction between the inquiry of an employer and the inquiry of the Court. The facts by which an employer forms a belief of serious misconduct is not the same as proving to the Court that a dismissal is justified.
  • To show dismissal is justified, the employer must show that both the course taken to ascertain the facts and the determination itself were This must be shown on the balance of probabilities flexibly applied according to the gravity of the matter.

Ms Cowan argued that the Employment Court erred in finding that IDEA had sufficiently investigated the allegations for the purposes of s103A.  She submitted that an employer is required to apply the civil standard of proof to its consideration of whether misconduct has occurred and must apply the standard of proof flexibly, meaning a higher degree of probability is necessary to substantiate serious misconduct.

The Court of Appeal considered that the legal principles for assessing an employer’s decision-making process (noted above) were well established and did not need revisiting.  The one exception was the flexible standard of proof applied in Honda New Zealand Ltd v Boilermarkers etc Union [1991] 1 NZLR 392 (CA) at 394.  The Court distinguished this case as it pre-dates s103A and the Supreme Court has since rejected the concept of a “flexible standard of proof” in Z v Dental Standards Assessment Committee.

Further, it is not necessary to impose a legal standard of proof on the decisions of a litigant, when there is already a statutory standard of reasonableness.  Section 103A makes clear that the Court is not to override the view of an employer holding a reasonably formed view.

Comment


It can be difficult for employers to know what is “reasonable” conduct and decision-making in a workplace investigation.  This case provides clarity on this question for employers and their insurers.  Employers do not have to apply a different standard of proof dependent on the gravity of the allegation.  An employer may reasonably find an allegation substantiated, even if a Court would not consider the evidence especially strong or reliable.  The test under s103A is met if the employer takes a fair and reasonable approach to the evidence before it, and follows a fair process.

For insurers, this case is a helpful guide when evaluating an insured’s decision-making in the event of a claim.  It reiterates that an employer does not have to undertake a legalistic or forensic approach to workplace investigations and may rely on imperfect evidence to justifiably discipline or dismiss an employee.


If you would like to know more about the issues arising in this judgment, please contact Kiri Harkess or Miranda Braddock


  1. Cowan v IDEA Services Ltd [2020] NZCA 239

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