What is ‘fair and reasonable’ under s 103A

What is ‘fair and reasonable’ under s 103A.

If you’re in the employment sphere, or have ever had an employment dispute, no doubt you will have heard the words “fair and reasonable” bandied about a fair bit. But what does this really mean?

This is a reference to S103A of the Employment Relations Act, which states that the test for justification (whether an action taken by an employer 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.”

In 2011, Parliament amended the previous version of the above ‘test for justification’ to use the word ‘could’. The previous test used the word ‘should’. While this appears like a small change, it had some significant implications. The Employment Court in Angus v Ports of Auckland Limited examined this section following the amendment, and discussed what this meant in practice.

The following points were made:

1. There is no longer a single standard of fair and reasonable under s 103A

This means that there may be more than one fair and reasonable response available to an employer. The words “in all the circumstances” were emphasised by the Court in relation to this. In the case of a personal grievance claim for unjustified dismissal or unjustified disadvantage, the Court will look at what may be fair and reasonable through the lens of the circumstances of the employer at the time of the relevant decision or action.

2. Industry practice may be relevant in limited circumstances

Related to the first point, the Court discussed whether “all the circumstances” includes relevant industry practice. It was concluded that this could be a relevant consideration in “appropriate cases”. The Court noted that appropriate cases would particularly include cases “where the employment is in a very specialised and/or technically complex field in which the Authority and the Court may be unsuited to making, unaided, nuanced decisions beyond their expertise.”

3. The nature of the work is relevant

Despite the above, the Court did note that “the phrase “in all the circumstances” includes the particular nature of the employing enterprise”. This is again tied to the first point – there is no single standard of fair and reasonable, and the nature of the work carried out by an employer is therefore relevant.

 

If you have any questions or queries in relation to your work situation , please get in touch with the Watermark team directly. We are happy to advise you.

Erin Drew

Solicitor