Preston Russell Law - Legal Services for Southern People

The Significance of 'Would' v 'Could'

Saturday, October 23, 2010 by Brian Richardson, HR Adviser category Work to Rule

It is anticipated that there will be some changes to the Employment Relations Act 2000 early next year. These changes will have a significant  impact on how the Courts will judge the actions of employers.                                               

The first anticipated change seems a minor one in that one word in section 103A will be changed. But don’t be fooled.
 
Section 103A is the section that deals with the “Test of Justification” for employers with respect to how they are to be judged when an employee challenges an employer’s decision or action for example in a dismissal or redundancy situation.

Currently, an employer is judged on the basis of what a reasonable and fair employer would do in a given set of circumstances. This is supposed to be an objective test applied by the Employment Relations Authority and the Court. It is however reasonably restrictive in that it only allows one outcome based on what an employer would (read should) do.

The proposed change is for the word would to be replaced by the word could.
 
This change will effectively allow an employer to contemplate a series of options for actions they may take given a certain set of circumstances. As long as the action taken by the employer remains fair and justifiable in the circumstances it doesn’t have to be only one option that a fair and reasonable employer would always take in those circumstances. The option taken could be harsh but still fair, and thus be justifiable.
 
With particular reference to a redundancy situation the common law position has become that an employer must consult with staff in all instances of redundancy. How that consultation is to be carried out could possibly change given the proposed new wording of the Act.
 
We anticipate that the employer will be given more leeway about how they consult and will be allowed to tailor their consultation to the particular circumstances they face.
 
Currently the law is that it is not for the Authority or Court to substitute their business judgment for that of the employer – a position that has been held since 1990.
 
The proposed change will allow flexibility but will probably also require the Courts to adopt something other than a “tick the box” approach. This should be welcome news for both employers and employees in that it will allow processes to be tailor made for particular circumstances, rather than a situation where the employer has to make sure all the boxes are ticked on the way through. As long as the process is fair then it is our belief that it will be justifiable, even if its not what the mythical “reasonable employer” would always do.
 
We will keep you informed about when and how this proposed change will come about.