A Lesson on Suspension

The following decision is a good reminder that Employers need to ensure they follow their own policies and procedures when dealing with Employees.

A Court of Appeal decision involved a bus company (“R”) who suspended an employee (“M”) after he was charged with alleged sexual assault.


M had been accused of indecently assaulting a passenger in early 2011. His P endorsement was suspended by the NZTA so he could not drive. He was placed on a mixture of annual leave, sick leave and anticipated leave.

The charges were later dropped and M returned to work after his P endorsement was reinstated.

In December 2011 M was accused of sexual assault by another passenger. M was suspended on pay until an investigation was carried out. His P endorsement was later suspended. The passenger also laid a complaint with the Police and M was formally charged with sexual assault.

Suspension without pay

At this time R proposed to suspend M without pay, given there was going to be a criminal trial and the employment investigation was on hold until such time as the criminal process was concluded. M’s lawyer did not respond to that proposal – in other words M did not agree.

R’s House Rules set out the procedure when an employee was suspended:

The employer …. may suspend the employee on pay pending the investigation of the alleged events.”


M was found not guilty in May 2013. On 10 June 2013 R placed M back on paid suspension pending the outcome of the employment investigation. On 29 August R proposed that summary dismissal of M was the correct outcome to the employment investigation, which they confirmed on 16 October.

Personal Grievance

M raised a personal grievance for unjustified dismissal and for unjustified disadvantage, in that he should have been paid while suspended. This was for the period 16 December 2011 until 10 June 2013 and amounted to $72,856.00 plus holiday pay, less the $20,000.00 which M had earnt during that period working elsewhere.

The matter proceeded to the Employment Court, where the decision to dismiss was found to be unjustified. The Employment Court found that R did not carry out the employment investigation into the alleged sexual assault with an open mind, nor did it evaluate all of the information it had in a fair and reasonable way.

The Court found that R did not make reasonable inquiries to establish whether or not M had acted in the way that was alleged. The Employment Court also held that R should have paid M for the entire time he was suspended.


R appealed that part of the decision (that is that M should have been paid while suspended) to the Court of Appeal. The Employer argued that because M did not carry a P endorsement on his license he could not work, if he had not been suspended. They claimed he was not ready, willing and able to work, and therefore they should not have to pay him.

Significantly R had suspended M before his P endorsement had been cancelled. He was unable to work initially because of the suspension, not because he could no longer carry passengers.

House Rules

The Court of Appeal agreed with the Employment Court. As stated above R’s House Rules set out the procedure when an employee was suspended:

The employer …. may suspend the employee on pay pending the investigation of the alleged events.”

M had signed a collective agreement with R and this agreement did not contain a provision about suspension, so the House Rules were the only guidance both parties had when it came to suspension.

In addition R had also told M at a meeting about the alleged incident on 17 November 2011, that he would be suspended on pay pending the outcome of the employment investigation.

Appeal dismissed

The appeal was dismissed, the Employment Court’s decision was upheld and R was required to pay M his wages for the period that he was suspended.

Employers look at your employment agreements – they may need a clause that allows suspension without pay in certain circumstances.