Reinstatement remedy can become too bitter a pill

The Dominion Post - Saturday, 11 September 2010

A recent decision of the Employment Relations Authority has reinstated two Customs officers to their former positions at the New Zealand Customs Service. John Smith and Glenn Rankin both applied to return to their jobs after being dismissed for "irreparably damaging the trust and confidence" of the employer.

Mr Smith, a former employee of the police of many years standing and a former union delegate, had allegedly leaked confidential Customs information to the press. Glenn Rankin allegedly knew of the leak but did nothing to inform his employer. The authority originally declined to allow the officers to return to their jobs pending further investigation.

The authority subsequently conducted a full investigation before concluding in August that the officers must be reinstated.

The leaked information resulting in the dismissal of Mr Smith and Mr Rankin consisted of a graph of the number of personal searches undertaken by Customs officer "X", compared with searches undertaken by other unnamed officers, and a statement in the nature of a complaint about the behaviour of Officer X prepared by another employee.

Both documents were sensitive and confidential. Essentially, the documents potentially implied that Officer X had been misusing his authority for sexual gratification.

An investigation conducted by Customs turned up information that led to the conclusion that it was likely that Mr Smith was involved in the leak. He was summarily dismissed following the investigation.

On the same day, Mr Rankin was summarily dismissed for breaching the service's code of conduct by having knowledge of Mr Smith's alleged involvement in the leak and not bringing it to the attention of his employer.

Mr Rankin had worked at Customs since 1986.

The investigation report suggested the leak had come about because a group of workers, including Mr Smith and Mr Rankin, were aggrieved that Officer X had returned to work after a previous investigation into his conduct. In addition there had been a sexual harassment and discrimination complaint made against Mr Rankin by Officer X in mid-2009 relating to Mr Rankin telling other employees he would not undertake personal searches with Officer X because of his sexual orientation. There were also several other allegations against Officer X by other employees. There had allegedly been a "campaign to oust" Officer X.

The authority decided that the leak of information would be regarded by a fair and reasonable employer in this matter as serious.

The information had the potential to seriously damage the Customs Service's reputation and public confidence in the service.

Confidentiality of sensitive information is of increasing concern to organisations and employers these days, with information able to reach the far corners of the earth in the click of a button. The Customs Service was understandably concerned about the leak and its possible consequences.

Despite that, of significance in this case were the Customs Service's processes in investigating and determining the matter. The authority found several flaws in the process and these affected the outcome of the case.

There were delays in the process, the employer withheld certain important information from the officers, and there was a lack of specificity in terms of the allegations. In the end it was found that a fair and reasonable employer would conclude that there was insufficient evidence about Mr Rankin having knowledge of the leak.

In terms of Mr Smith, inferences were capable of being drawn in terms of some of his conduct, and there was enough to create a suspicion of his involvement, but there was no clear evidence of his contacting the media. No phone records, no witness accounts.

A fair and reasonable employer would not have concluded that he was the only officer with motive. Due to the seriousness of the allegations and the lack of evidence the authority found Customs' belief and conclusions as to Mr Smith's involvement in the leak were unfair and unreasonable. The investigation as a whole was unfair, and so was the decision to dismiss both workers.

The authority decided that reinstatement was appropriate for both officers. It was not satisfied that it would not be practicable for Mr Smith to be reinstated because of concerns about his relationship with Officer X, or because of concerns about national security. Mr Smith undertook to conduct himself professionally, and the authority held that Customs was entitled to hold him to that.

Similarly, the authority saw that Mr Rankin's undertaking to be professional and make reinstatement a success was a sign that he recognised that he may not have been in the right, and that some things he wrote did not sit at all well with his leadership role.

Neither worker was awarded compensation on the basis of their contribution to the problem.

This case highlights that reinstatement is currently the primary remedy in unjustified dismissal cases. Even though there was strong suspicion in this case about the conduct of the parties, the authority was satisfied that they could continue in their jobs provided they kept to their undertakings to behave professionally.

The Government is looking to retain reinstatement as a remedy in unjustified dismissal cases but remove it as the primary remedy. This reflects the practical reality that in many cases the employment relationship is too irreparably damaged for reinstatement to be awarded. If the law change goes through employers will find it easier to show that reinstatement is not practicable or desirable in the circumstances.

Other law changes that would be relevant to this decision, and that have been proposed by National, include altering the test for when dismissal is justified in the employer's favour, and making process failures of less significance.

The decision in this case that the dismissals were unjustified may not have been decided differently if these changes were in place, although reinstatement of the two officers may not have been granted.

This case has been reported in the media twice. The first time was when interim reinstatement was unsuccessfully sought by the two officers. The second occasion was when the authority issued its determination on all issues at a full hearing as opposed to the earlier one that sought interim relief. It is possible the case will go on to the Employment Court for a further hearing.

What does emerge from reading the decisions to date, is that Customs appears to have dealt very fairly with Officer X - the employee in question - and resisted pressure from the staff who were antagonistic to him. It is unfortunate that information about him was leaked to the media in the way that it was. Customs can be credited for handling the apparent prejudice about Officer X being gay so well.

The Employment Relations Authority's determination was that the two dismissed officers could not be linked to the leak with sufficient confidence to justify their dismissal.