When dishonesty is at play

In HRNZ’s fourth in a series of articles on getting the basics right, Jack Rainbow, Associate at Dundas Street Employment Lawyers, outlines how to deal with the disciplinary process when dishonesty is evident.

Where misconduct is alleged, an employer may begin an investigation and/or disciplinary processes to get to the bottom of the allegations, including whether they occurred and in what manner and context. This generally involves meeting with the accused and ascertaining their side of the story.

But what happens if, in the course of those investigations, you find out that the employee has lied?

The seriousness of lying during a disciplinary process has been clear for many years, with the Court of Appeal saying back in 1990 in Honda New Zealand Ltd v New Zealand Boilermakers Union that:

A proved lie, told in denial or explanation of an allegation of misconduct, may not necessarily assist in the proof of the misconduct, but may be misconduct in itself.

George V Auckland Council

This is what occurred in a dispute between the Auckland Council and its employee, Laura George. The Council raised concerns with Ms George about her employing a casual worker without obtaining the requisite approvals to do so, which was inconsistent with Council policy. While not acceptable, this was not a dismissible offence on its own.

However, during the course of the investigation, Ms George made several inaccurate and false statements about her own actions. Statements that the Council soon realised were lies after speaking to a number of Ms George’s colleagues.

As a result, the Council added a new charge to the disciplinary process – that Ms George had been dishonest with them. Ultimately, the Council concluded that the allegation of dishonesty was substantiated. As a result, it no longer had trust and confidence in Ms George, particularly given that her role as a senior manager in an important financial position was one that required a high level of trust.

Ms George filed proceedings against the Council, asserting that she had been unjustifiably dismissed. She argued that the Council could not reasonably add a new allegation relating to dishonesty in the middle of the existing disciplinary process.

In its decision, the Court disagreed with Ms George. It found that it was reasonable for the Council to add new allegations to an existing disciplinary process. Specifically, the Court noted that while it would not suffice for an employer to merely assert that dishonesty has occurred, the employer could set out the new allegation, noting:

In order to undertake a fair and proper disciplinary process an employer is obliged to meet certain minimum standards, including adequately particularising the concerns that he/she has; identifying the potential consequences of a finding against the employee; providing sufficient information and a reasonable time to respond; and giving adequate consideration to any explanation given. I do not accept, however, that an employer who becomes concerned that an employee is not being truthful in his/ her responses is obliged to conclude a disciplinary process that is already in train and then embark on a new process, or initiate parallel processes. That would lead to unnecessary complexity, delay, and inefficiency. Provided that the requirements of fair process are met, an employer may identify a concern about truthfulness and deal with that concern in the course of a pre-existing process. Whether the process that was adopted in this case met the minimum standards is answered by a consideration of what in fact occurred, rather than an application of blanket rules.

Provided that the requirements of fair process are met, an employer may identify a concern about truthfulness and deal with that concern in the course of a pre-existing process.

That decision was appealed to the Court of Appeal, which specifically considered and addressed the issues associated with untruths told during a disciplinary process and whether this required a fresh disciplinary process. The Court of Appeal agreed with the Employment Court that this was not necessary for the reasons provided by the Employment Court. In reaching its decision, the Court of Appeal emphasised the standard that would apply in assessing whether an employee had in fact lied:

We emphasise that mere differences in recollection are likely to be commonplace during the course of the disciplinary process including any earlier investigation stage. Differences of recollection or inconsistencies are not in themselves sufficient to support a finding that the employee has lied. An employee may honestly, but mistakenly, have a different recollection of events. In order to establish that the employee has lied, there must be proof of a deliberate untruth on the employee’s part. The standard of proof is the civil standard but to a level commensurate with the seriousness of such an allegation.

In A Nutshell

This case demonstrates two main points:

• an employer can add an allegation of dishonesty to an existing investigation or disciplinary process, as long as the correct process is followed and the employee is offered an opportunity to provide feedback on that allegation

• an employer cannot determine that an employee has lied just because they arrive at a different conclusion about what occurred. Rather, there is a need to establish deliberate untruths if an employer wants to justify disciplinary action in respect of an employee’s response within a pre-existing disciplinary process.

Jack Rainbow, Arawa (Tapuika), Ngāti Tūwharetoa, is an Associate at Dundas Street Employment Lawyers. Jack has strong experience in industrial relations, dispute resolution and providing highlevel, strategic advice. He partners closely with his clients, providing advice and assistance from start to finish on a range of complex matters.