HR professionals are used to assisting managers to raise issues with employees. The conventional approach is to follow a number of steps set out in the Employment Relations Act; sufficiently investigate the issue, raise the issue with the employee, give the employee a reasonable opportunity to respond, genuinely consider the employee’s response, make a decision that a fair and reasonable could have made. In the case of poor performance, these steps often have to be repeated a number of times before dismissal is justified. We all know how long this usually takes!
Some leaders cut straight to the chase. They initiate a frank discussion with an employee (often termed a “fireside chat” or an “off the record discussion”). They identify the problem, are honest about whether the employee has a likely future with the business, and offer a solution (usually an exit with dignity, usually on terms which the employee is likely to accept). Such a discussion can be very useful when the parties are likely to be able to agree on an acceptable outcome.
If the parties are unable to agree on an acceptable outcome, that discussion is very difficult to overcome. The discussion usually smacks of pre-determination by expressing a genuine desire on behalf of the employer to terminate the employment relationship; the classic constructive dismissal scenario of resign or you will be fired!
This is what happened in the case of Blakeley v ACM New Zealand. Ms Blakeley was a branch manager with ACM. Ms Blakeley met with her Regional Manager in June to discuss the perceived poor financial performance of her branch. In July Ms Blakeley travelled to Auckland to participate in a Managers’ meeting. Her participation in the meeting was perceived as limited and disinterested. Her Manager ended Ms Blakely’s participation (or lack thereof) at the meeting early by calling a taxi and sending her home.
The following week Ms Blakeley’s Regional Manager asked HR to write a script for him for a meeting he intended to hold with Ms Blakeley. There was general agreement about the course of the meeting that was held. Ms Blakeley accepted that the meeting would proceed on a “without prejudice” basis. Her Manager told her that her performance and the behaviours she had been demonstrating were unacceptable. She was told that the company wanted to terminate her employment and that if she did not accept the company’s exit offer, her employment would most likely be terminated through a formal disciplinary process.
The company and Ms Blakeley were unable to agree on a financial settlement. Efforts were also made at mediation to agree on an exit for Ms Blakeley. When this was not successful, Ms Blakeley resigned two days later and raised a personal grievance on the basis that she was constructively dismissed.
The Employment Relations Authority concluded that it was almost a textbook illustration of one of the leading decisions on constructive dismissal. In the Woolworths case the Court of Appeal held constructive dismissal includes, but is not limited to, cases where:
- An employer gives an employee a choice of resigning or being dismissed;
- An employer has followed a course of conduct with the deliberate and dominant purpose of coercing an employee to resign;
- A breach of a duty by the employer causes an employee to resign.
The Authority Member said “I have no qualms concluding Ms Blakely was constructively dismissed.
The Authority also considered whether the so-called “without prejudice” meeting should be excluded from consideration. Again, the Authority had no difficulty in concluding that it should be considered in evidence. Ms Blakely had been informed that following the failure of the parties to agree on an exit that it was back to work as normal, pending a formal disciplinary process. She had already been told that the relationship was untenable and she had no reason to believe that the process would be conducted fairly or with an open mind. The employer’s intention had already been signaled.
The Courts only deal with situations where the parties have been unable to agree on an outcome. There are likely to be many cases that we do not see where bold discussions have been successful. However, before an employer embarks on a bold discussion, the employer should realise that agreement may not be reached; a Plan B and even a Plan C should be prepared in case the bold discussion does not go well.
Published in HR Magazine Summer 2022