Court to re-assess justification for dismissal in light of new health evidence
The Employment Court of New Zealand has ordered the temporary reinstatement of a former Inland Revenue Department (IRD) employee, following her dismissal in September 2024.
The decision comes after the former employee filed a legal challenge against IRD's decision to terminate her employment on a "no faults" basis.
The court has ruled that the former employee should be reinstated to the payroll pending the outcome of her personal grievance claim, which will be heard by the Employment Relations Authority (ERA) in April 2025.
The former employee had been employed at IRD for approximately 18 months, working in a Workplace Support role, when her employment was terminated in September 2024.
Her dismissal followed a series of performance concerns, including complaints from co-workers regarding her lateness, attendance, and behavioural issues.
These issues were compounded by the employee's disclosure of personal trauma, including a history of physical, sexual, and psychological abuse, which she claimed impacted her performance at work.
Despite her ongoing health challenges, the former employee's employment was ended under the doctrine of "frustration," arguing that she demonstrated that her "fundamental makeup" rendered her unable to meet her contractual obligations.
IRD argued that the employee's performance issues were so severe that they could not be reasonably addressed within the terms of her employment agreement.
However, the former employee's legal team disputed the use of the frustration doctrine, arguing that her performance issues were tied to her health condition and that IRD should have followed the procedures for managing medical incapacity. They further argued that the employer should have waited for additional medical assessments before making a final decision on her dismissal.
The challenge was initially brought before the ERA, which declined the former employee's request for interim reinstatement. In response, she appealed the decision to the Employment Court, seeking a temporary return to the payroll while her case was reviewed.
Chief Judge Christina Inglis sided with the former IRD employee on the case.
"The determination of the Authority is set aside," Inglis said in the ruling. "The plaintiff's application for interim reinstatement is granted pending the outcome of the Authority's substantive investigation but on a limited basis, namely a return to the payroll only."
Inglis found that there was an arguable case for unjustified dismissal, highlighting that IRD had not fully considered the employee's medical condition and the potential impact it had on her work performance.
The court also noted that the employer had not sought further medical reports or explored whether workplace accommodations could have supported the employee in her role.
The court also emphasised that IRD's decision to terminate the employee's employment under the frustration doctrine was questionable, given the lack of clear articulation regarding how the doctrine applied in this case.
The judge observed that, had the employer pursued a medical incapacity route, it might have been possible to avoid dismissal.
After reviewing the facts, Judge Inglis ruled that it was unjust to deny the former employee interim reinstatement, particularly as she had a strong case that her dismissal may have been unjustified.
"I consider a return to the payroll would provide the plaintiff with the opportunity to make progress on the issues identified in the clinical psychologist's report and for further medical reports to be obtained and for counselling to occur," Inglis said.
"It will also provide a firmer basis for managing a successful return to work if that is what is ordered following the Authority's substantive investigation, including having further clarity on how that might be achieved."
