It is well established that a warning can be issued to an employee following a fair and reasonable disciplinary process where it is found that the employee has engaged in misconduct.
This article explores the issue of time-bound written warnings. ‘Time binding’ warnings establishes a time frame where the warning can be relied upon if another incident of misconduct arises. We look at the rationale for including, and not including, expiry dates on written warnings, plus look at when a case-by-case approach might be best.
This issue highlights an important aspect of employment law – namely that, unlike some other areas of law, employer obligations and the actions they can justifiably take is not always clear cut. This is because, as with all employer actions, the test that applies to the issuing and relying on warnings is section 103A of the Employment Relations Act 2000 (the Act).
This test imposes a standard of reasonableness– where the actions of the employer are what a fair and reasonable employer could (as opposed to ‘would’) have done in the circumstances at the time the warning was given, or relied upon in a future disciplinary process.
The members of our Employment Team are experts at assisting clients navigate disciplinary processes. If you need assistance with a disciplinary process, feel free to reach out.
Option 1: include an expiry on written warnings
It is standard practice to include a time limit. The appropriate length of the time limit will depend on the conduct, however the warnings will usually sit on an employee’s file for a period of six to 12 months.
The practice of including a time limit in a warning reduces the risk of an employer relying on a warning which has gone ‘stale’. Where an employer unreasonably relies on a warning in a decision to dismiss an employee, the dismissal may not be justified. In Dalliessi v ISS Facility Services Ltd[1], a warning the employee had been given two and a half years previously for similar conduct was taken into consideration when deciding to dismiss her. The Authority stated:
“…while there is no general rule of thumb as to the period a previous warning or caution may remain valid, the normal point of discussion is around 12 months. The period here, 30 months, is considerably greater and, in my view, renders it an inappropriate consideration”.
In addition, including time limits in warning letters can be pointed to by employers as evidence of their compliance with their obligations of good faith toward their employees, in accordance with section 4 of the Act.
Option 2: don’t include an expiry on written warnings
While including a time limit in a written warning is standard practice, it is not a requirement. Including a time limit in a warning can limit future employer action, perhaps unnecessarily. It is possible that very serious conduct that has deeply impaired the employer’s trust and confidence would remain relevant for a long time so, if misconduct occurred, it would be reasonable for the employer to rely on the previous warning when taking further disciplinary action.
Time-binding warnings can create the risk that, if misconduct occurs soon after a previous warning has expired, the employer may not be able to rely on the previous warning.
There have been suggestions from the Employment Relations Authority and Employment Court that in some circumstances it may be appropriate to rely on a lapsed warning[2]. However, we consider there is a considerable degree of risk in relying on an expired warning because the circumstances in which this may be appropriate are unclear..
If employers don’t decide to formally time-bind warnings, they still must consider and take account of the length of time that has elapsed since the last warning and the nature of that previous misconduct – determining whether it is reasonable to rely on it.
Option 3: case-by-case approach
Employers can consider taking a case-by-case approach when deciding whether to put a time limit on a warning, and specifying a time limit in the warning letter itself. Where the conduct is serious, the warning will remain relevant for some time, and therefore determining not to time-bind the warning is reasonable.
Footnotes
[1] [2011] NZERA Christchurch 191
[2] NZ Baking Trades Employees IUOW v Findlay’s Gold Krust Bakeries Ltd [1989] 2 NZILR 633, Butcher v OCS Ltd [2008] ERNZ 367
