Wednesday, June 15, 2011

New Zealand: Re-thinking the Good Faith Obligation

By Michael Quigg and Tim Sissons

A full Court of New Zealand’s Employment Court recently handed down a much-anticipated decision about the information employers need to provide employees when termination is a possibility.

The Claim

The case was brought by two lecturers who were made redundant during a restructuring process undertaken by Massey University in 2009. The process involved the disestablishment of a number of positions and the creation of a smaller number of new positions in their place. A panel interview process was used to determine which existing staff would fill the new positions. The two lecturers were unsuccessful in obtaining new positions.

The issue considered by the full Court was how much information from the panel interview process the lecturers were entitled to. Amongst other things, the lecturers were seeking access to the scores the panellists had given to other candidates, and to information which was contained only in the panellists’ minds.

Good Faith

The extent of the lecturers’ entitlement to receive further information turned on the duty of good faith, the central concept of New Zealand’s Employment Relations Act 2000 (‘the Act’). Under section 4(1A)(c) of the Act, that duty means that when an employer proposes to make a decision which might adversely affect an employee’s employment, it must provide them with access to relevant information about the decision and an opportunity to comment before the decision is made.

That obligation is subject to section 4(1B) of the Act, under which an employer may withhold relevant information if it is confidential and there is good reason to maintain confidentiality.

Relevant Information

The first issue for the full Court to decide was whether the information being requested was “relevant”. The university argued that “relevant” information was limited to that sufficient to fairly and adequately inform the lecturers about what was being proposed to enable them to respond meaningfully.

The lecturers argued for a broader interpretation. The full Court agreed. It found that “relevant” information would include more than just the information the employer relied on in formulating the restructuring proposal. It could include comparisons between employees, information about the perceptions and opinions of those leading the process, and information contained only in people’s minds.


The full Court found that all of the documentation sought by the lecturers was “relevant”. It therefore went on to consider whether the university was entitled to withhold it on the basis that it was confidential, and whether there were good reasons for maintaining that confidentiality. It found that this required a balancing exercise, in which the adverse effects of disclosure would be weighed against the importance of the information for the affected employees.

In this situation, the full Court found that almost all of the information being sought was confidential: it had been provided on the expectation it would be kept in confidence unless ordered to be disclosed by the Court, and dealt with private matters.

The Court therefore went on to consider whether there were good reasons for maintaining that confidentiality. It found that the potential adverse effects on privacy of providing access to the documents were not great: the panellists had been aware of the possibility that their comments could be disclosed. Noting that academics are used to differences of opinion, the Court found that there was no good reason for withholding the information.


The approach of many employers until now has been like that of the university: that employees need only be provided with enough information to allow them to respond meaningfully to the proposal.
This decision may change this:

· It is likely to mean that consultation processes in redundancy situations, and indeed any other processes which might lead to an employee’s employment coming to an end, will involve the provision of more information by employers.
· In some circumstances, it may mean that employees can require access to decision-makers’ undocumented views, especially if they have been previously expressed orally.
· Perhaps most significantly, it seems to indicate that the Court will take a narrow view on the circumstances in which information that is relevant but confidential should be kept confidential. This may require employers to make redactions from documents in order to disclose as much relevant information as possible while also protecting privacy interests.

Michael Quigg and Tim Sissons, Quigg Partners, Wellington, New Zealand