Unjustified dismissal for poor drug testing process and botched disciplinary process…

In a recent case, a worker was asked to undertake a drug test following accusations by a co-worker.


The worker’s employment agreement required drug testing to be in accordance with the employer’s drug testing policy, but there was no policy in existence.

When the employer suspected the employee was using drugs at work, they tried to introduce policies the next day, but would not give the employee a copy to take away and get advice on.  They only allowed her to read it overnight.  This was because where they had bought the policy from prohibited copying of it and would have charged $100 for a further copy (which they did not want to pay).The employer subsequently invited a drug tester on site. The worker refused to take the drug test, and as a result disciplinary proceedings were initiated and the employee was terminated.

The Employment Court upheld the personal grievance claim and found it was an unjustified dismissal of the worker because:

 (1)   Retrospectively implementing a drug testing policy and immediately requiring the    employee to undergo screening was in bad faith; and

(2)    The dismissal of the employee for refusing to consent to the drug test was “not the fair and reasonable actions an employer could have done in all the circumstances”, nor did they comply with procedural requirements in the Employment Relations Act.

The Employment Court found that the dismissal of the employee was both procedurally and substantively unjustified.  The Employment Relations Authority had found the dismissal to be procedurally unjustified, but substantively justified and therefore had only awarded compensation for the poor process, rather than any lost wages.  The Employment Court overturned that finding and decided to order payment of six weeks lost wages because of the substantive problems with the dismissal.

This poor process made the dismissal unjustified.  In addition to having no actual policies in place the employer should not have terminated the employee for refusing to undergo a drugs test.  There was no policy in place, so there was no right to insist on a test and the employee could not be dismissed for standing by her right not to undergo the test.

The ERA had originally awarded $10,000 compensation for the poor process reduced by 10% for contributory conduct by the employee.  The Employment Court would have increased the deduction off the remedies for the employee’s behaviour, as it believed her contributory conduct was more serious.  It involved drug taking at work and bad behaviour towards other staff and the employers.  However, the Court felt that the compensation of $10,000 awarded was too low to start with and so it left both that award of compensation and the limited 10% deduction unchanged.

The Court has for some time been signaling that the compensation awards would be significantly increased over what has happened in the past and even for a low level of hurt and humiliation, awards are likely to be around $20,000.  For more serious matters the awards will be significantly higher.

The Employment Court found the summary dismissal was unjustified, and the employer was required to pay a compensation payment of $10,000 (discounted by 10% for the employee’s part in the process), and six week’s wages.

It is essential to have your policies in place, and to follow proper procedures in accordance with those policies.

Alan Knowsley

Employment Lawyer Wellington