Good faith in New Zealand employment law
Good faith is a statutory obligation that runs through New Zealand employment relationships. Section 4 of the Employment Relations Act 2000 requires parties to deal with each other in good faith. The obligation is wider than simply not lying: the Act expressly requires parties to be active and constructive in maintaining a productive employment relationship and to be responsive and communicative.
What good faith requires
The precise obligations depend on the employment situation, but the statutory starting points include:
- the parties must not directly or indirectly mislead or deceive each other;
- they must be active and constructive in establishing and maintaining a productive employment relationship;
- they must be responsive and communicative;
- the duty applies to employers, employees and unions in the relationships identified by the Act.
Information before an adverse decision
Section 4(1A) imposes an important employer obligation where a proposed decision is likely to have an adverse effect on the continuation of an employee's employment. Subject to the statutory exceptions, the employer must provide access to relevant information and give the employee an opportunity to comment on it before the decision is made.
This duty commonly matters in disciplinary processes, restructuring and redundancy proposals, and other decisions that may end employment. It overlaps with the justification test in s 103A, but good faith is a distinct statutory obligation.
Good faith is not the same as a personal grievance
A breach of good faith does not automatically mean an employee has been unjustifiably dismissed or disadvantaged. The legal character of the claim depends on what happened. The same conduct may, however, be relevant to whether an employer's action was justified and whether an employee suffered an unjustified disadvantage.
Not every breach produces a penalty
Section 4A sets a separate threshold for penalties for specified breaches of good faith. A party may act inconsistently with good faith without the conduct necessarily meeting the statutory threshold for a penalty. The Authority or Court must consider the actual statutory test rather than treating every procedural failure as automatically penal.
Read s 4A on the New Zealand Legislation website.
Examples of where good faith commonly matters
- Disciplinary investigations: disclosing the substance of allegations and relevant information, allowing a genuine response, and approaching the process with an open mind.
- Redundancy and restructuring: consulting before the decision is made and providing relevant information about the proposal, subject to lawful confidentiality and privacy limits.
- Performance management: communicating concerns clearly and giving a reasonable opportunity to respond and improve where appropriate.
- Medical incapacity: communicating about capacity, information requirements and possible next steps rather than allowing assumptions to replace a fair process.
- Employees raising concerns: responding to complaints and employment problems rather than ignoring them.
If you have an active employment problem, the factual sequence and the documents exchanged usually matter more than labels. Use the employee case form if you want us to review an employment issue.
