The Duty to Give Reasons

Why an explanation is owed at all

The obligation to give reasons is not a matter of courtesy. It serves purposes that go to the heart of fair decision-making, and the courts have set those purposes out plainly. Reasons answer the grievance a person feels when a decision affecting them is handed down without explanation. They allow that person to understand how the decision was reached, to see whether an error has crept in, and to make an informed choice about whether to challenge it. They assist any body that later reviews the decision, by exposing the path the decision-maker actually travelled. They impose a discipline on the decision-maker, who reasons more carefully knowing the reasoning will be read. And they assure the wider workforce that the process was open rather than arbitrary.

Each of those purposes maps directly onto the employment relationship. The worker who is told nothing cannot know whether to accept a decision or contest it; a decision-maker who explains nothing cannot demonstrate that the decision was sound. In this sense the duty to give reasons is the precondition for every other protection a fair process offers — without it, the right to be heard and the right to challenge are both exercised in the dark.

What counts as a decision — and when it is already made

The obligation is wider than the right to ask for reasons after a dismissal, because it attaches to every decision that bears on a person's job — and a decision here is not only the final act of dismissal. It is any conclusion that adversely affects the continuation of employment: a finding of misconduct, a determination that a role is redundant, the selection of one worker for redundancy over another, a formal warning, or the refusal of a request to change how or when a person works. Wherever an employer moves toward such a conclusion, the good faith obligations in section 4 of the Employment Relations Act 2000 are engaged before it is made final.

The timing is the heart of it. Good faith requires the employer to advance a genuine proposal — one not yet finally decided — and to weigh the worker's response with an open mind. Where the outcome is fixed in advance and a meeting is held only to record it, the decision has already been made: the consultation is an empty exercise and the process is predetermined. A decision reached without the worker, and then explained afterwards, inverts the duty, because the reasons are owed while the matter is still open, not once it is closed. That is the same defect the companion article on the rule against bias treats as predetermination.

The statutory right to be told why you were dismissed

The Employment Relations Act 2000 does not leave the duty to give reasons for a dismissal to implication. It creates a direct statutory right. Under section 120 of the Employment Relations Act 2000, an employee who has been dismissed may request a written statement of the reasons for the dismissal. The request must be made within sixty (60) days of the dismissal, or of the employee becoming aware of it, whichever is later. The employer must then provide that written statement within fourteen (14) days of receiving the request.

The content of that statement is not a formality. The employer is expected to state the true reasons and the whole of the reasons, and is generally held to them. An employer who supplies one account at the time of the dismissal cannot quietly construct a different and more defensible account once a personal grievance is on foot. The Employment Court made the point in Ashton v Shoreline Hotel [1994] NZEmpC 37, where it treated the reasons given at the time as the reasons the employer must stand behind: a later attempt to substitute fresh justifications is met with scepticism and must overcome the obvious inference that the original reasons were the real ones.

Time limits give the right its urgency. A personal grievance must ordinarily be raised within ninety (90) days, under section 114 of the Employment Relations Act 2000, although the Employment Relations Authority may grant leave to raise one later where exceptional circumstances exist, with section 115 of the Employment Relations Act 2000 making further provision about what those circumstances may include. A clear, early statement of reasons under section 120 of the Employment Relations Act 2000 lets a dismissed employee assess the position and raise any grievance in time; reasons withheld or obscured make that assessment harder, not easier.

Reasons before the decision, not only after it

The statutory right under section 120 of the Employment Relations Act 2000 looks backward, explaining a decision already made. The duty of good faith looks forward, and it is the more powerful of the two. Section 4 of the Employment Relations Act 2000 requires the parties to an employment relationship to be active and constructive, and in particular to be responsive and communicative. Where an employer is proposing a decision that will, or is likely to, have an adverse effect on the continuation of an employee's employment, section 4 of the Employment Relations Act 2000 requires the employer to give the affected employee access to the information relevant to that decision, and an opportunity to comment on that information, before the decision is made.

This is the duty to give reasons operating in advance: the information an employer must disclose is, in practical terms, the reasons it is contemplating acting upon, together with the material those reasons rest on. The obligation to explain is meaningless if it arrives only after the decision is sealed; good faith front-loads it.

The same logic runs through the common law of natural justice that underlies a fair disciplinary process. A worker must be given notice of the specific allegation and its likely consequences, a real opportunity to respond, and an unbiased consideration of that response — principles the Employment Court applied in New Zealand Express Transport Christchurch Limited v Ngaropo [1994] NZEmpC 245. Stating the specific allegation is, in essence, giving the reason for the process. Without it, the opportunity to respond is left to chance. This is the territory of the companion articles in this hub on the right to be heard and the rule against bias; the duty to give reasons is the third strand of the same rope.

What makes reasons adequate

A statement is not reasons merely because it is written down. The reasons must do the work the duty exists to do, and a bare conclusion does not. There is no inflexible rule fixing how much must be said — the depth required varies with the gravity of the decision and the issues in dispute — but the courts have settled what adequacy looks like. Reasons must explain the decision intelligibly, so the reader can understand why it was made. They must engage with the substantial points actually in dispute, rather than recite the submissions and then announce a result. They must show that the decision-maker turned its mind to the criteria that governed the decision. And where the evidence conflicted, they must indicate which evidence was preferred, and why.

Reasons need not be drafted to the standard of a reserved judgment of the High Court. But they must amount to more than a conclusion, because a conclusion explains nothing. The point sharpens wherever a right of challenge exists: if a person cannot tell from the reasons whether an error of law or fact has occurred, the right to challenge the decision is hollow, and that hollowness can itself imperil the decision.

“Why me?” — reasons in a redundancy

Nowhere is the demand for reasons more acute than in a redundancy, and particularly a partial one where some roles survive and others do not. The affected worker's question is simple and legitimate: why me? An older line of thinking treated the absence of reasons for redundancy as a minor matter. The modern approach, shaped by the good faith duty in section 4 of the Employment Relations Act 2000, does not. Clear, objective reasons for selection are a necessary part of a fair and transparent process, and an employer that cannot explain the basis on which one worker was chosen over another exposes the dismissal to a finding that it was unjustifiable.

The forward-looking thread appears even at the formation of a relationship. Where an employment agreement is to be for a fixed term, section 66 of the Employment Relations Act 2000 requires the agreement to state in writing the genuine reasons, based on reasonable grounds, for the employment ending in that way. The reason must be given at the outset; an unstated or contrived reason cannot be supplied later. The statute treats the obligation to explain as part of the architecture of the relationship itself, not merely a feature of its ending.

When silence becomes evidence

The failure to give a reason is not only a procedural lapse. It can be substantive evidence. Where an action is alleged to have been taken for an unlawful reason — discrimination, or retaliation for the exercise of a protected right — the employer's stated reason is the central issue in the case. An employer that cannot offer a credible, lawful reason for what it did invites the inference that the real reason was the unlawful one. The absence of a good reason can be compelling evidence of a bad one. In this way the duty to give reasons does more than discipline process; it polices motive.

The duty binds the Authority and the Court too

The obligation does not stop at the employer's door. The bodies that resolve employment disputes are themselves decision-makers, and they owe reasons too. The Employment Relations Authority investigates and determines matters according to the substantial merits of the case, in equity and good conscience, under section 157 of the Employment Relations Act 2000; a determination that states a result without adequate reasons frustrates the very review that the statute provides. Where a party is dissatisfied with a determination of the Authority, the route is not judicial review but a challenge to the Employment Court under section 179 of the Employment Relations Act 2000, which is heard afresh. A determination that does not disclose why it was reached is the more readily set aside, because an appellate body may infer from the silence that no adequate reasons supported it.

Beneath all of this sits a constitutional anchor. Section 27 of the New Zealand Bill of Rights Act 1990 affirms the right of every person to the observance of the principles of natural justice by any tribunal or public authority that determines their rights, obligations, or interests. The duty to give reasons is one of the ways those principles are made real: a decision that cannot be explained cannot be said to have been justly made.

Legislation cited is linked to the current consolidated text on the New Zealand Parliamentary Counsel Office website at legislation.govt.nz. Case authorities are linked to the Working for Workers case law and reference repository at caselawandreference.workingforworkers.nz.