Employment at Will versus Just Cause Dismissal: Applying the Due Process Model of Procedural Justice
Harcourt, Mark, Lam, Helen, Hannay, Maureen, Labor Law Journal
This paper critically examines the procedural justice characteristics of dismissal under the American employment-at-will (EAW) system and the New Zealand just-cause system, with regard to poor performance, misconduct, and redundancy (downsizing) situations, using a due process framework of three dimensions: adequate notice, fair hearing, and judgment based on evidence. Without any explicit proactive procedural protocol required for dismissals, EAW was found to offer limited protection to employees. Contrarily, employees in New Zealand have better protections in statute and common law, requiring employers to provide substantive justifications for dismissal and to follow procedures similar to due process. If employees are to be treated fairly and respectfully, changes to the EAW are needed, and the New Zealand system, despite some limitations identified, may be a good reference model.
Fairness, or justice, has long been seen as a sign of good organizational decision-making, because "it gives substance and meaning to human dignity", is generally considered the right thing to do, and has broad implications for cooperative, productive interactions between employees and employers.1 As Rawls once said: "justice is the first virtue of social institutions, as truth is of systems of thought."2 Employees have several reasons for wanting employers to treat them fairly in any human resource deci- sion. First, fairness often involves empowering employees to have some control over decision outcomes and so is desired for instrumental reasons.3 Second, fair treatment can indicate a person's organizational worth or value, and therefore affects self-esteem and group status.4 Third, and most importantly, fairness is seen as a virtue in itself.5 The employee's expectations of fairness are likely to be higher, the higher the potential impact of the employer's decisions on the employee. Dismissals, of all organizational decisions, are probably the most impactful on employees. Job termination generally threatens self-esteem6, while layoffs, in particular, have "pernicious effects, harming the victims while undermining the morale of survivors who re- main employed".7
Fairness, or justice, is of two types: procedural and distributive. Procedural justice focuses on the fairness of decision methods and proce- dures, whereas distributive justice focuses on the fairness of decision outcomes8 More specifi- cally, procedural justice refers to the "structural characteristics of a system": the rules used in decision-making, including how the decision authority is determined, how information is com- municated, and whether there is an opportunity for input or appeal.9
Research has found, for detrimental situations like dismissal, that perceptions of procedural injustice are generally a better predictor of em- ployee legal action (e.g., lawsuits, personal griev- ances) than perceptions of distributive injustice.10 The means matter more than the ends. Why? A just process is one that is not obviously biased, arbitrary, or capricious. It typically involves lis- tening to, and considering, both sides' arguments and evidence. As such, a just process is one that seemingly delivers rational and legitimate out- comes. In other words, even if the outcomes are disappointing for the employee, they make some sense. They are understandable if not desirable.11 If decisions are procedurally fair, unfavourable outcomes are more likely to be seen as tempo- rary and possibly changeable.12 For instance, the employee can try to improve his or her perfor- mance and thereby avoid future dismissal. He or she can behave more appropriately at work and avert being fired for drunkenness or fighting or stealing, as the case may be. In such situations, a just procedure gives employees confidence that they can try again and make things right. A just procedure better prepares employees to accept the consequences of their actions.13 A just pro- cedure helps maintain employees' confidence in management14 and employers, more generally. …