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Employment Relations Act 2000: Good Faith

The obligation of good faith is known to be the backbone of an employment relationship, and can be found in section 4 of the Employment Relations Act 2000.

It requires that the parties be active and constructive in maintaining the employment relationship, and that neither party do anything to mislead or deceive the other party.

In being active and constructive in maintaining the employment relationship, it is important that both parties raise their concerns in a fair and timely manner, and that each party respond to those concerns in the interests of maintaining the employment relationship.

However, the duty of good faith can be seen as being much broader than this; incorporating concepts of "trust and confidence" and "responsiveness".

Despite being such an integral part of the employment relationship, the duty of good faith is often overlooked in litigating employment relationship problems; presumably because it is difficult penalise the employer for a breach. Put simply, a penalty can only be claimed if the breach of good faith was deliberate, serious or sustained or was intended to undermine the individual employment agreement or the employment relationship: you can read more in section 4A of the Employment Relations Act 2000.

In my view, it appears paradoxical that there is one standard to breach good faith, and another (much higher) standard to be penalised for it. However, I'll peg that for another day; as that is not the purpose of this article.

The purpose of this article is to discuss the purpose of raising concerns of good faith with your employer, and to discuss how and when to go about this.

Why claim breach of Good Faith?

It is important to understand the obligations of trust and confidence which underpin both the Employment Relations Act 2000 and the obligation of good faith.

If an employer is seeking to terminate an employee's employment for reason of serious misconduct, the employer must show that, ultimately, it does not have the required trust and confidence in the employee.

If an employee raises a personal grievance for unjustified constructive dismissal, as they felt they had no other option but to resign, they must show that, as a result of the employer's unjustified actions, there was no trust and confidence left in the employment relationship.

Simply put, there can be no employment relationship where there is no trust and confidence.

Therefore, it is important to raise your concerns relating the obligation of good faith, as it is an indication that you see the employment relationship deteriorating.

If you feel that you are not being treated fairly, and you believe that you may need to resign due to these unjustified behaviours; it is important that you specifically highlight your concerns that your employer has breached its obligations of good faith.

While it is unlikely that you penalise your employer for breaching good faith, I take a principled approach: I raise these claims because I believe in the importance of good faith, and in the significance of breaching this obligation.

I also believe the breach of good faith substantiates your other claims; after all, there can't be a personal grievance without some form of breach of good faith. It is difficult to imagine a scenario where an employer was active and constructive in maintaining the employment relationship, but who was also unfair and unreasonable.

How and when to claim breach of Good Faith?

There is no formal means of raising a claim for breach of good faith, and can be raised verbally, in an email, a letter or it can form part of your personal grievance.

Remember your obligations of Good Faith, too!

Employee's tend to forget that they are held to these same standards of good faith. This means that it is not good enough to say "my employer didn't contact me" when you did not make attempts to follow up and communicate with your employer.

Two wrongs don't make a right.

It is also important that you consider that, in raising your concerns about good faith, you are coincidentally also acting in good faith.


Legal AF Limited t/a Ashleigh the Advocate

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