What is Good Faith? : Overview & Common dos and don’ts

Because the term “good faith” is so broad, it’s possible it can never truly be explained in writing such as this.


However, this is the start of a series that will try to explain the concept of good faith in practical terms. My thoughts will be fed by the sad realities that exist inside too many of New Zealand’s workplaces, as seen regularly here at Sacked Kiwi.


New Zealand’s overarching employment legislation is the Employment Relations Act 2000. This act sets out minimum standards for the relationships between employees, employers, and unions.


Section 4 of the Act sets out a requirement that all parties to an employment relationship must always act in good faith. This covers all aspects of the employment relationship – from recruitment to termination and everything in between!


Good faith is defined through three main elements:


  1. Parties must not mislead or deceive each other;


  1. Parties must be responsive and communicative;


  1. Employers who are making decisions that may result in termination of employment must give affected employees sufficient information to be able to understand a proposal and have the opportunity to comment before that decision is made.


Okay, but what does that really mean?


The explanation above is broad and arguably ambiguous, which can cause confusion and make it difficult to know what is truly considered “acting in good faith” when handling different situations at work.


This article discusses three common workplace scenarios. It provides examples of what good faith behaviour from an employer might look like, and what should certainly be avoided!


  1. An employee is under performing.


Acting in Good Faith would be following a fair and reasonable performance management process. Providing the employee with full feedback, appropriate training, and setting realistic expectations and ways of measuring improvement in performance. Keeping clear communication through the process, advising the employee when they are not meeting expectations, and ensuring they understand that termination of employment is a potential consequence if the performance process is not successful.


One example of not acting in Good Faith would be making someone redundant through restructuring a team or role with the intention of terminating the employee. This may look like a proposal that doesn’t genuinely meet business needs, not providing the affected employee with sufficient information and time to seek advice and respond, or simply advising the employee out of the blue that they are being made redundant. Genuine redundancy is time consuming and requires a robust and thorough process by an employer.


  1. An allegation of serious misconduct is raised against an employee.


Acting in Good Faith would be following a full and fair process to substantiate the allegation. This includes notifying the employee of the alleged misconduct and advising them if found true their employment may be terminated, inviting them to a meeting with a support person to provide their version of events, genuinely considering what they had to say, giving them time to consider and provide feedback on any proposed outcome, then delivering the outcome.


One example of not acting in Good Faith would be giving the employee notice of termination effective immediately. Even if an employee has acted in a way that is considered serious misconduct, the employer must follow a fair and full process. No shortcuts!


  1. An employee is hired into a role they have minimal to no experience in


Acting in Good Faith would be providing the employee with thorough training to set them up for success. This includes providing them with a buddy to learn off and question, arranging any mandatory safety or job specific training, and ensuring they are given ample opportunities to receive feedback on their performance as they learn.


One example of not acting in Good Faith would be hiring the employee on a fixed term or casual employment agreement in the hopes it would be easier to terminate them if they weren’t performing as expected. If a business has a genuine need for a full time or part time permanent position then it should be reflected within a permanent employment agreement.


Hopefully this shines some light onto common dos and don’ts in the workplace!


If you ever feel concerned that you are not being treated in good faith at work, please don’t hesitate to call us for advice!


Your Job. Your Rights. Our Fight.