Tripping on drug policies

Drugs and alcohol pose a major health and safety risk to employers, particularly those with workers operating in safety sensitive positions (for example, where heavy machinery is at play). But given the extensive intrusion to privacy caused by testing, the default position is that testing is not permissible unless there is both a right within the employment agreement/policies and one of the three conditions below exists:

  • Pre-employment testing;
  • Random testing (where it is a safety-sensitive position); or
  • Reasonable cause testing (where the employer has good reason to believe an employee is under the influence; for example, post-accident or if the employee is exhibiting unusual behaviours).

Where a clause or policy exists, it is still possible to trip up. Sometimes, the policy itself is the offending obstacle. The recent case of Hadfield v Atlas Concrete Limited provides a useful demonstration. The four key lessons from this case are:

  1. An employer can in some cases infer that an employee is ‘under the influence at work’, based on a non-negative test result, even though the consumption of drugs may have taken place days earlier;
  1. Suspension needs to be strictly in accordance with the employment agreement/policy;
  1. The wording of drug and alcohol policies and consistency with employment agreements is critical. Employers are required to adhere strictly to the policies and any inconsistencies will generally be held against the employer; and
  1. Where an employee returns a non-negative test result, the employer still needs to consider the employee’s explanation and any alternatives to dismissal (particularly if expressly included in their policy) before dismissing.

Details of the Case

Atlas Concrete (Atlas) had an extensive drug and alcohol policy (Policy) in place which contained a “first occasion” clause. This stated, “a first positive drug or alcohol test will be treated as potentially serious misconduct, and that potentially renders an employee liable for instant dismissal” or otherformal disciplinary procedures or measures”. These measures were at Atlas’ discretion and included the possibility of suspension without pay, or offering the employee an opportunity to participate in rehabilitation.

In 2020, Atlas amended the Policy, which resulted in some inconsistencies. For example, despite the above clause stating that the measures are at Atlas’ discretion, Schedule 4 indicated employees would be referred to rehabilitation as standard practice. The Union had supported the previous version of the Policy but said they were not made aware it had been amended in 2020.

Hadfield, a driver, returned a non-negative test for cannabis in a random drug test in 2021. He was suspended without pay and eventually dismissed, on the basis that he had attended work while being under the influence of drugs. Hadfield admitted to smoking cannabis on the weekend but the Union argued that he had not been under the influence while attending work.

The Employment Relations Authority (Authority) determined Hadfield was unjustifiably disadvantaged by the unpaid suspension and unjustifiably dismissed on procedural grounds:

  • Atlas had failed to act in accordance with Schedule 4 of the Policy, which:
    • only permitted the employee to be removed from the employment site without pay until the confirmed results were available – but Hadfield remained unpaid after the confirmed results were available. The collective agreement did not permit suspension without pay either, and the Policy could not supersede the collective agreement, particularly absent the Union’s agreement or support of the amended 2020 Policy;
    • required Hadfield to be advised of his right to consult a representative on each occasion he was required to undergo a test; and
    • stipulated that Atlas was to refer the employee to its rehabilitation programme. Hadfield was offered counselling but not rehabilitation.
  • Atlas suggested that, as Hadfield had previously been dismissed by an earlier employer for a drug issue, the Policy’s ‘first occasion’ clause didn’t apply. The Authority considered it clear that it was Hadfield’s “first occasion” with Atlas, and in any event, if Atlas considered previous drug use relevant it should have put this to Hadfield at the time.
  • Atlas had not demonstrated it had considered Hadfield’s explanation for the non-negative test during the disciplinary process. It did not address Hadfield’s circumstances in its dismissal letter, nor did it outline whether it explored rehabilitation or other alternative disciplinary options. In other words, the Authority felt that no discretion had been exercised at all (against the requirements of the Policy).

However, the Authority found that the decision was substantively justified. It did not accept Hadfield’s position that he was not ‘under the influence while at work’. The Authority heard expert witness evidence (a useful joint statement from the experts can be found at paragraph 65 of the judgment) confirming that urine test only tests for the presence of THC-acid, a metabolite of THC, and not the psychoactive substance itself. The results could not inform the time, dosage, frequency or potency of the previous use(s) of cannabis. Further, a toxicologist could not assess impairment and is not in a position to comment on impairment – this was more the expertise of an Occupational Physician. However, the results could not exclude impairment from cannabis at the time of donation.

The Authority considered a fair and reasonable employer could have, in the circumstances, concluded that the non-negative test result met the definition of “attending work under the influence” of drugs. The Authority noted that “under the influence” was imprecise, and clearer language was preferable; however in light of the context in the Policy about cut-offs and limits in line with the AS/NZS 4308:2008 standards, it was evident Atlas were relying on testing standards to determine impairment. The Authority noted it was “important not to lose sight about why these tests are undertaken – for safety reasons.”


Hadfield was awarded three months’ lost wages and compensation of $16,000 for the suspension and dismissal, reduced by 20% for contributory conduct.

The award of lost wages for procedural defects is slightly unusual where a dismissal is otherwise substantively justifiable. This aspect may be subject to appeal.

The arena of drug and alcohol testing can be a minefield. We recommend getting in touch for advice should you wish to implement a policy or carry out a disciplinary process as a result of a non-negative test.

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