How to dismiss an employee in New Zealand

The requirements for a lawful dismissal

In order to be lawful, the dismissal of an employee

• must be substantively justified, and
• must be conducted in a procedurally fair manner

In order to be substantively justified, there must be a genuine reason for a dismissal. The requirements of procedural fairness may vary depending on the circumstances; for example, in serious cases the employer will be justified in dismissing the employee without first giving a warning (see below).

If an employer issues a warning or dismisses an employee unlawfully, an employee can lodge a personal grievance claim with the NZ Employment Relations Authority. The employee can be awarded lost wages and damages for distress. See How to defend a personal grievance claim brought by an employee.

The Employment Relations Service in the Department of Labour can provide information and mediation services to help deal with employment problems. Contact them on 0800 800 863. In order to be substantively justified, there must be a genuine reason for a dismissal. The requirements of procedural fairness may vary depending on the circumstances; for example, in serious cases the employer will be justified in dismissing the employee without first giving a warning (see below). The test of whether the dismissal was justifiable and the procedure was fair is an objective one - namely, whether it meets the standard of what a fair and reasonable employer would have done.

Dismissal without notice for serious misconduct ("summary dismissal")

If there has been serious misconduct, a summary dismissal will be justified – that is, the employee can be dismissed without receiving any earlier notice or warning. However, the dismissal must still be procedurally fair (see below for the general rules of procedural fairness). Examples of serious misconduct include:

• theft or some other act of dishonesty
• fighting in the workplace or assaulting an employer or co-worker
• breaching work rules
• deliberately disobeying a lawful and reasonable instruction from the employer
• possessing illegal substances at work

Even if an employee is dismissed for serious misconduct, he or she is still entitled to outstanding wages, holiday pay and any other entitlement under the employment contract.

Poor work performance and less serious misconduct

However, if the ground for taking action is poor work performance or some less serious form of misconduct, the employer cannot dismiss the employee unless there have been previous warnings about the poor performance or misconduct.

The accepted procedure is usually to first give an oral warning, then a formal written warning, then a final written warning, and then, if necessary, dismissal.

General rules of procedural fairness

An employer is generally required to perform the following steps to ensure that a dismissal is procedurally fair. These will apply whether it is a summary dismissal or a dismissal after warnings.

• You must carry out a full investigation into the alleged behaviour.
• The employee should be informed about the exact nature of the allegations and, where appropriate, that dismissal is a possible outcome of the disciplinary process.
• The employee should be given an opportunity to be heard.
• The employee should be given the option of having a support person or lawyer present when the hearing takes place.
• Unless the conduct in question justifies summary dismissal, the employee must be warned and asked to stop the misconduct or improve the poor performance. In appropriate cases, the employee should be given assistance in this. An accepted procedure is to first given an oral warning, then a formal written warning, then a final written warning.
• The employee should be given the reasons for the decision that you eventually reach. It is advisable that these be given before any dismissal. However, the employee has the right, within 60 days after the dismissal or after becoming aware of it, to request you to provide a written statement of the reasons; you must then provide the statement within 14 days.
• A dismissal should be notified in writing.

An employee can be suspended on full pay pending the outcome of the disciplinary process.

Compliance with the employment contract

The employer must also ensure that any dismissal is carried out in compliance with any specific terms of the employment contract. For example, the contract might set out the warning procedure that must be followed or a definition of "serious misconduct".

Probationary employees

The NZ EMPLOYMENT RELATIONS ACT 2000 allows an employment agreement to provide that the employee will serve a period of probation or trial, in which case the agreement must state this is writing.

However, this does not mean that the employer does not have to follow the requirements of procedural fairness in dismissing the employee: the employer must still provide the proper warnings and provide the employee with assistance, training and opportunities to improve his or her performance, the same as with any other employee.

However, it may be that an employer will be permitted a wider discretion in the area of substantive reasons for the dismissal than is the case with permanent employees.

The New Zealand Employment website has additional articles Dismissal.
 

Other New Zealand Employment Law resources

• The New Zealand Government website Employment is an additional useful guide.
   
• The NZ Employment Relations Authority assists you further seek assistance in resolving employment related issues. It is an independent body.
   
• The NZ Employment Court allows you to challenge a decision made by the Employment Relations Authority.
   
• The NZ Human Rights Review Tribunal assists with issues of human rights and privacy at work.
   
• The NZ Employment Relations Authority has a database of previous cases for review.
   
• The NZ Government website Employment has a free tool for creating employment agreements - help yourself.

Cautionary notes

• It can be difficult for an employer to decide whether misconduct is serious enough to justify a summary dismissal or whether only a warning is justified. If a warning is given and the misconduct is repeated, an employer must still comply with the requirements of procedural fairness set out above before taking any further action.
• Every situation is different, and the way in which the guidelines given above should be applied can vary. It is therefore essential for an employer to obtain legal advice throughout the disciplinary process.