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Under New Zealand law, serious misconduct is where an employee commits an act or makes a mistake that is so serious that it has the effect of destroying or undermining the relationship of trust and confidence between your business and the employee. The bar for serious misconduct is quite high. Further, it can be a tough issue to manage from the perspective of an employer. You need to balance your good faith duty with the need to resolve the issues raised by the employee’s behaviour. This article will set out three tips for managing serious misconduct: 

  • having a fair process; 
  • dealing with misconduct that occurs outside of work; and 
  • looking at summary dismissal as a final option.

Ensuring Your Business’ Process Is Fair and Reasonable

It can be extremely easy to forget your good faith obligations as an employer when an employee commits an act or makes a mistake that is so severe that it qualifies as serious misconduct. However, no matter how serious the employee’s bad behaviour is, they still have certain rights under employment law. Additionally, your business has certain obligations to run a fair and reasonable process in meeting the challenge of their misconduct.

If your business does not run a fair and reasonable process, the risk is that an employee raises a personal grievance. This could either be for: 

  • unjustified dismissal if they are dismissed; or 
  • disadvantage if they are not treated fairly in their view. 

These claims can be successful even if the employee has behaved badly or made a serious error. 

This means your business must ensure that it gives the employee a fair chance following the misconduct. You should fully investigate the allegations of serious misconduct and any events leading up or following it. You should also tell the employee exactly what the alleged allegations of misconduct, or issues, are. 

In order to fairly defend themselves against the allegations, employees must be told what they are accused of and provided with the relevant supporting information. You should also tell them in a meeting that disciplinary action is a possibility. The employee must have a reasonable opportunity to:

  • get advice from a lawyer or support person; and
  • explain their behaviour in a further meeting (with a lawyer or support person present if preferred).

What to Do if the Serious Misconduct Occurs Outside of Work

If there are allegations of an employee committing serious misconduct outside of work, this can present issues for businesses. It could be outside the workplace physically or outside work hours. However, allegations of misconduct outside of work can still lead to disciplinary action or even dismissal if it is serious enough. 

The key test is still whether the misconduct committed by the employee damages the trust and confidence your business has in them. Even though the employee’s actions may have occurred outside of work, it can amount to serious misconduct if:

  • they bring your business into disrepute in some way; or
  • their conduct outside of work means it is not appropriate or acceptable for them to continue to do their job.

Considering Summary Dismissal 

Following a fair and reasonable process as described above, if an employee is found to have committed serious misconduct, you can consider whether summary dismissal is an appropriate disciplinary response. Summary dismissal (also known as immediate dismissal) is where you ask an employee to leave work straight away. In most cases, they do not receive payment for a notice period and their working relationship with your business ends. 

Note that your business will still have to pay any entitlements that the employee is owed, such as annual leave, and any outstanding pay. However, summary dismissal can be a useful mechanism to part ways with an employee that you genuinely do not trust to continue working in the business. 

Key Takeaways

Serious misconduct can be difficult for employers to manage. In terms of things to bear in mind throughout the process, the need for a fair and reasonable process is paramount. No matter how bad the employee may have behaved, they still have rights under employment law, and your business is obliged to run a fair process. This involves giving the employee the relevant information and hearing their perspective and any defence or explanation they may have. Misconduct outside of work can still qualify as serious misconduct, even if it is not in the workplace. When this kind of serious misconduct occurs, summary dismissal is a valid option to end an employment relationship immediately. If you want to know more about managing serious misconduct, contact LegalVision’s employment lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

What is serious misconduct?

It is where an employee commits an act or makes a mistake that is so serious that it has the effect of destroying or undermining the relationship of trust and confidence between an employee and employer.

What is the difference between misconduct and serious misconduct?

Not all misconduct is so serious as to undermine the fundamental relationship between an employee and employer. If an employee makes a mistake or does something wrong in some way, this may just be regular misconduct. An employer is justified in responding in a proportionate way. 

What is serious misconduct?

Summary dismissal is when an employee is immediately dismissed without serving their notice period.

Can an employer summarily dismiss an employee for serious misconduct?

Yes, summary dismissal is an option in instances of serious misconduct. The employer must follow a fair process, and the employee must have committed an act or display or behaviour so serious as to destroy the trust and confidence their employer has in them.

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