Reading time: 6 minutes

There are various reasons you may want to dismiss an employee. It could be due to poor performance, bullying and harassment or perhaps you no longer require that position of employment due to a restructure of the business. Notably, you must follow certain requirements and processes when dismissing an employee. If you do not follow the necessary processes, there is a risk that the employee may bring a personal grievance claim against you. This article explains the key factors you should consider when dismissing an employee.

What is a Personal Grievance Claim? 

If you do not have a good reason to dismiss or terminate your employee, then they may bring a personal grievance claim against your business. This is a type of complaint that workers can bring against a current or former employer relating to issues of:

The employee has 90 days from the date they become aware of the issues of their dismissal to bring a claim against you.

Reasons for Dismissal

There are various reasons why an employer may want to dismiss an employee, including:

If you dismiss the employee outside of their trial period, they will have the right to ask you for a written statement of the reasons for their dismissal. The employee must make this request within 60 days of finding out about their dismissal. You must provide the written statement within 14 days. If you fail to provide the statement, the employee may be entitled to make their personal grievance claim outside of the general 90 day limitation period.

Process Before Termination of Employment

If you want to dismiss an employee, you need to carefully think about the process of termination, including:

  • acting in good faith;
  • having a good reason;
  • following a fair and reasonable process;
  • having an open mind when dealing with problems so they ensure outcomes are not predetermined.

Good Reason

You must have a good reason for dismissal. A good reason means that:

  • you believe that there is a valid reason to begin the action or process; and
  • any decision that you make for a good and fair reason.

Examples of a good reason include:

  • misconduct, such as repeated breaches of clauses in the employment contract;
  • serious misconduct, such as theft or fraud, bullying and harassment or behaviour that endangers the health and safety of the employee or others;
  • poor performance which has not improved after delivering a Performance Improvement Plan that has been in place for a certain period of time; and
  • redundancy, where you no longer require someone to perform the employee’s job for a genuine work-related reason like a restructure of the business.

Fair Process

Fair process depends on: 

  • the circumstances surrounding the particular employee; and 
  • whether you followed relevant provisions in the employment agreement and your workplace policies. 

This means that you are required by law to follow a process whereby you:

  • investigate the matter relating to the employee;
  • raise your concerns with the employee in a meeting;
  • allow the employee to respond to your concerns; and
  • genuinely consider the employee’s response.

For example, if you are making an employee redundant, you must review all other options prior to dismissal. This includes: 

  • considering redeployment in another location or segment of the business;
  • asking the employee if there is any other position in the business that they fulfil; and 
  • considering what the employee has put forward.

Alternatively, if an employee has been performing poorly, you should put a performance plan in place with a reasonable period of time for the employee to improve. If the employee makes no development, you should discuss their progress with them and provide them an opportunity to respond.

Process of Employment Termination 

Notice Period

Once you have followed the processes for dismissing your employee, you need to ensure that you give sufficient notice. Indeed, your employment agreement will likely establish a period of time for which you need to give your employee warning of termination. If your agreement does not specify any notice period, you must provide ‘reasonable notice’ which depends on:

  • the employee’s length of service,
  • type of job, 
  • how long it might take to replace the employee; and
  • common practice in the workplace.

Depending on the role, two-to-four weeks’ notice will generally be sufficient.

Entitlements

Upon dismissal, your employee has the right to receive any outstanding entitlements, such as: 

  • wages;
  • payment in lieu of notice (if relevant); and 
  • accrued but untaken annual leave.

Key Takeaways

There may be circumstances in which you need to dismiss an employee due to: 

  • a business restructure;
  • the employee’s performance; or
  • misconduct of an employee.

When dismissing an employee, it is essential to follow a clear process prior to dismissal. You must:

  • act in good faith;
  • have a good reason for the dismissal;
  • follow a fair and reasonable process;
  • be transparent in your decision making, by ensuring that outcomes are not predetermined. 

If you need legal advice on your plan to terminate an employee, contact LegalVision’s New Zealand employment lawyers on 0800 005 570 or complete the form on this page.

FAQs

What is a Fair Reason for Dismissing an Employee?

You can terminate an employee if they engage in serious misconduct or repeated misconduct. Further, poor performance, issues during a trial, redundancy and incompatibility will also be good reasons for a dismissal.

What is a Fair Process to Dismiss an Employee?

Fair process refers to the circumstances surrounding your employee’s dismissal. For the process to be fair, you must investigate the issue, raise your concerns with the employee, give them the opportunity to respond to the concerns and genuinely consider the employee’s response.

What is a Personal Grievance Claim?

If your employee believes that you dismissed them unfairly, they may bring a personal grievance claim against your business. This may relate to unjustifiable dismissal, discrimination, harassment or any other action that unfairly disadvantages the employee.

Do I Need to Give My Employee Notice Before Dismissing Them?

Yes, you will generally need to warn your employee that you intend to dismiss them by giving sufficient notice. Your employment agreement will set out this period of time. However, you may be able to provide payment in lieu of notice if you want to terminate your employee immediately. 

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer