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Terminating Employment

11 February 2020

An employee is entitled to resign from their job at any time and for any reason; the only obligation being to give the notice required under their employment agreement.

An employer, however, cannot terminate a worker’s employment by giving unilateral notice without cause. Under New Zealand law, principally governed by the Employment Relations Act 2000, an employer requires a lawful reason to terminate a worker’s employment. And, the employer must also follow a fair and reasonable process before making the final decision to dismiss an employee. If a dismissal is unjustified or the process was not fair, then an employee can bring a personal grievance claim seeking various remedies; including reinstatement, compensation for lost income, and damages for humiliation, loss of dignity, or injury to feelings. This can be an expensive outcome for an employer.

When an employer considers it may be appropriate or necessary to dismiss an employee, the employer should take certain steps to act in an acceptable manner and to minimise its exposure to subsequent claims.

Employers do not have to have the process perfect. Minor errors may not make the whole process unfair. What is fair depends on the circumstances. Any relevant provisions in the employment agreement and workplace policies or processes must be followed. Where there is no clear written guidance, the test will be: ”what could a fair and reasonable employer have done in the circumstances?”. For example, if an employment agreement does not have a notice period, then reasonable notice must be given.

Examples of processes, which may end with a good reason for dismissal, include:

  • disciplinary process for misconduct or breach of terms of employment
  • managing employee performance issues
  • workplace change process leading to redundancies; and
  • bullying, harassment, and discrimination.

As a starting point, an employer must raise with the employee the issue that may lead to dismissal as soon as possible and must allow the employee a fair opportunity to respond and to provide any explanation. The employer should then consider both the facts and the response and any other relevant information before making any decision as to whether the employee is to be dismissed. After which, the employer should notify the employee of its preliminary decision and allow the employee time to comment on that decision. At all times, the employer should treat the employee with respect and consideration and allow the employee to seek support or legal advice.

An employee, usually, is required to raise any personal grievance within 90 days of the event giving rise to the grievance. If an employee is dismissed, they have the right to ask the employer for a written statement outlining the reasons for dismissal. This request can be made up to 60 days after they find out about the dismissal. The employer must provide the written statement within 14 days of such a request. If the employer fails to provide this written statement, the employee may consequently be able to raise a personal grievance after the required 90-day limitation period.

If you would like to discuss any aspect of termination of an employment agreement, whether as an employer or employee, we would be pleased to hear from you and provide assistance. Do not hesitate to contact Brett Vautier.