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6 min read - September 22, 2022

Dismissing an Employee: 4 Key Considerations

The dismissal process can be stressful for everyone involved including both the employer and the employee. While there are often many emotions at play, it is important for both parties to not lose sight of their legal obligations under their employment agreement and the Employment Relations Act 2000.

This article will cover four key considerations both parties should keep in mind during the dismissal process.

1. What type of employee is being dismissed?

Permanent Employees

Permanent employees are employees who do not have a specified end-date in their employment agreement. Permanent employees can be both full-time (e.g., working 9am-5pm, 5 days per week) or part-time.

Permanent employees are afforded the most legal rights under the Employment Relations Act 2000, as they should be able to expect to retain their employment unless they resign or breach their employment agreement. As such, employers will need to be especially mindful of their legal obligations if they want to dismiss a permanent employee.

Fixed-Term or Seasonal Employees

Fixed-term employment will end on a specific date or event and are used in situations where an employee is needed to fill-in on a temporary basis – such as to cover an employee who has gone on maternity leave, or if additional staff is needed to complete a big project.

Seasonal employment works in a similar way but is usually tied to a specific period of the year (e.g., the autumn season for fruit-pickers) and may renew at the same period the following year.

In both cases, the employment relationship will end at the date specified in the employment agreement, but if an employer wishes to dismiss an employee before this date, they will need to follow the same process as dismissing a permanent employee.

Casual Employees

Casual employment is where an employee does not have a regular pattern of work and are not expected to accept work offered to them. For example, security and catering staff for events are often employed on a casual basis due to the unpredictability of work availability.

The nature of casual employment means that a new employment relationship begins when new work is offered and accepted and ends when there is no new work offered. Therefore, if an employer wants to dismiss a casual employee, they can simply not offer the employee any further shifts.

However, if an employer wants to dismiss a casual employee part-way through an agreed period of work, they will need to follow the same process as dismissing a permanent employee.

2. Is there a trial period?

Many employment agreements will contain a trial period clause, which must be agreed in writing in the employment agreement before the employee begins their first day of work.

If a trial period is valid, an employer can rely on it to dismiss the employee by just giving the required notice period, without needing to go through the usual procedural requirements or justify it with reasons. The employee is also barred from being able to raise a personal grievance for unjustified dismissal.

However, it is important to keep in mind that trial periods can only be used if an employer has 19 or fewer employees, and the trial period is no longer than 90 calendar days.

3. What is the dismissal for?

Serious Misconduct

Serious misconduct is any misconduct that undermines or destroys the trust and confidence an employer has placed in an employee. Examples of serious misconduct include an employee stealing an employer’s money, engaging in violent conduct, or using illegal drugs at work.

A fair investigation of the alleged misconduct must take place where the employee is given a reasonable opportunity to respond to the allegations. It is important that the employer does not reach any conclusions prior to an investigation being conducted.

If an employer decides that misconduct reaches the threshold of seriousness, they may be able to dismiss the employer summarily. This means that they do not need to provide the employee with a warning or a notice period.

Repeated Misconduct

Repeated misconduct covers less serious misconduct that does not reach the level of seriousness required to justify a summary dismissal. This could include the use of inappropriate language at work, not following instructions, or continued lateness.

This level of misconduct usually requires the employer provide the employee with at least two formal warnings and a genuine opportunity for the employee to correct their behaviour before being able to move to a dismissal.

Performance Issues

Performance issues are where an employee is failing to meet the requirements of their job.

Employers should first attempt to engage with the employee informally, such as having a meeting to try and find out if there are underlying issues (such as problems at home or issues with a colleague) and to try and see what support could be provided to improve performance.

If informal interventions are unsuccessful, the employer will then want to consider formal steps, such as giving the employee a formal warning and a performance improvement plan (PIP). PIPs should set specific targets for the employees to meet and timeframes to meet them by, and the employer should provide ongoing feedback and support.

If the employee’s performance does not improve following the PIP, the employer may be able to justify a dismissal for poor performance.

4. Good faith

The key term that both employers and employees want to keep in mind through any dismissal process is the legal concept of “good faith”, which is implied into every employment agreement under the Employment Relations Act 2000.

Good faith requires both parties to treat each other honestly, openly and to work constructively together. In the context of a dismissal, this would require employers to provide employees with all the information they are relying on for a dismissal (e.g., witness statements, CCTV footage, etc.) and to genuinely consider the employee’s response to allegations put to them. On the other hand, employees should be as transparent and co-operative through the whole process to allow the employer to make an informed decision.

As mentioned, this advice only provides a brief snapshot into the obligations that both parties owe each other during the dismissal process. We strongly recommend that employers consult with a lawyer prior to taking any steps leading up to a dismissal, and that employees who feel their dismissal was unjustified obtain legal advice to review whether there are any reasonable grounds to raise a personal grievance.

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