Dismissal and redundancy in New Zealand — employer obligations

Both substantive and procedural justification required

A dismissal is only justified if it passes both parts of the test:

• Substantive justification: there was a genuine reason for dismissal — misconduct, poor performance, incapacity, or genuine redundancy
• Procedural justification: the employer followed a fair process — raised the issue, gave the employee a chance to respond, genuinely considered the response

Failing either part can result in the Employment Relations Authority finding the dismissal unjustified.

The fair process for misconduct dismissal

1. Investigate the alleged misconduct — gather evidence before making any decision
2. Notify the employee in writing of the allegation and the proposed action
3. Give the employee a reasonable opportunity to respond — typically 48–72 hours notice of a meeting
4. Advise the employee they can bring a support person to any meeting
5. Hold the meeting — listen genuinely to the employee's response
6. Consider the response with an open mind before deciding
7. Communicate the decision in writing with reasons

Gross misconduct (theft, assault, serious dishonesty) may justify summary dismissal — but you still need to follow the process above before dismissing.

Manage performance before dismissing

Dismissing someone for poor performance without prior warnings and a genuine opportunity to improve is almost always unjustified. Before dismissal for performance:

• Raise the performance concern clearly in writing
• Set clear, measurable expectations
• Provide support and training
• Allow a reasonable improvement period with regular feedback
• If performance still doesn't improve, follow the same procedural steps as for misconduct

Genuine redundancy — process still required

A redundancy is a genuine restructuring where the role is no longer required. It is not a mechanism to dismiss a problem employee. For redundancy to be justified:

• The business reason must be genuine — financial pressure, restructuring, technology change
• The selection for redundancy must be fair — not targeting specific individuals
• You must consult with affected employees before making the final decision
• Consider whether alternative roles exist
• Give the required notice period

There is no statutory redundancy payment in NZ — employees are entitled only to notice (or pay in lieu) unless the employment agreement provides for redundancy compensation.

Notice must be as specified in the employment agreement. The minimum under the Act is whatever notice the employee must give — it must be equal or greater. Most agreements specify 2–4 weeks. Summary dismissal for serious misconduct may allow immediate dismissal without notice — but only if justified.