Fair process for dismissal in New Zealand: the steps you can’t skip
Most employers who end up in front of the Employment Relations Authority (ERA) did not lose on the facts. They lost on the process. An employer can have every reason in the world to end someone’s employment and still be found to have acted unfairly, because in New Zealand a fair reason does not rescue a defective process, and likewise a perfect process does not cure a groundless reason. Both halves must stand on their own.
What a fair process looks like
New Zealand employment law is built on the duty of good faith, and that duty runs in both directions from the moment a job is advertised, not just from the point a dismissal is contemplated. In practice it means whichever party is raising an allegation, whether that’s the employer or the employee, it must give the other side a proper opportunity to see the claim, review the evidence behind it, and take independent advice before responding. Nobody should be blindsided in a meeting by an allegation they are hearing for the first time.
Substantive and procedural justification
Every dismissal, and every disciplinary process, needs to satisfy two separate tests: substantive justification and procedural justification. Meeting one without the other is not enough, and an employer cannot pick whichever suits them best.
Substantive justification is the evidence behind the reason. Saying an employee’s timekeeping is ’disrupting the business‘ is not enough on its own; the employer needs to be able to point to what that disruption looked like in practice, and why the standard being applied was reasonable in the first place.
Procedural justification is about the steps taken to get there:
Have you had an informal conversation with the employee about their behaviour before inviting them to a formal meeting?
Has that invitation set out the allegations and the evidence being relied on?
Has the employee been given enough time, rather than, say, a Friday evening email inviting them to a Monday morning meeting? (New Zealand has no rule against sending correspondence on a weekend, but an employer still must account for the recipient’s working days when deciding how much notice is fair.)
Are the actions taken by the employer, what a fair and reasonable employer would take?
The size of the business is not an excuse
Small employers sometimes assume limited resources justify a shortcut. It doesn’t. An employer acting as complainant, investigator and decision maker, all at once, has a built-in conflict. Regardless of size, small employers should bring in an independent HR consultant or investigator rather than run a process taking on all three roles alone.
How many warnings does an employer needs to give
There is no fixed sequence in New Zealand, no automatic first, second and third warning system. What gets issued, and how serious it is, depends entirely on the conduct and what is outlined in the employment agreement.
A minor, expectation-related issue, for example arriving inconsistently late for a 9am start, might only warrant a letter of expectation. Repeated behaviour after that conversation can escalate to a formal warning and continued or more serious misconduct can escalate again to a final warning or termination of employment.
What employers frequently overlook is that a warning should have a shelf life. If it isn’t clear how long a warning stays live, it can’t fairly be relied on years later. A verbal warning, despite the name, still needs to be put in writing and shared with the employee afterwards, or it carries little weight if challenged.
Can you dismiss for poor performance without any warning?
No, and an employer shouldn’t try. Before an investigation or disciplinary meeting is even called, the employer needs to be able to show they gave the employee a fair chance to improve: clear expectations, adequate training, feedback on where performance fell short, and reasonable time to lift it. That’s the substance of a performance improvement plan (PIP). Only once that process has been followed, and performance still hasn’t improved, does moving to a formal disciplinary process become an option.
The same logic applies even where the conduct looks serious on its face. Visible misconduct doesn’t remove the obligation to investigate before deciding on an outcome. The employer can suspend the employee, paid or unpaid, while that investigation runs, but summary dismissal without any process still exposes the business to a personal grievance for unjustified dismissal or unjustified disadvantage.
The step most employers miss
Between the investigation and the final decision sits a preliminary outcome stage that catches a lot of employers out. Once the evidence has been reviewed, the employer needs to share their preliminary view, including where that view is that the conduct meets the threshold for summary dismissal, and give the employee a further three to five working days to respond before anything is finalised. The outcome letter should also set out what avenues remain open to the employee if they disagree. Skipping this step, or rushing it, is one of the more common ways an otherwise well-founded dismissal gets successfully challenged.
None of these steps individually take very long. Together, they are what separates a decision that holds up from one that turns into a costly personal grievance. If you are about to start a disciplinary process, or you’re not sure whether one you’ve already started would stand up to scrutiny, we are happy to look at it with you before the outcome letter goes out rather than after. Our initial conversation is always free.