Employee termination
in New Zealand.

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Valid reasons to terminate employment in New Zealand

Provided they have adhered to a fair dismissal process, employers can terminate an employment agreement for a variety of reasons.

Misconduct (serious or repeated)
Performance issues
Incompatibility
Incapacity
Redundancy

Employers can also terminate an employment agreement at any time during a trial period.

Unfair reasons to terminate employment in New Zealand

Following a fair dismissal process means that employers must adhere to the employment agreement and provide justification for dismissal.

For example, grounds for dismissal should be covered in the employment agreement. A fair process might involve warning employees when they breach business policies and reviewing employee performance at regular intervals and highlighting where and how improvements might be achieved.

If an employer decides that dismissal is the best course of action, they should provide justification to the employee. Employees who have been dismissed have the right to ask their ex-employer for a written statement of the reasons for dismissal. Failure to provide a written statement may result in the employee initiating a grievance.

Dismissal procedure in New Zealand

The dismissal procedure involves providing the employee with written notice and the justification for the dismissal.

The specifics of the dismissal procedure will vary, depending on company policies and the nature of the dismissal. For example, where an employee is being dismissed for serious misconduct, an employer may be able to dismiss an employee without providing notice or providing payment of notice.

Resignation procedure in New Zealand

An employee can ensign at any time, including during the probationary period. The resignation process begins with the employee informing the employer of their intentions and providing written notice.

It’s then up to the employer to:

Confirm the notice period clause in the employment agreement
- At this point, employers should confirm the notice period and decide if the employee needs to work the full notice period – remember an agreement can be reached in regards to working the full notice period.
Accept the employee’s resignation request
- This is not a formal requirement, it simply involves confirming that the employee intends to resign and then acknowledging their confirmation.
Calculate the employee’s final pay
- This will depend on when the employee triggered the resignation procedure based on when they gave notice.
Collect any company property in the possession of the employee
- The handover process might involve creating a list of tasks or projects the employee was responsible for and collecting any company property.

An employee may choose to withdraw their resignation. In such cases, it is up to the employer whether or not they accept the withdrawal.

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FAQs

Is it difficult to terminate employment in New Zealand?

No, provided employers have proper processes in place and build a fair case for justified dismissal it is not difficult to terminate an employment agreement in New Zealand.

What are the risks of terminating employment in New Zealand, and how do I mitigate them?

The primary risk is that an ex-employee files a grievance claim with the Employment Relations Authority. Employees who are not on a trial period and think they’ve been treated in an unreasonable way can choose to lodge a personal grievance claim directly with the ERA within 90 days of receiving notice.

What is a fair process when terminating an employment agreement in New Zealand?

Employers in New Zealand must follow a fair process before taking any action against an employee. Fair process, which is also referred to as procedural fairness in New Zealand, involves following the requirements of the Employment Relations Act (2000). Before terminating any employment agreement, employers should first raise their concerns with the employee in question. The employer should be clear in explaining exactly what the problem is and also inform the employee that disciplinary action is a possibility. Employee’s should also be given a reasonable opportunity to tell their side of the story

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