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Top 10 Things Employers Need To Know About Termination

Published April 13, 2021 (last updated May 5, 2021) -
employer who knows how to end employment.

1. Follow the Act

Termination is tough, and tricky. To act in accordance with the Employment Relations Act 2000 employers who want to dismiss an employee have to:

  • act in good faith
  • have a good reason
  • follow a fair and reasonable process
  • make sure the outcome is not pre-determined

If the employer doesn’t, the employee may have grounds for a personal grievance against their employer for unjustified dismissal.

2. Act In Good Faith

This means that:

  • Neither the employee nor the employer should mislead or deceive each other;
  • Both the employer and the employees should communicate and respond appropriately to one another in a timely manner; and
  • An employer should consult with the employee before making any decisions that may affect their employment and allow them an opportunity to respond.

3. Have A Good Reason

An employer should only dismiss an employee on reasonable grounds after a fair process. The following are reasons why an employer may dismiss an employee:

  • Serious or repeated misconduct – Behaviour which falls outside workplace standards and/or poses a risk to employee safety, or undermines the trust and confidence essential to the employment relationship;
  • Performance issues – The employee is unable to meet performance standards, and they’ve been given a reasonable opportunity to improve their conduct prior to the employment relationship being terminated;
  • During a trial period – the employer does not need to provide a reason for a trial period termination in writing, but the employee can still raise a claim if they believe the decision was based on discrimination. It is best if the employer has an objective reason for ending the employment, such as performance or misconduct;
  • Redundancy – The job performed by the employee is no longer necessary for the business or technological advancements have made the role redundant;
  • Incapacity – Employee is unable to perform the duties required of their role due to medical reasons such as an illness or injury, and all reasonable alternatives to dismissal have been considered.

4. Follow A Fair Process

A fair process allows the employee to respond to any concerns raised by the employer, where the employer takes any explanation into account before deciding an outcome. What process is required will depend on the issue, for example a trial period termination will be different to ending employment for medical incapacity.  However, even in cases of serious misconduct, a fair process should be followed (although note some of these will not apply to a trial period termination):

  • Investigate the allegation thoroughly;
  • Raise the issues with the employee in writing and advise them of the possible consequences;
  • Allow the employee time to consider the allegations and to seek advice or representation;
  • Give the employee an opportunity to respond to the allegations and provide a reason or an explanation;
  • Consider the employee’s responses with an open mind;
  • Decide on the appropriate outcome.

5. Put it in Writing

The employer should put the reasons for the dismissal in writing unless terminating employment under a trial period. If they don’t, the employee can ask for a written statement of the reasons for dismissal and the employer has to provide one within 14 days of the employee requesting a reason, provided the employee requests one within 60 days of becoming aware of the dismissal. BrightHR allows you to store employee profiles and key documents such as contracts and handbooks securely in the cloud and determine employee access. You can upload updated documents and set reminders and notifications of key dates, and get read receipts once your employees have accessed the document in question.

6. Check the Notice Period

An employer should give an employee appropriate notice of the last day of their employment as specified in the employment agreement unless they are dismissing for serious misconduct.

But if there is no notice specified then the notice period must be fair and reasonable, depending on how long the employee has been in the business, the job they do and how long it may take to hire a replacement.

7. Dismissal Without Notice – Serious Misconduct

An employee may be summarily dismissed if, after a fair investigation and disciplinary process, they are found guilty of serious misconduct. This is conduct that destroys or significantly undermines the relationship of trust and confidence between employer and employee.

In cases of serious misconduct, an employer may be able to dismiss a worker without giving notice or paying out the notice period.

8. Redundancy

A genuine redundancy is when the employer no longer needs a certain job to be performed by anyone. The employer must consult with the employee and make sure there are no other jobs within the business that the employee could reasonably do before making an employee redundant.

9. Final Pay

An employer should pay an employee any outstanding pay for hours worked since their last pay, unused holiday pay and any other additional entitlements due to the employee as per the employment agreement or as part of their termination package, on their last day of work. BrightHR can help you manage and keep track of employee rosters, timesheets, annual holidays, sick leave and absenteeism.

BrightHR helping you manage your people and business

BrightHR can help you keep track of your employees’ leave entitlements by monitoring absences and shifts schedules, as well as working hours as they clock in and out with Blip. You can generate timesheet reports and store wage and time records securely in the cloud.

10. Record Keeping

An employer must keep records for each employee that contain their personal details, their employment agreement, the job they do, the hours they work and details of their pay and annual holiday and sick leave entitlements. You must keep wage and time, and holidays and leave records for the preceding six years, even if the employee is no longer with the business. You can store employee profiles, wage and time records and related documents securely in the cloud with BrightHR.

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About Employsure

Employsure is one of New Zealand’s largest workplace relations advisers to small- and medium-businesses, with over 5,000 clients. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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