Ending an Employment Contract

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Termination of an employment contract can happen for a number of reasons such as resignation, dismissal, abandonment, or redundancy.

Regardless of why the employment relationship is ending, the correct procedure must be followed to ensure the process is fair and reasonable.


A dismissal is the termination of an employment relationship via a process which has been instigated by the employer.

Employers can only dismiss employees on reasonable grounds and must ensure they follow strict guidelines to avoid the risk of facing an unjustified dismissal claim. According to New Zealand employment law, an employee can be fairly dismissed based on the following grounds:

  • 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 – Unsatisfactory performance, serious misconduct or incapacity from the trial employee
  • Redundancy – The job performed by the employee is no longer necessary for the business or technological advancements have made the role redundant
  • Medical incapacity – Employee is unable to perform the duties required of their role due to medical reasons such as an illness or injury

When ending an employment relationship through dismissal, employers must give reasonable notice and a written statement explaining why the employee is being dismissed. However, in the case of serious or gross misconduct, an employer may dismiss the employee without any notice.


Resignation is when an employee ends the employment contract and relationship. An employee may resign at any time. However, they must give reasonable notice based on the conditions of their employment contract.

While not legally required, employees should submit their resignation in writing to clearly explain their reasons for leaving, as this helps to avoid misunderstandings.

When an employer receives a notice of resignation, they must:

  • Check the notice period to confirm the conditions of the notice period are being met
  • Accept the request for resignation and calculate their final pay
  • Collect any company property in the employee’s possession

Unintended Resignations

When it comes to disputes or arguments, employees might say or do something which signals their intention to resign. However, this could be a response to a heated moment and should be assessed before jumping to conclusions.

For employees, if they do not wish to terminate the contract, they should correct any misunderstandings as soon as possible. Employers should allow for a cooling-off period of at least 24 hours, then arrange a meeting with the employee to discuss their intentions. This will give the employee time to reflect on their actions and either choose to resign or amend the situation.


Whether due to technological advancements or changes in the business, some jobs may no longer be vital to the success of the business. In these cases, employers must make a reasonable effort to provide alternative options for redeployment.

However, if all avenues have been exhausted and are unsuccessful, an employer may have reasonable grounds to make the person redundant.

Following this decision, employers should meet with the employee to discuss and offer various kinds of support:

  • Payment of redundancy compensation (if required by the employment agreement)
  • Date of when the job will be discontinued
  • Counselling support
  • Assistance with resume writing, interview skills training, career advice, and other training to improve their chances of future employment

Employsure advisers can help you with ending an employment relationship legally. For peace of mind, please call our advice line now on 0800 568 012 for specialist advice.

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