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Dismissal or termination

Having to dismiss an employee isn't fun — but sometimes it's the only option.

Following the right process can ease the stress of the situation, and help to ensure that you don't end up with a personal grievance case.

Checklist

Use the following task lists and checklist to help you avoid common pitfalls. These will also provide a record of what's happened.

Managing misconduct steps and timeframes - task list [PDF, 108 KB]

Performance management plan - checklist [DOCX, 54 KB]

Performance management plan and timeframes - task list [DOCX, 175 KB]

Reasons for dismissal

There are many reasons you may need to dismiss an employee. Whatever the reason, make sure you follow a proper, fair process.

Misconduct

Misconduct can include things like:

  • ongoing poor performance (despite repeated attempts by you to help them improve)
  • minor breaches of employment agreement clauses, e.g. inappropriate clothing
  • unsafe behaviour
  • confidentiality breaches.

If you've followed the right process  for managing misconduct, and given your employee a fair opportunity to improve their behavior, ongoing misconduct can lead to dismissal. You’ll need to give them the amount of notice stated in the dismissal clause in their employment agreement.

Read managing misconduct and handling poor performance for more information.

Serious misconduct

Some misconduct is so serious that it may warrant immediate dismissal. This could include:

  • behaviour that endangers the health and safety of the employee or others
  • violence in the workplace
  • bullying and harassment
  • theft or fraud
  • serious breaches of employment agreement clauses.

Whatever the behaviour, you need to follow a full, investigative process before you dismiss someone. If your investigation finds that your employee’s actions amount to serious misconduct — that you no longer have the trust or confidence that they can do the job — you can terminate their employment agreement without notice.

Suspension

Generally, you can’t suspend an employee unless there’s a suspension clause in the employment agreement. In very serious cases, you may be able to suspend someone while you investigate the misconduct, e.g. to protect your accounts from possible interference after an alleged theft, or to protect the victim in the case of an alleged sexual assault.

Before suspending them, you must discuss the proposed suspension, and the reasons for it, with the employee and consider their comments with an open mind.

Misconduct and serious misconduct (external link) — Ministry for Business, Innovation and Employment (MBIE)

Find out what you know about hiring and managing people.

Before you dismiss an employee

When you're considering dismissing someone, you need to be sure it's the only acceptable option. When you're making your decision, consider things like:

  • whether there are any alternatives to dismissal, e.g. a final written warning
  • if there are any mitigating factors
  • were the company rules clear?
  • did you contribute to the issue in any way?
  • have you warned them over this or a similar issue before? How long ago?
  • how long they've worked for you.

If you’re at all unsure on how to act, consider whether another reasonable employer would consider dismissal as an option due to the seriousness of the misconduct.

Dismissing an employee — the step-by-step process

You can only consider dismissal if:

  • your employee’s performance has not improved despite repeated attempts with a performance management plan, and you have warned them that dismissal was a potential outcome
  • you’ve formally warned your employee about misconduct, but their behaviour hasn’t improved and you have now lost trust and confidence that the employee can continue in the role
  • you believe the employee’s single act of misconduct is so serious that you have lost the trust and confidence in them to do the job.

Step 1. Investigate the matter 

If an employee has engaged in serious misconduct, you may need to investigate and gather witness statements regarding what has occurred. You should get written statements from witnesses, with details like:

  • the date of the incident 
  • what time it happened
  • a description of the alleged behaviour.

Tell the witnesses that you'll be disclosing their allegation to the employee you're investigating. If you witnessed it yourself, document your own statement of the event, and get statements from other witnesses if possible.

If the employee has engaged in previous misconduct, or has been through a performance management plan, gather the previous warnings on their file. Refer to these warnings in Step 3.

Step 2. Check documentation

Check relevant company policies and your employee's employment agreement for clauses outlining what is considered to be serious misconduct, so that if the allegations are proved, you can confirm, that they breached your rules.

Step 3. Provide written findings

Set out the details in a letter. The letter should include:

  • details of the allegations (including any witness statements)
  • details of any previous misconduct (include any written warnings, final written warnings, the reasons they were given and the date)
  • excerpts of the relevant clauses in the employment agreement or company policies that may have been breached if the allegations are made out
  • a date on which you want to meet with the employee to discuss the allegations (let them know they can bring a support person or representation
  • the consequences of what may happen if the allegations are upheld (specifically, that you’re considering dismissal).

Step 4. Meet with the employee

Meet with your employee on the date stated in your letter. You can both have a support person or representative there, if you want to.

Discuss:

  • the reason for the meeting
  • the allegations against the employee
  • the possible consequences if the allegations are confirmed.

Give your employee the chance to tell their side of the story. At the end of the meeting, let them know how long you'll take to consider the situation (normally a day or two), and when you'll inform them of the outcome.

Step 5. Make your decision and give written notice

Consider all the evidence and decide what the outcome will be. You may decide:

  • that a final warning is an acceptable consequence
  • to dismiss the employee.

When deciding how to deal with the behaviour, consider what an objective, reasonable employer would do in your situation. If you decide dismissal is appropriate, it’s good practice to give the employee another chance to respond in person to your decision.

Detail your findings in a letter to your employee, stating:

  • which clauses or policies have been breached
  • why you decided on this outcome
  • the required notice period, and their last day of employment with you.

For cases of serious misconduct where you have lost the trust and confidence in them to do their job, you may be able to dismiss them without allowing them to work out the notice period — this is called summary dismissal.

Step 6. Complete the employee exit checklist

Complete the employee exit checklist to make sure you’ve done everything you need to do.

Common mistakes

To reduce the risk of a personal grievance, don’t fall into these common traps:

  • dismissing someone for misconduct that isn’t serious enough to warrant dismissal
  • not providing support or training during a performance management process
  • not giving the employee enough time to improve during a performance management process
  • using warnings that are not recent enough to demonstrate an employee’s ongoing misconduct
  • getting the process wrong — even if there's a good reason for dismissal, you need to complete all the steps, in the right order.

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