Every year, the Employment Relations Authority (ERA) handles and deals with resolving workplace issues between employers and employees. Some of these cases revolve around unjustifiable dismissal.
Employees can claim unjustified dismissal if they have been fired or made redundant in an improperly handled manner and process. An employee may claim their dismissal was unjustifiable if they can show they were dismissed and they believe that:
- the employer did not have a fair reason to dismiss them, and/or
- the process was unfair
A dismissal must be for a good reason and should be in accordance with a fair process. Failing this, an employee may have a personal grievance claim.
Understanding how unjustified dismissal works in New Zealand helps employers avoid personal grievance claims and ensure every dismissal follows a fair and reasonable process.
What is a Personal Grievance?
A personal grievance is a type of formal complaint that an employee can raise against their current or former employer. Employees can bring a personal grievance for several reasons including unjustified dismissal, discrimination, harassment (racial/sexual) or unfair treatment.
The employee must present that grievance within 90 days of the event giving rise to the grievance (or within 12 months if the matter relates to sexual harassment).
In all cases, the parties should first seek to resolve the matter themselves or through voluntary mediation. If this proves unsuccessful, then the claim can be referred to the ERA for a binding determination.
Constructive Dismissal
Constructive dismissal is a type of unjustified dismissal. It occurs when an employer’s actions, behaviour, or pressure make the working environment so difficult that the employee feels forced to resign. If the ERA finds the employer’s conduct caused the resignation, the dismissal may be treated as unjustified.
Steps an employee may take after dismissal
If an employee believes they have been unjustifiably dismissed, they may take the following steps:
- Request written reasons for the dismissal (within 60 days).
- Raise a personal grievance in writing within 90 days.
- Attempt mediation through MBIE’s free service.
- Apply to the Employment Relations Authority if mediation is unsuccessful.
Remedies for unjustified dismissal
If the ERA finds a dismissal was unjustified, remedies may include:
- Reinstatement (returning the employee to their role).
- Lost wages reimbursement.
- Compensation for humiliation, loss of dignity, or injury to feelings.
- Penalties or compliance orders against the employer.
What makes a dismissal unjustified?
A dismissal may be unjustified if there is no genuine reason, the process was unfair, or the employer failed to act in good faith. Both the reason and the process must meet the standard of what a fair and reasonable employer would do in the circumstances.
Who is excluded from Raising a Personal Grievance for Unjustified Dismissal?
90-day Trial Period - Valid 90 day trial periods that comply with the Employment Relations Act 2000, enable an employer to dismiss the employee up to 90 days into the employment relationship and the employee is not permitted to raise a personal grievance for unjustified dismissal.
Remuneration Threshold – With effect from 21 February 2025, employees earning $200,000 per annum would not be able to raise an unjustified dismissal claim, unless they have negotiated to opt back into this protection in writing with the employer. (Any Employees on existing employment agreements who meet the threshold will have up to 12-months from 21 February 2026 to re-negotiate their agreements to opt back in).
These employees can, however, still raise a personal grievance for unjustified disadvantage or discrimination
What is a Fair Process?
What amounts to a fair process, depends on the particular situation in question. Any relevant provisions in your employment agreement and workplace policies or processes must be followed. Any process should be in accordance with what could a fair and reasonable employer have done in the circumstances.
In addition to having a fair reason for a dismissal, an employer is required to follow a fair process in terms of which they must comply with the following before proceeding with a dismissal:
- the employer must raise their concerns with the employee,
- allow the employee a reasonable opportunity to respond; and
- the employer must genuinely consider the employee’s responses before making a final decision.
At all times the employer should act in good faith and have an open mind when dealing with problems so that outcomes are not pre-determined.
Examples of a fair process would include:
- Performance management process
- Disciplinary process
- Consultation process
- Welfare process
What is a Fair Reason for Dismissal?
There are various reasons that may justify a dismissal:
- Performance issues – unsatisfactory performance of the employee, which is outlined clearly to the employee with a reasonable opportunity for them to meet the required performance standard.
- Serious misconduct – where the conduct of the employee has the effect of destroying or undermining the relationship of trust between the employee and the employer
- Repeated misconduct – where dismissal is justified due to an escalation of warnings for the same misconduct
- Redundancy – disestablishment of a role due to genuine business reasons. This can occur in situations such as a change in focus, sale of a business or due to financial constraints.
- Capabilities issues - If the employee has an illness or health issue that is keeping them from performing their job and the employer has considered all other alternatives, then dismissal may be justified.
If you dismiss an employee, then they have the right to ask for a written statement outlining reasons for dismissal.
Request for a Written Statement of Reasons for Dismissal?
A request can be made by the employee for a written statement of the reasons for dismissal. This request can be made up to 60 days after they have been notified of the dismissal. Employers must provide this written statement within 14 days of such request. Failure to provide a written statement may result in the employee raising a grievance based on certain situations.
What Are Some of the Common Mistakes Made by Employers When Carrying Out a Disciplinary or Dismissal Process?
- Conducting interviews or collecting feedback in an unfair manner, that may be biased or inaccurate.
- Making decisions based on feelings and opinions rather than facts.
- Not reaching out to all relevant people or excluding some people on purpose.
- Waiting too long after an incident to interview employees, so their recollection may not be fresh.
- Treating an employee differently compared to others who have acted the same.
- Not explaining the process or the reason for the process to the employee.
- Not giving an appropriate amount of time to the employee to get advice and prepare a response.
- Not considering employee explanations of their behaviour/incident.
- Coming to the disciplinary meeting with a predetermined decision and letter.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.