Why Is a Fair and Reasonable Process Important when Dealing with Employee Issues?

Managing employee issues is one of the most challenging parts of being an employer. Whether you are dealing with poor performance, misconduct, absenteeism, or workplace conflict, it can be tempting to jump straight to a solution.

However, in New Zealand employment law, it is not enough to simply make the right decision. Employers must also follow a fair and reasonable process before making decisions that could affect an employee's employment.

Many employers who find themselves facing a personal grievance have not necessarily made the wrong decision, they have simply failed to follow a fair process.

Understanding what a fair and reasonable process looks like can help protect your business, maintain positive workplace relationships, and reduce the risk of costly disputes.

What Does Fair and Reasonable Process Mean?

The concept of a fair and reasonable process comes from the Employment Relations Act 2000.

When considering whether an employer has acted fairly, the Employment Relations Authority (ERA) and Employment Court will often ask:

'What would a fair and reasonable employer have done in all the circumstances at the time?'

This means employers must:

• Act in good faith.

• Gather sufficient information.

• Keep an open mind.

• Allow employees an opportunity to respond.

• Consider employee feedback before making decisions.

• Make decisions based on facts rather than assumptions.

A fair process is not necessarily a perfect process. Employers are expected to act reasonably, not flawlessly.

When Is a Fair and Reasonable Process Required?

Many employers assume formal processes only apply when dismissing someone. In reality, a fair and reasonable process is required whenever an employment decision could significantly affect an employee. Examples include:

Disciplinary Issues

A disciplinary process may be required where there are allegations of:

• Misconduct,

• Serious misconduct,

• Breach of company policies,

• Inappropriate behaviour,

• Poor attendance,

• Health and safety breaches, or

• Failure to follow reasonable instructions.

Performance Management

A performance process may be required where an employee is not meeting expectations, making repeated mistakes, failing to achieve agreed objectives, or struggling to perform the role.

Bullying and Harassment Complaints

Employers must investigate complaints fairly and objectively before reaching conclusions.

Medical Incapacity

If an employee is unable to perform their role due to illness or injury, employers must gather information and consult with the employee before making decisions.

Restructuring and Redundancy

Employees must be consulted before decisions are finalised.

Flexible Working Requests

Employers must properly consider requests and provide reasons if declining them.

Why Is a Fair Process So Important?

A fair process serves several purposes.

It Protects Employees

Employees deserve to know what concerns exist, what information is being relied upon, what outcomes are being considered, and how they can respond.  

It Protects Employers

A documented and well-managed process demonstrates that decisions were made fairly and reasonably. If an employee later raises a personal grievance, evidence of a proper process can be critical. 

It Leads to Better Decisions

When employers gather information and hear all sides of a situation, they are more likely to make accurate and defensible decisions.

It Supports Workplace Culture

Employees are more likely to trust leadership when they see issues being handled fairly and consistently.

What does a Fair and Reasonable Process look like?

While every situation is different, most fair processes contain several common elements.

1. Identify the Issue

The first step is clearly identifying the concern.  The employer should ask:

• What exactly has happened?

• What evidence exists?

• What policies or expectations may have been breached?

• Is the issue performance-related or conduct-related?

  
  

Employers should avoid making assumptions or rushing to conclusions.

2. Gather Information

Before taking action, employers should collect relevant information.  This may include:

• Witness statements

• Documents

• Emails

• CCTV footage

• Timesheets

• Customer complaints

• Performance data

Information gathering should be objective and balanced.  The goal is to establish facts, not build a case against the employee.

3. Consider Whether Suspension Is Necessary

In serious situations, employers may consider suspension while investigations occur.  Suspension should only occur when:

• It is genuinely necessary.

• Alternatives have been considered.

• The employee has had an opportunity to comment.

Suspension is not a punishment. It is a temporary measure used to protect the integrity of a process.

4. Notify the Employee of the Concerns

Employees must be informed of what the concerns are, what information supports those concerns, why the issue is being investigated, and what potential outcomes could result.  This information should generally be provided in writing.  The employee cannot properly respond if they do not understand the allegations.

5. Allow the Employee Time to Respond

Employees should be given a reasonable opportunity to review information, seek advice, and prepare a response.  Rushing employees into meetings can undermine the fairness of the process.

6. Offer Representation or a Support Person

Employees should generally be advised that they may bring a support person, a union representative and/or an employment advocate or lawyer.  This helps ensure employees feel supported and able to participate effectively.

7. Listen With an Open Mind

One of the most common mistakes employers make is deciding the outcome before hearing from the employee.  A fair employer listens carefully, considers explanations, reviews all evidence, and remains open to alternative conclusions.  The process must be genuine, not a box-ticking exercise.

8. Investigate Further if Necessary

Sometimes new information emerges during a meeting.  If that happens, employers may need to interview additional witnesses, gather further evidence, and clarify the facts.  Taking additional time is often preferable to making a rushed decision.

9. Make a Provisional Decision

In more serious situations, particularly where warnings or dismissal are being considered, employers may issue a provisional decision.  This explains what findings have been made, what outcome is being considered, and why that outcome is being considered.  Employees are then given a final opportunity to comment before a decision is made.

10. Make a Final Decision

Once all information has been considered, the employer can make a final decision.  The decision should be reasonable, proportionate, consistent with previous cases, and supported by evidence.  The outcome should be communicated clearly and preferably in writing.

Important Definitions Employers Should Understand

Good Faith

Good faith requires employers and employees to be active and constructive in maintaining a productive employment relationship.  This includes being honest, communicative, and responsive.

Misconduct

Misconduct is behaviour that falls below expected standards but does not necessarily destroy the employment relationship.  Examples may include:

• Minor policy breaches

• Inappropriate language

• Unauthorised breaks

• Occasional lateness

Serious Misconduct

Serious misconduct is behaviour that fundamentally damages trust and confidence.  Examples may include:

• Theft

• Violence

• Serious dishonesty

• Serious health and safety breaches

Natural Justice

Natural justice means employees must know the allegations against them, be given relevant information, have an opportunity to respond, and have their response genuinely considered.  Natural justice sits at the heart of every fair process.

What Happens If an Employer Does Not Follow a Fair Process?

Failing to follow a fair and reasonable process can have significant consequences.

• Employees may raise personal grievances for unjustified dismissal, unjustified disadvantage, discrimination, and harassment.  

• The Employment Relations Authority may award lost wages, compensation for humiliation, loss of dignity, and injury to feelings, and reimbursement of legal costs.  

• In some cases, employees may seek reinstatement into their role.

• Poorly managed processes can reduce trust and morale among remaining employees.

• Employment disputes can cause reputational damage affecting recruitment, retention, customer confidence, business reputation, and workplace culture.  

When Should Employers Seek External Help?

Many employee issues can be managed internally. However, there are situations where external support can be invaluable.  Consider obtaining advice when:

Dismissal Is Being Considered

The risks increase significantly when termination is a possible outcome.

Serious Misconduct Allegations Exist

Investigations involving theft, fraud, violence, bullying, or serious safety breaches often require careful management.

The Employee Has Raised a Personal Grievance

Once a grievance is raised, employers should seek advice early.

There Are Complex Medical Issues

Medical incapacity situations can involve privacy, health information, and legal obligations.

The Situation Is Emotionally Charged

Independent advice can help ensure decisions remain objective.

You Are Unsure About the Correct Process

Seeking advice early is usually far less expensive than defending a grievance later.

FAQS

Can I dismiss an employee if I know they have done something wrong?

Not immediately. Even where misconduct appears obvious, employees must generally be informed of the allegations, given relevant information, and provided an opportunity to respond before a decision is made.

Do I always need to hold a formal meeting?

Not necessarily. Minor issues may be dealt with informally. However, formal meetings are generally required where disciplinary outcomes or warnings are being considered.

How much time should I give an employee to respond?

This depends on the circumstances. Employees should have enough time to understand the concerns, review information, seek advice, and prepare a response.

Can I suspend an employee while I investigate?

Possibly, but suspension should only occur where genuinely necessary and after the employee has had an opportunity to comment on the proposed suspension.

What is the difference between performance management and discipline?

Performance management focuses on helping an employee improve capability and performance. Discipline focuses on addressing misconduct or behavioural concerns.

Can I investigate a complaint without telling the employee?

You may gather preliminary information, but employees must generally be informed of allegations and given an opportunity to respond before findings are made.

Do employees have a right to bring a support person?

In most formal employment meetings, employees should be advised they may bring a support person, representative, advocate, or union delegate.

What is the biggest mistake employers make?

The most common mistake is deciding on an outcome before hearing the employee's explanation. Keeping an open mind throughout the process is essential.

When should I get professional HR or employment relations advice?

Whenever dismissal is being considered, a personal grievance has been raised, serious misconduct is alleged, or you are uncertain about the correct process, obtaining advice early is strongly recommended.

A fair and reasonable process is one of the most important responsibilities an employer has.  Good employers do not simply focus on reaching the right outcome, they focus on reaching that outcome the right way.

When employee issues arise, taking time to gather information, communicate openly, hear the employee's perspective, and genuinely consider all relevant factors can make the difference between a defensible decision and an expensive employment dispute.  The process itself is often just as important as the final decision.

If you have a workplace issue and are unsure of the how to proceed, or would like to talk about putting the processes in place before an issue arises, get in touch today for a consultation or audit of your processes.  Employer-Direct.co.nz | 0800 612 355

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