What Are The Biggest Mistakes Employers Make When Firing Staff in New Zealand?

Most employers don’t get dismissals wrong because they’re bad people. They get them wrong because they’re busy, under pressure, and trying to “just deal with it” and that’s exactly where things go sideways.  Often, good, well-meaning business owners end up in costly personal grievances, not because the decision to dismiss was wrong, but because the process was.

With the average Employment Relations Authority settlement sitting at tens of thousands of dollars, getting this wrong isn’t just frustrating, it can be expensive.

If you're like most business owners, you are juggling staff issues, finance, marketing and other aspects critical to making your business a success.  HR often becomes the thing you deal with after hours or only when it becomes a problem.  So when a staff issue escalates, it’s tempting to move quickly, avoid conflict or try to rely on common sense.  Unfortunately, employment law doesn’t reward common sense, it rewards process, fairness, and documentation.

What are the Biggest Mistakes Employers Make? 

1. Acting Too Quickly

You’ve had enough.  Your employee has been late again. Their attitude stinks and customers are complaining.  So you call them in and say 'Look, it’s not working out.'  This is one of the biggest mistakes.  Even if your reasoning is valid, a rushed decision without a fair process is almost guaranteed to fail legally. In New Zealand, it’s not just what you decide, it’s how you decide it.

2. Skipping the Proper Process

A fair process isn’t optional. It’s required. Employers often skip investigation, don’t give the employee a chance to respond, and have already pre-determined the outcome before they address the issue.  This is where most personal grievances are won, even if the employee was clearly in the wrong.

3. Poor Documentation or None at All

If it’s not written down,  it’s as if it didn’t happen.  Common problems with documentation of employee issues include no written warnings, no notes from meetings about performance or behaviour, no performance review records, and no clear expectations set.  This makes it incredibly hard to justify a dismissal later.

4. Not Following Their Own Employment Agreement

You’d be surprised how often this happens.  Employers have been known to ignore notice periods, skip disciplinary steps outlined in contracts and policies, and apply rules inconsistently. Your own agreement can be used against you if you don’t follow it.

5. Confusing 'Frustration' with Serious Misconduct

Not every issue is grounds for instant dismissal.  We often see poor performance treated as misconduct, personality clashes escalated to dismissal and minor issues labelled as serious misconduct which can be risky.  Serious misconduct has a very high legal threshold and it is important to understand what can and can’t be used to dismiss an employee.  

6. Not Getting Advice Early

This is the one that costs the most.  By the time employers reach out, often they’ve already said the wrong thing, skipped important steps and created legal exposure.  At that point, it’s damage control.  Seeking advice before the issue escalates is the best way to minimise risk and costs.  

What Are The Different Types of Dismissal?

Before you can get it right, you need to understand the type of dismissal you’re dealing with.

Misconduct and Serious Misconduct

Misconduct might include repeated lateness, failure to follow instructions and/or minor breaches of policy.   Serious misconduct could include theft, violence, serious safety breaches or dishonesty.  The key difference is that serious misconduct may justify summary dismissal (no notice) but only if handled correctly.

Poor Performance

This is one of the most mishandled areas. You cannot dismiss someone for poor performance unless expectations were clear, training and/or support was provided, the employee was given time to improve, and a structured process was followed.  

Redundancy

This is not about the person, it’s about the role.  To be genuine, redundancy must involve a real business reason, consultation with the employee, and exploration of alternatives, before the decision is made to make a role redundant.  

Medical Incapacity

If an employee can’t perform their role due to illness or injury you must seek medical evidence, consult with the employee, and consider reasonable accommodations before looking at termination for medical incapacity. 

Abandonment of Employment

If an employee disappears or stops communicating, you still need to attempt contact, follow any workplace policy you have in place relating to abandonment of employment, and give the employee an opportunity to respond as to why they are absent.  

What Is The Correct Way to Terminate an Employee?

Here’s the part most employers need clarity on.  A fair dismissal in New Zealand follows a structured, repeatable process.  The issue must be identified and communicated clearly.  Before making any decision there must be an investigation where facts are gathered, witnesses interviewed and evidence reviewed.  The employee should be invited to a meeting with adequate notice to find a support person and details of the concerns should be provided in advance.  During the meeting you should explain the concerns, present evidence and give the employee a chance to respond.  

Following the meeting you must genuinely consider the employee’s explanation with an open mind before deciding on an  outcome which is proportionate to the issue.  The outcome should be clearly communicated in writing to the employee, including an explanation for why the decision was made and what the next steps will be.  

If you haven’t followed a fair process, your dismissal is at risk, no matter how justified it feels.

FAQs

Can I fire someone on the spot?

Only in cases of serious misconduct, and even then, you must still investigate and follow a fair process.  Instant decisions without process are high-risk.

What is a personal grievance?

A personal grievance is when an employee claims they’ve been unjustifiably dismissed or disadvantaged.  These can result in the need to pay compensation, lost wages and/or legal costs. 

How many warnings do I need to give?

There’s no fixed number but for performance issues, you generally need to demonstrate that clear expectations were set, there was opportunity for the employee to improve, and documentation of meetings and warnings.  

Can a 90-day trial period protect me?

Yes, but only if It’s validly included in the agreement and you follow the correct process.  Even then, it must be handled carefully.

What if the employee is toxic but hasn’t breached policy?

This is common.  You’ll need to address behaviour clearly, set expectations, and follow a structured process.  You can’t dismiss someone just because they’re difficult.

What’s the biggest risk when firing someone?

Simply put, process failure is the biggest risk.  

As a business owner, you didn’t start your business to become an HR expert.  But the reality is people issues are business issues.  And getting them wrong costs money, creates stress and impacts your team.  At Employer Direct, we believe employing people should ease your load, not increase your stress.  That’s why having the right systems, support, and advice in place isn’t just nice to have, it’s essential. If you are planning on firing staff, or just want to put the processes in place in case you need to in the future, get in touch for information on our 'The Complete Ending Employment Pack' or help from an expert. Employer-Direct.co.nz | 0800 612 355.

Contact us today!

Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.