Ending Employment the Right Way: How to Manage Terminations Without Legal Risk

Terminating an employee’s employment is one of the most sensitive and high-risk actions an employer can take. In New Zealand, employment law places a strong emphasis on fair process and substantive justification—meaning that even when there’s a valid reason to dismiss someone, failure to follow the correct procedure can still result in a personal grievance or a claim for unjustified dismissal.

As an HR and Employment Relations professional, I regularly support businesses through this challenging area. Here’s what every employer should understand to reduce legal risk and uphold best practice.

Why Termination Requires Caution

Under the Employment Relations Act 2000, all employment relationships must be managed in good faith. This includes acting honestly, openly, and communicatively—especially when a termination is being considered.

There are various types of termination, including:

• Dismissal for misconduct or serious misconduct

• Redundancy

• Medical incapacity

• Performance-related dismissal

• Trial period dismissal (if lawful and properly applied)

Each type requires a distinct approach and a robust process to ensure compliance with the law.

Key Principles for Lawful Termination

1. Justifiable Reason Employers must have a genuine and lawful reason to terminate employment. This must be based on facts and evidence—not assumptions, personal conflict, or personality clashes.

   
   

2. Fair and Transparent Process A procedurally fair process includes:

   • Notifying the employee of the concerns

   • Giving them a chance to respond

   • Considering their explanation before making any decision

   • Allowing representation if requested

   • Documenting the process clearly

   The “test of justification” used by the Employment Relations Authority looks at whether a fair and reasonable employer could have acted the same way in all the circumstances.

   
   

3. Redundancy Requires Genuine Business Reasons Redundancy is not a shortcut to end difficult employment relationships. It must be based on legitimate business restructuring, and employers are required to consult meaningfully with affected employees.

   
   

4. Trial Periods Must Be Watertight Dismissing under a valid trial period clause (for businesses with fewer than 20 employees) may avoid a personal grievance for unjustified dismissal—but only if:

   • The clause is in writing and signed before the employee starts

   • The dismissal is given within the trial period

   • The correct notice is provided

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5. Avoid Discriminatory or Unlawful Motives Any termination related to prohibited grounds—such as race, gender, religion, age, disability, or union involvement—can result in claims under the Human Rights Act or Employment Relations Act.

How HR and ER Support Helps

Managing terminations requires not only knowledge of employment law, but also sound judgment, emotional intelligence, and precise documentation. My role as an HR and Employment Relations consultant is to:

• Guide you through legally compliant processes

• Provide documentation templates (e.g., disciplinary letters, termination letters)

• Support performance or misconduct investigations

• Advise on alternatives to dismissal, such as redeployment or mediation

• Represent your business in disciplinary or grievance processes, if needed

  
  

Minimise Risk, Maintain Integrity

A legally sound termination process protects your business from costly disputes, but it also protects your reputation as a fair and ethical employer. Getting it wrong can result in:

• Reinstatement orders

• Compensation for hurt and humiliation

• Loss of productivity and morale across the wider team

Getting it right requires preparation, consistency, and expert advice.

Need Help Managing a Termination?I provide confidential, practical support to ensure your termination process is lawful, fair, and defensible. Contact me today for a consultation.