Unjustified dismissal claims remain one of the most common types of personal grievances in New Zealand. While many employers understand the need for a valid reason to dismiss an employee, it is often the process, rather than the reason itself, that determines whether a dismissal is lawful.
Two common scenarios help illustrate how things can go wrong.
WHAT CAN HAPPEN
The following examples are not based on specific cases but reflect situations that arise regularly in practice.
Scenario 1: Acting Too Quickly
Sarah was a retail manager who discovered discrepancies in the till records of one of her staff members. Concerned about possible misconduct, she dismissed the employee on the spot.
While Sarah believed she had a valid reason, she had not carried out a proper investigation or given the employee an opportunity to respond to the allegations.
The employee later raised a personal grievance. Despite the seriousness of the concerns, the dismissal was found to be unjustified — not because there was no issue, but because the process was unfair.
Scenario 2: No Opportunity to Improve
Mark worked for a small business and had been struggling to meet performance expectations. His employer became increasingly frustrated and eventually terminated his employment without prior warnings.
The employer believed the decision was justified, pointing to ongoing performance concerns. However, Mark had not been clearly told what was expected of him, had not received formal warnings, and had not been given a reasonable opportunity to improve.
Again, the dismissal was vulnerable to challenge — not because performance was irrelevant, but because the process fell short.
THE LEGAL POSITION
In New Zealand, a dismissal may be considered unjustified if:
- There is no valid reason for the dismissal; or
- The employer fails to follow a fair and reasonable process.
Importantly, even where there is a valid reason — such as misconduct, poor performance, or redundancy — a dismissal can still be unjustified if the process is flawed.
The key question is whether a fair and reasonable employer could have made the same decision in all the circumstances.
WHAT DOES A FAIR PROCESS LOOK LIKE?
While every situation is different, a fair process will usually include
- Clearly raising concerns with the employee;
- Carrying out an appropriate investigation;
- Giving the employee a genuine opportunity to respond; and
- Properly considering that response before making a decision.
In performance situations, this will often also involve:
- Clear expectations;
- Support and feedback; and
- A reasonable opportunity to improve.
A COMMON PITFALL
A frequent mistake is assuming that having a “good reason” is enough. As the examples above show, even where concerns are genuine, failing to follow a fair process can expose an employer to a personal grievance.
PRACTICAL LESSONS
For employers:
- Slow down and follow a fair process, even where issues appear clear;
- Document each step carefully; and
- Seek advice early, particularly in more serious situations.
For employees:
- You are entitled to understand the concerns raised and to respond before any decision is made;
- If dismissed, you may request written reasons within 60 days.
KEY TAKEAWAYS
Unjustified dismissal claims are not just about whether the outcome was right, but whether the process was fair.
Taking shortcuts can be costly. A well-handled process not only reduces legal risk, but also supports better workplace outcomes for everyone involved