Is the deck stacked against employers?

A common complaint from employers is that personal grievances are used by disgruntled ex-employees to “shakedown” their former employers for cash windfalls, regardless of the merits of their case. Many employers claim there is no cost-effective way of preventing such claims.

We disagree.

In many cases, there are steps an employer can take to make their decision justifiable (if not entirely bullet-proof). Terminating employment in a justifiable manner ensures the employer is well positioned to resist any personal grievance claim that may arise.

An employer need not capitulate at mediation if they are confident in the integrity of their process and decision. A properly structured dismissal will withstand scrutiny by the Employment Relations Authority or Employment Court.

If employers understand the fundamentals of the termination process, their decisions are much more likely to withstand scrutiny.

Common pitfalls

It is not possible to hire and fire staff at will. Nor is it safe to alter an employee’s working conditions in the hope that this will encourage them to leave. It is not possible to “get rid” of an employee you dislike if their performance is up to scratch.

Decisions to terminate must have a justification, whether that be:

  • Performance (eg, production output);
  • Misconduct (something blameworthy the employee has done or failed to do).

It is important to be clear on whether the justification relied on is performance-related or misconductrelated as there are different processes to follow.

Performance issues

While it is possible to terminate employment for poor performance, this is a process that may take some time.

Employees need to have:

  • Deficiencies in their performance pointed out to them;
  • Been given a clear set of performance targets;
  • Been given a reasonable time to achieve these targets;
  • Been given reasonable support to achieve the targets; and
  • Been provided with feedback upon their performance.

A performance management process may progress through two or three cycles until poor performance can be treated as a disciplinary issue that might warrant a warning. Even then, the disciplinary process may not lead to an instant dismissal.

Misconduct

There are processes which must be followed by an employer in investigating and disciplining an employee for misconduct. If they are not followed, the employer’s decision may be vulnerable to challenge. We discuss these processes in more detail in “Investigations and Disciplinary Processes”.

Justifiable decisions

Under sect ion 103A of the Employment Relations Act the decision to discipline or dismiss must be one which “a reasonable and fair employer could have taken”. This means where processes are followed and decision making processes are robust, and the outcome is fair and reasonable, the courts will uphold a decision to discipline or dismiss (even if other outcomes were possible).

“No fault” trial provisions

New employees may be employed on a trial basis for up to 90 days if a statutorily-compliant trial provision is included in their employment agreement.

If a new employee fails to perform to a satisfactory standard within the trial period, the employer may terminate their employment and the employee cannot bring a personal grievance in respect of the dismissal.

In cases where dismissals relying on no fault trial provision have not been upheld, this is usually because the trial period did not comply with the legal requirement to be included in the individual employment agreement at the start of the employment relationship.


What Bartlett Law can do for you:

We are specialists in workplace law. We are able to assist and advise employers and employees at all stages through the dismissal and personal grievance procedures. We can:

    • Guide employers through all termination processes;
    • Draft letters for disciplinary investigation, meetings, warnings and dismissals;
    • Advise on restructurings;
    • Advise employees involved in warning and termination process;
    • Draft no fault trial provisions;
    • Check existing no-fault trial provisions and advise on compliance.

Contact us for more information.