Managing the dismissal process

DoorIn a recent MTR blog post – Staff management: why goals are important – we stipulated a number of reasons why an employer may have to prove they have followed due process when dismissing an employee, even within the recently introduced 90 day trial period. A recent article in the National Business Review highlighted some alarming precedents that have been set by the courts which we strongly recommend you take a look at.

Such examples emphasise that even in cases of employee misconduct, harsh penalties loom for employers who fast-track the dismissal process. Failing to give the employee a fair chance for a considered response before making a final decision landed these employers in court. While the NBR article doesn’t cover performance based dismissals, the process is similar and must be followed to avoid repercussions.

It all starts with the employment contract which must list key performance indicators including, if necessary, what is financially acceptable and what is not.  If a new employee fails to meet those required standards of performance, he or she should be called into a meeting, provided with the written facts and potential consequences and given an opportunity to improve over a realistic time period. Only after failure to improve and a second meeting should a written letter of dismissal, outlining the processes followed to date, be handed to the employee. It is important to note that the decision to dismiss cannot be set before the employee has a fair opportunity to improve and achieve clearly communicated, documented goals.

Many employers mistakenly believe that the new 90 day trial period legislation covers them against poorly performing recruits, however this is not in effect by default – the terms of the trial period must be explicitly defined in the employment contract, stating three key points:

  1. for a specified period (not exceeding 90 days), starting at the beginning of the employee’s employment, the employee is to serve a trial period; and
  2. during that period the employer may dismiss the employee; and
  3. if the employer does so, the employee is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.

Employment  Relations Act 2000, Section 67A

Only with each of these three points stated in the contract are the trial period and protection against legal reprise in effect. Without this, new employees must be formally performance managed: the documented process of termination due to poor performance must show that the employer made the employee aware of the performance issue and that they had reasonable time to rectify these issues prior to a final decision being made.