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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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employment

Can an employer fire you for poor performance without notice?

Key Takeaway

In New Zealand, an employer generally cannot dismiss an employee for poor performance without notice. A fair and reasonable process involving warnings, opportunities for improvement, and support is typically required. Dismissal without notice, known as summary dismissal, is usually reserved for serious misconduct, not for ordinary poor performance. Any dismissal must be justified.

Dismissal for Poor Performance in New Zealand without Notice

In New Zealand employment law, dismissing an employee for poor performance requires a fair and reasonable process. Employers generally cannot dismiss an employee for poor performance without providing notice, as summary dismissal (dismissal without notice) is typically reserved for instances of serious misconduct.

The Principle of Good Faith

All employment relationships in New Zealand are based on the principle of good faith – meaning that parties must deal with each other openly, honestly, and without misleading or deceiving each other [Source: Employment Relations Act 2000, s 4]. This principle underpins all employer actions, including managing poor performance and potential dismissal.

Justification for Dismissal

For any dismissal to be lawful, an employer must be able to show that the dismissal was both substantively justified (meaning there was a genuine reason for dismissal) and procedurally fair (meaning the employer followed a fair process) [Source: Employment Relations Act 2000, s 103A(2)]. The test for justification requires the Employment Relations Authority or Employment Court to determine whether the employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred [Source: Employment Relations Act 2000, s 103A(2)].

Managing Poor Performance – Required Process

When dealing with poor performance, an employer is typically expected to follow a process that includes:

  • Raising Concerns: Informing the employee specifically about the performance concerns [Source: Employment Relations Act 2000, s 103A(2)].
  • Providing Opportunity for Improvement: Giving the employee a reasonable opportunity to improve their performance [Source: Employment Relations Act 2000, s 103A(2)].
  • Support and Training: Offering appropriate support, training, or resources to help the employee meet performance expectations [Source: Employment Relations Act 2000, s 103A(2)].
  • Clear Expectations: Clearly outlining the required standards and expectations [Source: Employment Relations Act 2000, s 103A(2)].
  • Warnings: Issuing clear warnings about the consequences of continued poor performance, which may include dismissal [Source: Employment Relations Act 2000, s 103A(2)].
  • Considering Explanations: Allowing the employee to provide their explanation or response to the concerns [Source: Employment Relations Act 2000, s 103A(2)].
  • Fair Consideration: Genuinely considering the employee's explanations before making a decision [Source: Employment Relations Act 2000, s 103A(2)].

This process is generally expected to take place over a reasonable period, allowing time for improvement and review.

Dismissal Without Notice (Summary Dismissal)

Summary dismissal is the termination of employment without a period of notice or payment in lieu of notice. In New Zealand, this is almost exclusively reserved for cases of serious misconduct – behaviour that is fundamentally inconsistent with the continuation of the employment relationship, such as theft, assault, or gross negligence that causes significant harm [Source: Employment Relations Act 2000, s 103A, in interpretation of justifiable dismissal].

Poor performance, on its own, generally does not constitute serious misconduct warranting summary dismissal. If poor performance leads to dismissal after a fair process, the employee is typically entitled to the notice period specified in their employment agreement or payment in lieu of notice.

If an employer dismisses an employee for poor performance without following a fair process or without providing the contractual notice (or payment in lieu of notice), the dismissal may be considered an unjustified dismissal [Source: Employment Relations Act 2000, s 103].

Notice Periods and Final Pay

Where dismissal for poor performance is justified following a fair process, the employer must still comply with the notice period provisions in the employment agreement. If the employer does not require the employee to work during the notice period, they must generally pay the employee for that period. Upon termination, employers are also legally required to pay out all accrued but untaken annual leave and other final entitlements [Source: Holidays Act 2003, s 27, s 28].

When to Seek Independent Legal Advice

Individuals facing dismissal or performance management concerns are encouraged to seek independent legal advice. Information and assistance can be obtained from Employment New Zealand for general guidance on employment rights, or by contacting a Community Law Centre for free legal assistance. Individuals may also choose to consult a private lawyer specializing in employment law.

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