What you need to know about: Ending Employment Relationships

Ending Employment Relationships

Who should read this?

Employers dealing with the end of an employment relationship by way of:

resignation
retirement
restructuring & redundancy
dismissal for
- poor performance
- misconduct

Why is it important?

To ensure employer/employee relationships are ended fairly by following the correct processes and avoiding costly mistakes.

What you need to do

You have a core requirement to act in good faith, to follow a fair and reasonable process and have an open mind when dealing with problems, ensuring outcomes are not pre-determined. Failing to do so may lead to an employee taking a personal grievance.

This brochure provides checklists of the key tasks involved with each of the above endings. It provides a guide to good practice behaviour in ending an employment relationship, but:

The guidelines are general in nature and you may need to seek professional advice regarding your specific situation.
The Employment Relations Act 2000 requires employers to meet standards of behaviour and, therefore, this brochure cannot be viewed as a ‘definitive’ set of rules.

More detailed information is available in A Guide to Employment Relationships and in Guidelines for Employers: Disciplinary Action, Dismissal, Redundancy and Ill-health. You can also contact us on 0800 20 90 20 or visit our website www.ers.dol.govt.nz

The Resignation Process

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Resignation Checklist

The following is a guide only and outlines the actions an employer would generally be expected to take when managing an employee’s resignation.

If you answer no to any of the questions you may need more information.

Receiving notice	Yes	No	n/a
Has the employee handed in notice according to the terms of their employment agreement?
Do you know what you should do if the employee does not give notice in accordance with their employment agreement or leaves work without giving notice?

Confirming notice	Yes	No	n/a
Have you confirmed the resignation with the employee (in writing or verbally depending on employment agreement)?

Final pay	Yes	No	n/a
Do you know how to calculate their final pay, including all holiday pay and any final entitlements, e.g. superannuation? If the notice given is in accordance with the terms of their employment agreement, the employee should be paid to the end of the notice period. If the notice given is less than the terms of their employment agreement, the employee should be paid to their last working day.

Exit interview	Yes	No	n/a
Have you conducted an exit interview to gain feedback that will help you improve your workplace in the future?

Collect company property	Yes	No	n/a
Have you collected all company property including keys, access cards, credit cards, uniforms, computers, passwords, security codes, cell phones etc before the employee leaves?

“Forced” resignation	Yes	No	n/a
If the employee claims the resignation is forced, are you aware of the process you need to follow to resolve this? If an employee has been forced to resign, they may have a personal grievance.

The Retirement Process

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Retirement checklist

The following is a guide only and outlines the actions an employer would generally be expected to take when an employee retires.

If you answer no to any of the questions you may need more information.

Before retirement	Yes	No	n/a
Have you checked the employment agreement?
Is your employee ready to retire?
Are you aware there is no legal set age for retirement, with some special jobs as exceptions?

Confirming retirement	Yes	No	n/a
Have you confirmed retirement with your employee, whether they have initiated retirement or you have according to the employment agreement?

Calculate final pay	Yes	No	n/a
Have you calculated final pay including all holiday pay and any final entitlements, e.g. superannuation?

Exit interview	Yes	No	n/a
Have you conducted an exit interview to gain feedback that will help you improve your workplace in the future?

Collect company property	Yes	No	n/a
Have you collected all company property including keys, access cards, credit cards, uniforms, computers, passwords, security codes, cell phones etc before the employee leaves?

“Forced” retirement	Yes	No	n/a
If the employee claims the retirement is forced, are you aware of the process you need to follow to resolve this? If an employee has been forced to retire, they may have a personal grievance.

Some employees moving towards retirement may want to work fewer hours or have flexible work arrangements. Information on flexible work and varying an employment agreement can be found on the Department of Labour’s website at www.ers.dol.govt.nz.

Restructuring and Redundancy Process

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Restructuring and redundancy checklist

The following is a guide only and outlines the actions an employer would generally be expected to take when changing the workplace in a way that affects employees. Individual cases may need further specialist advice from your employment or legal adviser, particularly in complex situations.

If you answer no to any of the questions you may need more information.

Before considering restructuring	Yes	No	n/a
Have you checked the legal requirements including the obligations and definitions in the Employment Relations Act 2000 and the employment agreement?
Are you aware of what it means to act in good faith in relation to restructuring?
Have you developed a proposal?

Advising employees	Yes	No	n/a
Have you advised employees (and unions) whose work is potentially affected?
Have you provided them with relevant information including: the proposal the roles affected selection criteria timeframe options for voluntary redundancy/redeployment?

Special jobs	Yes	No	n/a
Does the proposed restructuring involve the following jobs, and do you know what process you have to follow with them? (Cleaners, food catering, orderly, laundry or caretaking services)

Consulting employees	Yes	No	n/a
Have you consulted with your employees?
If unions are involved in the process, have you allowed for union consultation and meetings?
Have you allowed enough time for discussion?

Receiving feedback	Yes	No	n/a
Have you considered the feedback from your employees?
Have you included the feedback or response to that feedback in your proposed structure?

Updating proposed structure	Yes	No	n/a
If applicable, have you provided an updated structure to your employees (i.e. taking account of employee feedback)?
If the employees disagree with the changes, have you revisited the proposal and discussed/consulted again?
Have you considered voluntary redundancy as part of the proposal?

Advising employees	Yes	No	n/a
Have you advised employees (and unions) whose work is potentially affected?
Have you provided them with relevant information including: the proposal the roles affected selection criteria timeframe options for voluntary redundancy/redeployment?

Implementing changes	Yes	No	n/a
Have you confirmed the new structure, new appointments and redeployments in writing?

Updated terms of employment	Yes	No	n/a
For employees staying and whose jobs change significantly, have you: agreed on the updated terms in their employment agreements gained the employee’s signature stored all information on file?

Training	Yes	No	n/a
Have you identified training needs to support employees who are in new roles?

Support for those leaving	Yes	No	n/a
For those employees leaving, have you considered: allowing time to search for jobs? support services, e.g. counselling, career planning? providing references?

Calculate final pay	Yes	No	n/a
For employees made redundant, have you calculated their final pay to the end of their notice period, including all holiday pay and any final entitlements, e.g. superannuation?

Exit interview	Yes	No	n/a
Where appropriate, have you conducted an exit interview to gain feedback that will help you improve your workplace in the future?

Collect company property	Yes	No	n/a
Have you collected all company property including keys, access cards, credit cards, uniforms, computers, passwords, security codes, cell phones etc before the employee leaves?

Managing problems & disputes	Yes	No	n/a
If there are problems in relation to the proposed restructuring which could lead to disputes, such as a personal grievance, do you know where to go for help and advice?

Poor performance and misconduct

Background

Sometimes, you might need to raise serious concerns with your employee. In these cases, you might commence ‘disciplinary action’. ‘Disciplinary action’ can take many forms. It should be seen primarily as a corrective measure, aimed at preventing further misconduct or poor performance. The most common types of disciplinary action are warnings and, in serious cases, dismissal. However, disciplinary action can sometimes mean suspension from work, or the removal of certain privileges, or, in rare instances, demotion.

The duty of good faith does not stop an employer from dismissing an employee if:

the employer gives notice of dismissal before the end of a trial period, or
there are genuine grounds for dismissal, and
a fair and reasonable process has been followed.

Where an employee has breached a commitment in a significant way, and the matter has been investigated and managed fairly, the result can be dismissal or other actions (e.g. warnings, placing a note on personal file, demotion).

The Employment Relations Act 2000 applies a ‘test of justification’ – essentially is there just reason for dismissal? Whether a dismissal is justified depends on whether your actions and decisions are what a fair and reasonable employer would have done in the circumstances. The test of justification does not apply where you have given notice of dismissal to an employee before the end of a trial period, unless issues such as discrimination or harassment arise.

The following information on employment relationship problems provides an overview of the steps that employers would generally be expected to take in managing employment relationship problems. However, individual cases may need further specialist advice from your employment or legal adviser.

Managing poor performance and misconduct

A generic process is outlined below. It needs to be reviewed against specific actions outlined in the overview.

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Poor performance checklist

The following is a guide only and is indicative of the steps to follow in dealing with problems relating to poor performance. Examples of poor performance issues include failure to perform the job to expected standards, e.g. continually making mistakes, poor customer interaction.

Individual cases may need further specialist advice from your employment or legal adviser. In particular, you need to ensure that you provide the number of warnings required under the employee’s employment agreement or a fair and reasonable number of warnings, and allow the employee sufficient time to respond to any allegations made against them.

If you answer no to any of the questions you may need more information.

Before considering the problem	Yes	No	n/a
Have you checked: your legal requirements including obligations and definitions in the Employment Relations Act (including the ‘test of justification’) the employment agreement for the problem solving process the job description, performance indicators and company standards to ensure that it is clear where performance is falling short?

Fact finding	Yes	No	n/a
Have you carried out a thorough investigation of the facts and identified the problem? For example, identified where standards are not being met and checked that training and induction occurred. It is important to keep an open mind and consider all relevant information throughout the process
Have you interviewed the appropriate people?

Trial periods	Yes	No	n/a
Have you checked whether your employee is on a trial period?
If they are and you give notice within the trial period, do you know that: you need to give notice in accordance with your employee’s employment agreement you do not need to provide a reason for the dismissal or follow all of the dismissal processes in this guide?

Arrange meeting with employee	Yes	No	n/a
Have you arranged a meeting with the employee and advised: the reason for the meeting that a support person/representative can attend?
Have you recorded that a meeting has been arranged?
Have you arranged for a witness to attend the meeting?

Meeting with employee	Yes	No	n/a
Have you held the meeting and covered the following: outlined concerns listened to employee agreed on standards expected in the future set training schedule set next review meeting discussed/outlined warning, if appropriate recorded actions/meeting on file?

Review meeting	Yes	No	n/a
Have you held the review meeting and covered the following: provided feedback to employee on progress listened to employee outlined any remaining concerns set further training if required set next review meeting recorded actions/meeting on file?

If improvements are not made	Yes	No	n/a
Have you checked the employment agreement to confirm the problem solving process?
Have you arranged a further meeting and advised: them of your concerns and that disciplinary action and/or dismissal is a potential outcome prior to the meeting that a support person/representative can attend?
Have you recorded that a meeting has been arranged, and arranged for your witness to attend?

Follow up meeting	Yes	No	n/a
Have you held the next meeting and: formally warned the employee (in writing unless verbal in employment agreement) recorded the warning and actions on file set next review date?

If performance is still an issue by review date	Yes	No	n/a
Have you checked: the employment agreement and notice provisions redeployment possibilities?
Have you arranged a final meeting, if appropriate?

Final meeting	Yes	No	n/a
If still no resolution to the problem, have you: held the final meeting with the employee (including any support person/representative for the employee and/or witness for yourself) and confirmed outcome, e.g. termination of employment ensured the termination is under the terms covered by the employment agreement?

Calculate final pay	Yes	No	n/a
For employees whose employment has been terminated, have you calculated their final pay to the end of their notice period, including all holiday pay and any final entitlements, e.g. superannuation?

Collect company property	Yes	No	n/a
Have you collected all company property including keys, access cards, credit cards, uniforms, computers, passwords, security codes, cell phones etc before the employee leaves?

Managing problems & disputes	Yes	No	n/a
If the problems above lead to a dispute, such as a personal grievance, do you know where to go to for help and advice?

Misconduct checklist

The following is a guide only and is indicative of the steps to follow in dealing with problems relating to misconduct. Examples of misconduct and serious misconduct are breaches of company policy or law, such as dishonesty, drinking or drugs while working, breaches of safety rules.

What is meant by misconduct and serious misconduct?

‘Misconduct’ means some form of wrongdoing. Usually it will involve deliberate wrongdoing, but there may be circumstances where an employee acts so carelessly that it amounts to misconduct (i.e. gross negligence or recklessness).

‘Serious misconduct’ involves serious wrongdoing. Where, after a fair process, it is established that an employee’s actions amount to serious misconduct, an employer may terminate the employee’s employment without notice (sometimes referred to as ‘instant’ or ‘summary’ dismissal). Because of this, the misconduct must be sufficiently serious that it undermines the trust and confidence that the employer has in the employee (e.g. theft, sexual or other assault, the use of illegal drugs at work).

If you answer no to any of the questions you may need more information.

Before considering the problem	Yes	No	n/a
Have you checked: your legal requirements including obligations and definitions in the Employment Relations Act (including ‘test of justification’) the employment agreement for the problem solving process as well as the definitions of misconduct and serious misconduct workplace policies that are related to conduct (such as a code of conduct)?

Fact finding	Yes	No	n/a
Have you carried out a thorough investigation of the facts and identified the issues? (It is important to keep an open mind and consider all relevant information throughout the process)
Have you interviewed the appropriate people?
If the allegation of misconduct or serious misconduct involves a crime, have you sought legal advice?

Trial periods	Yes	No	n/a
Have you checked whether your employee is on a trial period?
If they are on a trial period and you give notice within the trial period, do you know that: you need to give notice in accordance with your employee’s employment agreement you do not need to provide a reason for the dismissal or follow all of the dismissal processes in this guide

Arrange meeting with employee	Yes	No	n/a
Have you arranged a meeting with the employee and advised: the reason for the meeting that a support person/representative can attend advised that dismissal may result?
Have you recorded that a meeting has been arranged?
Have you arranged for a witness to attend the meeting?

Meeting with employee	Yes	No	n/a
Have you held the meeting and covered the following: outlined evidence listened to employee’s explanation, or given the employee time to gather information and respond recorded actions/results from the meeting on file?

If explanation given	Yes	No	n/a
Have you investigated immediately and recorded outcome and reassessed in light of investigation?

Follow up meeting & actions	Yes	No	n/a
Have you arranged the next meeting (including any support person/representative for the employee and witness for yourself)?
If no misconduct -if explanation shows no misconduct have you advised the employee and removed reference from file?
If misconduct is not at a level to warrant immediate dismissal – have you advised the employee and issued a warning (verbal or written) and recorded on file?
If conduct is deemed serious – have you advised employee of this, invited the employee to make any final representation and responded to any request for any lesser action?
If you decide dismissal is appropriate, have you informed the employee that they are being dismissed?

Calculate final pay	Yes	No	n/a
For employees whose employment has been terminated, have you calculated their final pay to the end of their notice period, including all holiday pay and any final entitlements, e.g. superannuation?

Collect company property	Yes	No	n/a
Have you collected all company property including keys, access cards, credit cards, uniforms, computers, passwords, security codes, cell phones etc before the employee leaves?

Managing problems & disputes	Yes	No	n/a
If the problems above lead to a dispute, such as a personal grievance, do you know where to go to for help and advice?

For further information

How to resolve employment relationship problems

You can help preserve employment relationships and save time by solving problems yourself in good faith as far as possible:

be clear about the facts
talk to your employee
deal with issues promptly but allow sufficient time for both parties to seek advice and think through the issues
if a problem is a personal grievance, the employee must raise it with the employer within 90 days of the action complained of, or after they became aware of it, unless you consent to the personal grievance being raised after the expiration of that period (if consent is not given, the employee can apply to the Employment Relations Authority.)
ensure you follow the process for issue resolution outlined in the employee’s employment agreement
you can call the Department of Labour to clarify your obligations (0800 20 90 20).
if the matter is about minimum legal requirements, a labour inspector can assist to resolve the matter.

If you can’t resolve the problem yourself, you can participate in mediation, either through the Department of Labour’s mediation services or through independent mediators.

If this does not resolve the problem, you or the employee can go to the Employment Relations Authority for a determination.

If either you or the employee is dissatisfied with the determination of the Employment Relations Authority, the issue can be taken to the Employment Court.

For more detailed information about problem resolution check: www.ers.dol.govt.nz/problem/

For More information

If you need more information about the topics covered in this brochure:

Call us free on 0800 20 90 20
Or visit our website at www.dol.govt.nz

The Department of Labour’s website contains detailed information relating to health and safety, recruiting, pay, holidays and leave, performance management, and ending employment relationships. Our website also has answers to frequently asked questions and case studies.

Our free online tools – to improve your business:

In addition to The Big 6, we also provide tools and services that are designed to make management simpler and free up time for small business owners to concentrate on the bigger picture. These tools help you implement good health and safety, and employment relations practice.

The tools are:

You can find these online tools at www.dol.govt.nz/onlinetools/

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Ending Employment Relationships