“You’re fired!” – many would recall these words being repeatedly spat out by a former US president who had once tried his hand at hosting a TV reality show. In that show, the people who failed to perform to the expected levels were unceremoniously given their marching orders there and then. No process, no consideration of their viewpoint or feedback, no ifs or buts …. Just go!

But that was only a show, many would say. That does not really happen here in Aotearoa… or does it?

The fact is it does happen here, and quite often. Too many managers or business owners have used those famous last words – or others to that effect – in a similar manner, believing that they had every right to do so, only to soon find out the hard (and expensive) way that they were wrong or did not follow the correct process. Unfortunately, a manager’s belief that firing someone on the spot if they are caught with their hand in the money till is a legitimate option, is often triggered by the very wording that is regularly used in the termination clauses of many individual or collective employment agreements.

“Summary Dismissal” or even “Instant Dismissal” are, in my opinion, some of the worst misnomers in the NZ employment vocabulary. Here is just one example of this taken from a current employment agreement:

“Summary Dismissal – an employee may be dismissed immediately in the event of serious misconduct”

Let’s be honest – any manager who catches an employee stealing from the money box, or physically assaulting a fellow employee, will be rightly tempted to sack that employee on the spot and march them off the property if they read such a clause in their employment agreement. However, in doing so they will be opening themselves up to be on the losing end of a claim of unjustifiable dismissal. And we all know that this can be very costly (especially since 74% of cases brough about favour the employee (EMA)).

So, what exactly is “summary dismissal”? What does it really mean and when can it be used? I find the best way to explain this to clients is to get them to see it as being dismissal “without notice” as opposed to dismissal or termination “with notice”.

An employment agreement could be terminated either by the employee handing in their resignation or by the employer ending the relationship for just cause, e.g., after repeated warnings or for medical incapacity or by means of redundancy. In all such cases the employment agreement will also stipulate the amount of notice that either party would have to give to the other, that the relationship is about to end.

On the other hand, the employer would not be expected to give any notice if the employee is found to have committed an act of misconduct or negligence that is deemed to be so serious or so negligent that it undermines the trust and faith in the employment relationship.  

In all the above instances, however, prior to ending the employment relationship, the employer must first go through a due and proper process to ensure that the termination is both substantively justifiable and procedurally correct. The obligation for the employer to act fair and reasonably also remains. In brief, this process entails:

1. Raising the allegations or concerns with the employee in writing.
2. Asking for their feedback or point of view and asking them to attend a meeting to discuss this.
3. Advising them of their right to be accompanied by a support person or a representative of their choice.
4. Informing them what the outcome could include if the allegations or concerns are substantiated.
5. Considering all of the information at hand, including the employee’s feedback, prior to taking a decision on any disciplinary outcome.
6. Proposing a preliminary outcome to the employee and asking for feedback or comment prior to confirming the outcome.

Therefore, in the case of serious misconduct, the employer can only dismiss the employee summarily or without notice after this process is diligently followed and the alleged misconduct is found to be so serious that the employment relationship could not continue.

Many employers continue to fall foul of this and believe that if the misconduct is serious enough, they have the right to dismiss the employee ‘on the spot’, without the need for any process.

So, the next time this happens to you, step backwards and take a deep breath before proceeding any further. Better still – give us a call and we can help you to manage the situation correctly.

By John Camilleri, Senior Associate