Summary dismissal is the dismissal of an employee without a notice period. As an employer, you might consider this type of dismissal for serious misconduct or situations where the employment relationship has broken down irreparably. Summary dismissal is legal in New Zealand but requires a fair process. Employers should only consider it in serious circumstances.
This article explains how summary dismissal works, when it is justified under the law, how it relates to serious misconduct and the need for a fair process.
How Does Summary Dismissal Work?
Summary (or 'immediate') dismissal is similar to a typical dismissal, except that it does not require giving the employee notice. The employee must leave work straight away. Likewise, they do not receive payment for a notice period (or at least the full payment of their notice period). However, you must still pay any entitlements you owe, such as annual leave, no matter the severity of the circumstances leading to their dismissal.
Summary dismissal is very serious, as employees are contractually obligated to a notice period when dismissed. Employment agreements stipulate a particular notice period for an employee's dismissal (commonly four weeks). Hence, summary dismissal is only legally justified in certain, rare situations.
In What Situations Is Summary Dismissal Legally Justified?
Summary dismissal is only justified in instances of serious misconduct. Since skipping an employee's contractual right to a notice period is a significant step, it is only justified when the employment relationship between your business and the employee has completely broken down.
Ultimately, the employee's behaviour or misconduct has been so bad that it is not tenable for them to continue as an employee. This typically follows an investigation of the employee's alleged misconduct or claims against them. After a fair process, summary dismissal is an option to sever the employee's relationship immediately.
When an employee commits misconduct, it can be challenging to ascertain whether it necessarily amounts to serious misconduct. The most important question to ask is whether the misconduct undermines or destroys the trust and confidence you have placed in the employee. This is more likely if the misconduct could impact the employee's ability to perform the job. Likewise, the misconduct might impact other employees' abilities to perform their job. If an employee breaches the trust put in them to perform a particular job (such as managing the business' finances), this can be serious misconduct.
Other common examples include violence, bullying, harassment, fraud, illegal drugs or any behaviour that endangers your other employees.
However, even when a serious incident occurs, there are still procedural requirements you must follow. There is always a need for a fair process.
The Need for a Fair Process
A fair process legally requires you, as the employer, to consider several different factors. If you are considering handing summary dismissal, ensure that you:
- fully investigate the concerns leading to the dismissal (to the extent possible given the resources of your business. Small businesses may have fewer resources to carry out an investigation);
- properly raise your concerns with the employee. This involves telling the employee exactly what the alleged problem or claims are, providing all relevant supporting information and telling them that disciplinary action is a possibility;
- give the employee a reasonable opportunity to tell their side of the story. Your employee may also require the advice from a lawyer or support person; and
- genuinely consider the employee's explanations if they provide them.
Often tensions can run high in the aftermath of a serious incident. Hence, it can be easy to forget that as an employer, you fundamentally owe a good faith duty to all of your employees, even if they have committed serious misconduct. For the dismissal to be ultimately lawful, it must follow a fair process.
Summary dismissal is the dismissal of an employee without notice. It can only occur in rare, serious situations where the employee has committed serious misconduct. However, in these situations, it is legally justified in New Zealand. It can be an option to immediately end an employment relationship with an employee when their behaviour has destroyed any trust and confidence you have in them to do their job. While it can be a useful option, you must still remember the need to follow a fair process.