There are several methods for terminating an employment agreement. Aside from being dismissed by an employer, an employee can choose to terminate their employment agreement by resigning, or a position may be made redundant.
A resignation occurs when an employee voluntarily terminates their employment agreement. The reasons for resignation can be varied. An employer should be open to the reasons given by the employee for their resignation. If the reasons given by the employee are serious, such as workplace bullying, an overly stressful environment or harassment, then an employer must take steps to resolve the problem.
The legislation does not set out a procedure that employers and employees must follow if an employee resigns. The first place to check to determine what procedure should be followed is the employee’s employment agreement. An employment agreement should set out:
- That the employee can terminate the agreement by resigning
- How the employee may resign, which could be:
- verbally and in writing (this is the recommended option)
- in writing only
- If there is a notice period for resignation, and
if so, what the notice period is (some employers do not have a notice period,
in which case, the employee must give “reasonable notice” to the employer of
their resignation. Employers can use their discretion when deciding what notice
period is “reasonable”. This depends on a few factors, including:
- the employment agreement
- type of work
- seniority of the role
- salary level
- what sort of notice periods are common in the industry
- What would happen if the employee gives less notice than the specified notice period or gives no notice. This could include deduction of wages owed.
An employee may have to work the full notice period before resigning. Alternatively, if the employee agrees in writing, or the employment agreement allows it, the employer may pay out some or all of the notice period in lieu of the employee working for that period. If an employee resigns and gives the required notice, the employer must pay the employee in full. The employee’s final pay must include any holiday pay owing to that employee.
If the employee’s employment agreement states that the employer can deduct wages if the notice period is not complied with, then the employer should check whether or not the employee has withdrawn consent for this before deducting wages. An employee can withdraw consent to deductions from wages at any time by giving written notice to the employer, even if they have signed an employment agreement giving consent. The Employee’s signature will satisfy the written consent requirement of section 5 of the Wages Protection Act 1983. In such a case, the employer may still be legally entitled to a payment from the employee, but cannot deduct it from the employee’s wages.
A constructive dismissal occurs when an employer directly or indirectly pressures an employee to resign.
Examples of a constructive dismissal include where an employee resigns because:
- the employee is told to resign or else they will be dismissed
- the employer has made working conditions for the employee intolerable
- the employer has embarked on a course of conduct deliberately aimed at making the employee resign (e.g., bullying the employee)
- there has been a breach of the employment agreement by the employer, or the employer has breached the duty of fair and reasonable treatment, such that the employee feels that they cannot remain in the job
If an employee has been subjected to a constructive dismissal, the employee may have an actionable personal grievance (discussed below).
Redundancy happens when a position within an organisation either becomes non-essential or its nature changes so much that the position is no longer relevant. When that happens, the organisation may remove the position altogether. This often occurs during restructures or mergers.
Redundancy versus dismissal
A redundancy is different from a dismissal. An employer must have a genuine work-related reason for a dismissal. A redundancy must be about the employee’s position, not the employee personally.
An employer cannot use redundancy to get rid of an employee if the employer has other motives for wanting to end the employee’s employment. That means:
- if a position has been removed and an employee made redundant, the employer cannot re-advertise the same position or a position that is substantially the same
- poor performance cannot form any part for the decision to remove a position and make an employee redundant
- an employer may not make someone redundant for being pregnant or for applying for parental leave
- if an employee suspects that they has been made redundant unfairly, the employee may raise a personal grievance (discussed below)
An employee cannot raise a successful personal grievance in relation to a redundancy if the redundancy is genuine, reasonable and the process used is fair.
A fair process for redundancy
The employer needs to ensure the reasons behind the redundancy are reasonable and based on correct information. An employment agreement should include a robust redundancy clause that makes it clear to both the employer and employee what will happen if the employer wishes to make, or is considering making, the employee redundant. If an employer intends to make an employee redundant, the employer must follow any redundancy process set out in the employee’s employment agreement. A redundancy process should include the following considerations:
- The employer should consider other options
before making an employee redundant. Other options include:
- redeployment of the employee to another role
- having the employee working reduced hours
- changing the employment agreement to reflect a new role if the previous role is abandoned.
- If the employer is still considering making an employee redundant after considering other options, then the employer must tell the employee.
- The employer must provide information to the employee about the process relating to their redundancy, including the period of time they can expect to remain employed by the employer.
- The employee should be given the opportunity to
express their views and concerns about the redundancy
- Often the employee is best placed to offer input about their role, and should use this opportunity to advocate for retaining the role
- An employee should be open to participating constructively in the consultation process. If the employee is able to come up with some alternative solutions to a redundancy, those solutions should be communicated to the employer.
- An employer is not bound to take the advice of the employee. The employer is however required to offer the employee the opportunity to provide input and consider the options given by the employee.
- If, after speaking with the employee, the employer still wishes to make the employee redundant, the employer should give notice of the redundancy to the employee in writing. The notice should also be given to the bargaining officer or the union if the employer is terminating a collective agreement.
- When assessing the fairness of a redundancy
process, a court is likely to consider:
- whether notice was given in writing
- whether the employer consulted with the employee prior to making its decision
- the quality of the information given to the employee about the redundancy
- the employer’s level of resources (e.g. if the employer is a small organisation with few resources, the court will take this into account when evaluating the fairness of its process).
- An employer may offer the redundant employee an
exit package, which may include:
- help with drafting the redundant employee’s CV
- counselling services
- career guidance
- a letter of recommendation or a reference
- severance pay (if the employee is eligible).
- An employer is not legally required to give compensation to an employee it has made redundant unless there is a compensation clause in the employment agreement. However, an employer may decide to give compensation to the employee it is making redundant before or after the employment relationship has been terminated. If an employer has, or is planning to have, a compensation clause in its employees’ employment agreements, it should ensure that it has sufficient funds to pay any amounts owed.
A technical redundancy occurs when a position is made redundant as a result of the sale of the business, or when the business merges with another business. If employees are offered similar positions on similar terms as their previous roles by the purchaser of the business (or a new entity created out of a merger), then those employees are not entitled to compensation.
A different redundancy process must be followed in respect of vulnerable workers. Vulnerable workers have rights beyond what regular employees have with regards to redundancy.
Vulnerable workers include persons who carry out:
- cleaning services and food catering services in any place of work
- laundry services for the education, health or age-related residential care sector
- orderly services for the health or age-related residential care sector
- caretaking services for the education sector
Vulnerable workers have the right to access resources and have the time to make an informed decision about their future prospects, and:
- if there is a sale of the business or a merger of the business with another business, transfer to the purchasing business or the merged entity on the same terms and conditions
- choose to stay with their current employer
- take on a role with a third party (in which case the employee will be made redundant by the current employer
Retirement occurs when an employee voluntarily terminates their employment agreement, and either does not seek another job, or moves on to another profession. If an employee wishes to retire, they must resign from their role in accordance with the usual resignation process.
An employer cannot generally force an employer to retire because of their age. There are, however, exceptions to this general rule, including where:
- the employee has a written employment agreement with the employer that was in force on 1 April 1992 and remains in force
- that agreement specifies a retirement age, which has been confirmed by the employer and the employee in writing on or after 1 April 1992
If your community venue is concerned about an underperforming employee, the centre should check the community venue’s code of conduct or the employee’s employment agreement to see if there is a procedure for dealing with underperforming employees. If your community venue does not have one, consider creating one. As always when dealing with an employee, an employer must engage with the employee in good faith throughout the entire process.
The process set out below is a formal one that covers all the procedural requirements of the law. This process is necessary if the result of the process could potentially be disadvantageous to the employee’s employment (e.g. a verbal/written warning, some form of privilege taken away, job description changes) or result in a dismissal. If the issue is minor and will not result in a disadvantage to the employee’s employment, a more informal process is likely to be adequate to address the issue.
Poor performance occurs when an employee fails to meet the standards required of a person in their job. It is different from misconduct (which involves some form of wrongdoing) or incapacity (where an employee is unable to do their job for a reason such as illness).
If an employee is failing to perform their job to the level required, the employer should go through a performance management process before undertaking a formal disciplinary procedure described below.
Identify the gap
First, the employer should identify the gap in the employee’s performance. What is the employee not doing that they should be doing as part of the job? Make sure that the gap is determined and measured objectively, which can be done by referring to the duties or job description in the employee’s employment agreement. Other places to consider when determining whether the standard is an objective one are the code of conduct or procedural documents in your workplace. Once identified, the employer should discuss the gap with the employee.
Develop a performance management plan
Once the employer has started the discussion with the employee, the employer should develop a performance management plan with the employee. The employer should work out what standards it wants the employee to achieve. The employer must ensure the standards are practical, reasonable and are objectively measurable, allocate a reasonable time frame for improvement by the employee, and consider whether additional training or other support is necessary to meet those standards.
If further training or support is necessary, the type of training or support will depend on the employer’s resources and the nature of performance that needs improving. If it has limited resources, having another employee provide training might be adequate. The employer might also need to provide additional support for the employee, such as ensuring that the employee has adequate resources and support from other employees and/or volunteers.
A performance management plan should also require regular check-ins with the employee. The employer should set up a regular meeting to discuss how the employee is improving or, if they are struggling to achieve the targets, why that might be and if further support should be provided.
When the time that the employee was given to improve has passed, the employer should again evaluate the employee against the standard it set in the performance management plan. If the employee has:
- improved, then this should be the end of the process
- improved a little but not fully, the employer should evaluate whether further action is required or if more time would be appropriate
- not improved their performance to an adequate degree, the employer should begin a formal disciplinary procedure (as discussed below)
Formal disciplinary procedure
The purpose of any disciplinary action is to prevent reoccurrence of the unwanted behaviour and/or misconduct. The emphasis should not be on punishing the employee, but rather on the corrective action required to change the employee’s conduct and giving the employee a reasonable opportunity to do so.
“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 serious misconduct (i.e. gross negligence or recklessness).
“Serious misconduct” involves serious wrongdoing. Where, after a fair process (e.g. the performance management 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). 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, or the use of illegal drugs at work).
Before the meeting
Before advising the employee that they are being formally disciplined, the employer must know what the issue is. This must be defined and tangible, and the employer must think about the issue objectively.
An employer can discipline employees only for work related issues. An employer cannot discipline an employee because of issues that are only personal. The employer must be open to considering any explanations the employee might provide. If the person responsible for the employee, such as a manager, feels they are too close to the issue, or if there is a conflict of interest, the employer should arrange for someone else to carry out the procedure (e.g. an employment subcommittee or representative of the management committee).
If there is alleged serious misconduct and there is a safety risk in keeping an employee at work, the employer might be able to stand the employee down. The employer should check the employee’s employment agreement to see if there are any requirements as to how to stand down the employee. Standing an employee down can be considered a disadvantage to employment, so an employee should only do this when it is within the range of options a fair and reasonable employer could undertake. Generally a stand down will need to be on full pay.
Before meeting with the employee, the employer must give the employee an explanation of the issue or behaviour in question and the nature of the meeting. This will give the employee a chance to provide an explanation and to seek advice if it is appropriate. It could be procedurally unfair if, at the end of the disciplinary process, the employer decides to take a type of disciplinary action that the employee was not pre-warned about.
The employee must have enough time before the meeting to consider the information provided and to prepare their response and be told that the response can be made orally or in writing, or in both ways. The employee must also be told who is coming to the meeting, and of their right to bring a support person or representative with them. A good way of communicating the arrangements for a meeting is by sending a letter or email.
When an employer raises the issue with the employee, the issues outlined should be the only issues that are discussed. An employer should not raise past issues unless they are relevant. If an issue from the past has already been dealt with, an employer cannot raise it again.
During the meeting
During the meeting, the employer should explain the issue tactfully and respectfully. It will be helpful for both the employer and employee to keep a record of all discussions, agreements and meetings held.
The employee should be given a reasonable time to explain their situation. If an explanation is satisfactory, the employer should note this on the employee’s file and consider the issue dealt with. The employer cannot then raise the issue again. An explanation may, however, require further investigation by the employer. If this is the case, the meeting should be adjourned and further investigation carried out. Another meeting may then be required to put the results of the investigation to the employee.
If the explanation provided by the employee is unsatisfactory, the employer should explain why this is the case and the possible consequences. The employer should then end the meeting, so that it can fully consider the employee’s explanation and whether disciplinary action is appropriate.
Consideration and disciplinary choices
The employer should ensure that any consequences are proportionate to the issue. The employer should also consider whether there are any mitigating factors (such as the employee being a long-serving employee with a clean record).
If the employee’s behaviour has changed positively, this should be taken into account by the employer. The employer could decide that the issue has been resolved or that a lesser consequence would be appropriate.
Some disciplinary options that are available include:
- verbal warning
- written warning
- final written warning
- change of role or responsibilities
- change of location (good for separating employees that are in conflict with each other)
- requiring additional training or education
When deciding what disciplinary action is appropriate, the employer should check the employment agreement. Some employment agreements will set out a hierarchy of disciplinary actions e.g. a verbal warning may need to be given before a written warning. In that case, the employer must follow the hierarchy. The employer must also comply with any other requirements relating set out in the employment agreement. If there is nothing in the agreement, the employer can decide itself what disciplinary action to take, so long as that action is reasonable and that the employer acts in good faith.
Communicating the outcome to the employee
Once the employer has made a decision, the employer should arrange a meeting with the employee. The employee should be given the opportunity to bring a representative or a support person. The disciplinary meeting template letter referred to above can be adjusted to include this information.
In the meeting the employer should outline its decision and the disciplinary action it believes is appropriate. The employee should then be given a chance to respond to this. The employer should consider this response; it is a good idea to adjourn the meeting to ensure there is adequate time to do this. The employer’s final decision must then be communicated to the employee and appropriate follow up action taken e.g. write and record any warning given, or make arrangements for dismissal and give notice (if required).
An employer must not write a warning or dismissal letter before the meeting. Doing so can indicate that the employer had a closed mind and did not genuinely consider the employee’s response.
Community venues should also be aware of the principle of ‘vicarious liability’ commonly found in employment issues. When an employee or a volunteer in the course of doing work ‘integral to the business’ commits an offence, the employer is held accountable.This is called ‘vicarious liability’. To minimise liability, a community venues should identify common risk factors, formulate risk management plans and implement regulation policies (e.g. a Code of Conduct).
Employee grievances and dispute resolution
Grievances arise when an employee considers the employer has done something that is unfair to the employee, which could include an action that unjustifiably negatively affects employment conditions, discrimination, harassment, or the employer having undue influence relating to unionism. Disputes are disagreements about the interpretation, application or operation of an employment agreement.
It is important that an employer has sound policies for dealing with issues arising in employment relationships. A dispute or grievance could arise for a number of reasons and with varying degrees of seriousness. A dispute resolution clause that sets out how disputes and grievances will be dealt with must be included in all employment agreements, including both individual and collective agreements.
How to identify problems
An issue may come to your attention through an employee making a complaint, either verbally or in writing. Alternatively, a situation may be so serious that you are able to identify an issue without a complaint being made (e.g. if you witness the bullying or harassment of an employee).
You should try and address any issues as early as possible, whether it has resulted from a complaint or has been identified more informally. This may involve asking the employee to provide you with more information so you can properly consider and address the issue.
Dealing with a dispute about the employment agreement
If an employee comes to you with a dispute or you realise there is an issue with the employment agreement, think through the key facts about the problem, and gather any relevant information. Some questions you could consider include:
- What are the relevant parts of the employment agreement?
- How does the dispute relate to the employment
- Are there any obvious breaches?
- Are there any mistakes?
- Do I need to seek further legal advice on this issue?
- How does the dispute affect the employee?
- Does the dispute affect any other employees?
- Has there been any discussion about the dispute with other employees?
- What mitigating actions have been taken to resolve the dispute?
- How effective have they been?
Common areas of dispute
Some common employment disputes are:
- disputes about the interpretation, application or operation of the employment agreement
- disputes relating to alleged breaches of the employment agreement
- whether a person can be considered an employee
- unfair bargaining of the employment agreement
- disputes relating to redundancy agreements
- recovery of wages
Dispute resolution methods
It is in the best interests of both the employer and the employee to resolve any dispute quickly. An employer or employee may rely on several methods to resolve a dispute, as discussed below.
Raising the issue early through an initial meeting
In cases of small disputes the first step can be a meeting between the two parties. The goal is to develop a common sense solution that both can agree on. One party can raise the issue and the other party can then respond. There does not need to be an independent third party present in the meeting. Once matters are discussed, the two parties can agree on a plan to resolve the issue. As a matter of good practice, the matters discussed at the meeting should be recorded in writing, agreed by both parties, and filed.
If the situation gets worse, the parties may consider mediation.
Contact the Labour Inspectorate
The Labour Inspectorate ensures that minimum conditions of employment laws are applied correctly (e.g. minimum wage is paid, holiday pay is paid). If the dispute relates to a minimum condition of employment then the employee may complain to the Labour Inspectorate, who will then investigate the complaint.
If the Labour Inspectorate finds that there might be breaches of the law, the inspector might do any of the following:
- Provide educational information to both parties, which may include any information the parties may need to become compliant with the law. This information can be useful in situations in which a breach may have been inadvertent. The information can also accompany any notice given to the parties (such as those set out below).
- Issue an enforceable undertaking, which is a voluntary commitment given by the parties recorded in writing. An enforceable undertaking may be withdrawn with the agreement of the labour inspector.
- Issue an improvement notice (which requires a party to take steps to improve the issue).
- Issue a demand notice (which requires compliance by a party).
Other forms of dispute resolution
You can resolve disputes using the mediation service provided by the Ministry of Business, Innovation and Employment, or if that doesn’t work then Employment Relations Authority and Employment Court processes set out in “How an employee raises a personal grievance”, below.
A personal grievance is a complaint made by an employee about their employer.Personal grievance claims can be made by all employees.
Grounds for a personal grievance
To raise a personal grievance, all an employee needs to do is make the employer or a representative of the employer aware of the facts that give rise to the grievance, with enough information that the employer can act on the issue if they want to. A grievance can be raised by a letter, an email or verbally.
The grounds for a personal grievance are discrimination, sexual harassment, racial harassment, unjustified dismissal, unjustified disadvantage, duress related to unionism and issues related to vulnerable workers and redundancy. The most common of these grounds are discussed below.
An employer has a duty to treat all employees fairly and equally. Discrimination occurs when an employee is treated unfairly and to their detriment, in comparison to the other employees, under one or more of the prohibited grounds of discrimination. The prohibited grounds of discrimination are listed in the recruitment section of this chapter.
The employer will be acting unlawfully if one of the following has occurred in the workplace because of one of the prohibited grounds of discrimination:
- the employer offers the employee less favourable terms of employment, conditions of work, fringe benefits or opportunities for training, promotion and transfer than are made available for other employees of the same or substantially similar qualifications, experience or skills employed in similar circumstances
- the employee has been subjected to some form of detriment or dismissal in circumstances where another employee in a similar situation would not have been subjected to such detriment or dismissal
- the employee has been forced to retire or required to resign
Sexual harassment may be any of the following:
employer or representative of the employer (e.g. a manager or senior management
team member) makes a request, either directly or indirectly, of an employee for
sexual contact or other form of sexual activity. This request may be
- an implied or overt promise or threat of preferential or detrimental treatment
- an implied or overt threat about the employee’s future employment status (e.g. threatening to dismiss)
- An employer or the employer’s representative uses language (written or spoken), visual material or physical behaviour of a sexual nature that is unwelcome and/or offensive, and is either repeated, or is so significant that it has a detrimental effect on the employee’s employment, job performance or job satisfaction.
The sexual harassment does not have to come from an employer or its representative. It may come from a co-worker, client or customer. The employer will be liable for such harassment only if it fails to take reasonable and practicable steps to prevent the harassment from occurring. This means that if an employer is informed of the sexual harassment of an employee by co-workers, clients or customers, the employer should take immediate action to protect the employee from such harassment and prevent it from happening in the future.
Racial harassment occurs when an employer or its representative uses language, visual material or physical behaviour that directly or indirectly:
- expresses hostility against, brings into contempt or ridicules the employee on the basis of race, colour, ethnicity or national origins
- is hurtful or offensive to the employee
- has, either by its nature or through repetition, a detrimental effect on the employee’s employment, job performance and/or job satisfaction
As with sexual harassment, the harassment does not have come from the employer. An employer may be held liable if they fail to take reasonable steps to stop racial harassment against an employee.
Racial harassment can include, but is not limited to, the following:
- derogatory comments made against the employee on the race, colour, ethnicity or national origins
- the existence in the workplace of written or visual items that are racially offensive and/or hurtful
- racial jokes that are made at the employee’s expense, or otherwise
- judging an employee or making decisions relating to the employee based on racial stereotypes
- sharing racist emails.
A dismissal can be unjustified if:
reason for an employee’s dismissal is not justifiable:
- an employer must have sufficient evidence to establish that there are good grounds to dismiss an employee
- the reason for dismissal must be one that a reasonable employer would consider to be a justifiable reason for dismissal (e.g. misconduct, incapacity, bringing employer into disrepute, poor performance)
- prohibited grounds of discrimination as a basis for dismissal is unjustified
- a redundancy is not genuine (job still exists)
- there is a breach of an employer’s duty through a constructive dismissal
procedure used for dismissal is procedurally unfair:
- any issue that results in dismissal must be properly investigated
- if an employer is unhappy with the employee’s performance, it must tell the employee
- the employee must be given an opportunity to respond to the employer’s concerns
- the employer must have an open mind when considering the matter and act in good faith
an employer resorts to dismissal, it should consider other options:
- meeting with the employee
- additional supervision of the employee
- giving a formal warning
Employers are bound to follow the ‘fair and reasonable’ test when dealing with a potential dismissal. That is, an employee should be dismissed only if dismissal is an action that a fair and reasonable employer could take, considering the circumstances of the individual employee.
An unjustified disadvantage could encompass many things, and occurs when:
- an employee’s employment or the conditions of employment have been affected
- the effect is disadvantageous to the employee
- the disadvantage was caused by the employer
Bullying is a form of unjustified disadvantage and can be a breach of health and safety legislation. Broadly, bullying is characterised by actions that are repeatedly carried out with the desire to gain power or exert dominance, or with the intention to cause fear and distress. A harsh management style alone will not constitute bullying.
Bullying can immediately create grounds for a personal grievance if the employer, or a representative of the employer, is the one subjecting an employee to bullying. If a co-worker is bullying an employee, the employee should inform the employer or employer’s representative of this. If the employer or its representative does nothing or acts inadequately, this may give rise to grounds for a personal grievance.
If an employee informs you that they are being bullied, you should take this seriously and investigate the issue. If an employee is undertaking bullying behaviour, then this can be grounds for misconduct.
How an employee raises a personal grievance
An employee with a grievance needs to take reasonable steps to raise a grievance with his or her employer. This can be done verbally or in writing. It is recommended that an employee does both, but they do not need to for it to be legally binding on the employer.
The grievance must be raised no later than 90 days from when the grievance occurred or when the employee became aware of the grievance, whichever is later. A personal grievance can be raised outside this time limit if the employer agrees to this,, if you wish to respond to a personal grievance raised outside the 90 day time limit – seek legal advice before doing so.
When raising a grievance, the employee should cover the following matters:
- Who the employer is
of the issue leading to the grievance. The employee should set out the relevant
events chronologically (or make their best attempt to do so). Specify the
- what happened?
- when did it happen?
- who did it involve?
- how did it become an issue?
- why does this warrant a personal grievance claim?
- Whether the issue been raised before with the employer. If possible, the employee should provide dates, times and places. The more detail an employee can add, the more credible the grievance
there are documents that support the employee’s claim, such as:
- written evidence of sexual or racial harassment
- the employment agreement
- documents resulting from meetings relevant to the issue
- file notes of telephone calls relevant to the issue
- documents that outline the reasons for the employer taking disciplinary action (if any)
- Any other information that could support the employee’s claim
remedy the employee is seeking, which might be:
- interim reinstatement
- acknowledgement that the employer contributed to the issue
- an apology
- a change in working conditions/workplace policy and/or procedures
Dispute resolution process for personal grievance
If an employee raises a personal grievance, the employer can choose to try to resolve the issue informally or go through mediation.
As an employer, if you are made aware of a personal grievance, it is a good idea to adopt a common sense approach. It is important to have a clear idea of the issues and what the facts are, which should involve some investigation. You should also ensure both you and the employee have time to think through the issues and get legal advice or other support if need be.
You should ensure you are following any process set out in the dispute resolution clause of the employment agreement.
If you are discussing the issue with the employee, it can be a good idea to have a third party present as a witness and to help prevent misunderstanding. You should advise the employee that they are entitled to bring a support person, union delegate or other representative. Both the employee and employer should take notes in any meetings and have a copy of any agreement reached.
Employment relationship problems may also be resolved through mediation. Mediation is a flexible procedure that can result in a binding settlement. An employer or employee may initiate mediation with the other party and get mediation for free through the Ministry of Business, Innovation & Employment (MBIE), provided that the issue is related to an employment relationship. Mediation is a voluntary process, and both parties must agree to attend mediation. (In some circumstances, the Employment Relationship Authority may require the parties to attend mediation. This is discussed below).
Mediation allows both the employer and employee to discuss their issues fully and without fear of ramification, as the process is completely confidential. For mediation to work efficiently, both parties should participate in good faith, with an open mind and a desire to resolve the matter.
Parties may be legally represented, but this is not a requirement. They may also take support people to the mediation.
The employer and employee can also choose to use a private employment mediator or arbitrator. However any agreement that is reached may not be enforceable in the Employment Relations Authority or Employment Court unless it is later signed off by a mediator from MBIE.
Role of the mediator
The mediator’s primary role is to facilitate and encourage discussion. The mediator is impartial and does not impose a binding decision on the parties unless the parties give the mediator the authority to do so. Mediators appointed by MBIE are experts in dealing with employment relations disputes. They also have the full authority to sign settlements that are legally binding under the Employment Relations Act 2000.
A mediator will pay careful attention to the discussion between the parties. They may identify issues that are not apparent to the parties and manage risks as they appear during the process.
Some strategies a mediator may use are set out below.
Before the mediation, the mediator may:
- Summarise their role in the mediation process, which could include information about how the mediation process will be managed.
- Begin the session by outlining common grounds that the parties have.
During the mediation the mediator may:
- Ensure that the discussions between the parties are civil and respectful. A good mediator should have some strategies to manage heated or irrelevant discussions.
the parties to seek settlement. However, a mediator should not pressure parties
to settle. Instead the mediator could direct the parties to:
- examine their investment in the employment relationship
- consider the nature of the problem
- weigh this against the circumstances of the parties
- examine the behaviour of both parties
- think about the relevant law and how it affects the current situation
- consider the other party’s situation and views
- reality test each party’s options if settlement is not reached.
Outline of a mediation process
The following is a general outline of the mediation process that is followed in respect of employment relationship.
- Parties agree to mediation: Because it is a voluntary process, one party cannot compel the other to go for mediation. However if one party files in the Employment Relations Authority (“ERA”), the ERA can compel both parties to attend a mediation. If a party refuses to attend a voluntary mediation, this may reflect poorly on that party.
- Speak to an information officer: A party can talk with the MBIE contact centre (0800 20 90 20). An information officer will discuss with the party whether or not mediation is the best process for the parties. The officer will then refer the parties’ contact details to an area office.
- Mediator contacts both parties to discuss the issue: A mediator from the area office will decide whether the issue should be mediated or if alternative actions are more appropriate.
- The parties should tell the mediator if they will need additional assistance in the mediation process (e.g. interpreter, legal representation, senior staff member).
- Either party may be required to send the mediator a written agreement that states it is willing to undertake mediation.
- If the parties would like the mediator to make a binding decision on their behalf, they must give the mediator written consent to do so. Each party must be aware that it cannot appeal the mediator’s decision if it is unhappy with it.
- If mediation is to go ahead,
the mediator will confirm in writing a time and place for the mediation.
All parties involved will receive this information from the mediator.
- While a written submission from either party is not required for mediation, it can be helpful if you prepare a submission that sets out your key arguments. That way if you get confused or flustered you can refer to your submission in the mediation.
- During the mediation session: the parties will have an equal opportunity to express their concerns. For the mediation process to be successful, the parties should mediate in good faith and with an open mind.
- The outcome of mediation: This is dependent on the parties involved.
- If a settlement is reached, the mediator will write up a ‘Record of Settlement agreement’. The parties involved will receive a copy. The Record of Settlement is a legally binding document once it is signed by the parties. This also bars the parties from going to court on the same issue.
- If settlement is not reached, the parties may make a separate or joint application to the Employment Relations Authority to resolve the issue, as set out below.
See the Ministry of Business, Innovation and Employment’s website for a Record of Settlement template.
Employment Relations Authority
The Employment Relations Authority (“ERA”) is an investigative body. Its role is to resolve employment relationship problems. When an application is made, the ERA will review the issue. It may suggest alternative forms of dispute resolution first (e.g. mediation). However, if initial steps taken by the parties have failed, then the ERA will investigate.
Applying to the Employment Relations Authority
To apply to the ERA, a party must fill in a prescribed form that can be found on the ERA’s website. The fee of $71.56 must be provided with the application, along with copies of supporting documents. These could include:
- the employment agreement
- meeting notes/minutes
- emails, letters or facsimiles
- diary notes
- file notes of discussions by the parties
The ERA website has other forms for the general public to access. These forms include:
- Application for interim reinstatement: An employee who has been dismissed and wishes to continue working for his or her former employer while the case is before the ERA can apply for interim reinstatement by filling out this form. The form should be attached to the application.
- Statement of Reply: when the ERA contacts the responding party, that party must fill in a Statement of Reply. There is a prescribed form on the website.
- Application for investigation to be reopened: If a party would like to reopen their case with the Employment Relations Authority, they must fill in this form and pay a fee of $153.33.
- Application for removal of matter to the Employment Court: If a party would like a matter to be heard in the Employment Court instead of the ERA, it must fill out a prescribed form and pay a fee of $153.33.
Forms can also be requested from the Ministry of Business, Innovation, and Employment on 0800 20 90 20.
Case management conference
When the ERA receives an application and payment, it will begin the investigation process. A case management conference file is created for the parties, and a case management conference is held. This is a brief process which normally takes place over the phone.
The purpose of a case management conference is to:
- outline a procedure for the investigation process
- have a clear understanding of the issues
- formulate strategies to resolve the dispute
- ensure that the correct evidence is used to resolve the dispute
- agree on a date, place and time for an investigative meeting
Investigation meeting with the Employment Relations Authority
Meetings are held at the ERA’s office. Parties are welcome to bring support people to the meeting. They may also have representatives (e.g. a lawyer or employment advocate) present at the meeting.
The process of the meeting:
- Introductions and outlining a process: The ERA member who runs the meeting will introduce him/herself and give a brief outline of the process that will be followed
- ‘Statement of Problem’ and ‘Statement of Reply’: The ERA member will then check the facts set out in both the ‘Statement of Problem’ and ‘Statement of Reply’ with the parties
- Presenting evidence: the parties may be asked to verbally present evidence during the meeting. Parties may also have to submit a written statement of evidence
- Witnesses: Witnesses who have provided a statement to the ERA must attend the investigation meeting. The Authority member may ask them questions regarding their statement. They will have to verify that the information given on the statement is true
- Conclusion: The parties will have an opportunity to summarise their key points
A determination is a decision that the ERA will make after considering all of the evidence. This decision is legally binding on both parties, although can be appealed as set out below. Determinations are public, and are issued in writing to either parties or their representatives.
The ERA has the legal authority to grant the following remedies:
- Interim reinstatement: the ERA may issue an order to an employer to temporarily reinstate the employee while there is an investigation
- Reinstatement: the ERA can reinstate an employee if it finds he or she has been unjustly dismissed
- Compensation: compensation is normally given to parties who have suffered loss or humiliation
- Compliance: the ERA can compel the parties to fulfil their obligations towards each other
- Costs: often the parties can decide who pays for the costs for the ERA. If they disagree, the ERA can make a binding decision as to costs
- Reimbursement of loss of wages: if the employee has been dismissed or subject to an unjustified action, the ERA may find the employee is entitled to a reimbursement
If either party is unhappy with a decision made by the ERA it may apply to the Employment Court. A party must apply to the Employment Court no later than 28 days after the ERA’s decision. A party may specify if it wants to have the matter considered again or if only specific aspects of the ERA’s decision should be considered again. The Employment Court follows a formal process and stricter rules of evidence than the ERA, so it is strongly recommended that both parties are represented by a lawyer.