15 - Let people go the right way.
How to handle a dismissal fairly, lawfully and decently, so it does not come back to bite you.
Picture the performance problem you have raised more than once. You have had the conversations, you have been patient and very little has changed. One day the frustration tips over, so you let the person go on the spot. A short, awkward chat and a final pay and it is done. Or so you think. A few weeks later a personal grievance claim lands on your desk. The person is seeking compensation for lost wages and hurt feelings. What felt like a simple decision has turned into a costly, stressful and very public fight.
For a New Zealand SME owner, letting someone go is far less straightforward than it looks. There is no HR department to steer you and no in-house lawyer to check the process. So the common mistakes get made in good faith. Skipping a fair process because the case seems obvious. Acting without ever giving the person a clear warning and a real chance to improve. Dismissing on a gut feeling rather than a genuine, defensible reason.
The consequences are real. Grievance claims often go the employee's way precisely because the process was rushed and the bill comes in money, in stress and in a reputation your other staff are watching closely. The reassuring part is that a dismissal done properly is rarely the thing that gets challenged. It is the dismissal done in a hurry that does.
Letting someone go should always be the last resort. When it genuinely is necessary, the process is what protects you. Here is how to do it the right way.
In an unjustified dismissal claim, it is usually not the decision that sinks you. It is the way you got there.
Start with a genuine reason
Under New Zealand law you can only dismiss someone for a reason that is fair and justified. In practice that usually means serious misconduct such as theft or violence, sustained poor performance after real chances to improve or a genuine redundancy where the role is no longer needed. A personality clash or a vague sense that someone is not working out is not, on its own, enough. You need a real reason that you could explain to a stranger and back up with evidence. A gut feeling will not survive contact with a grievance claim.
Follow a fair process, every time
For anything short of serious misconduct, how you get to the decision matters as much as the decision itself. Name the issue clearly and in writing, so there is no doubt about what the problem is. Give the person a genuine opportunity to respond. Where it is about performance, give them a real chance to improve as well. Let them bring a support person to any formal meeting. Keep a simple record of each step. None of this is about ceremony. It is about being able to show, later, that you were fair, which is exactly what a fair process produces.
If it is redundancy, it is about the role
Redundancy is one of the easiest things to get legally wrong, because it is so often used as a polite cover for moving a particular person on. The law sees through that. To stand up, a redundancy has to be genuine. The role, not the person, must be the thing that is no longer needed, the reason has to be a real business one and you have to consult the affected people properly and listen before the decision is final. Dress up a performance problem as a redundancy and you have simply chosen a more expensive way to lose the case.
Get the exit details right
A clean reason and a fair process can still be undone by sloppy final steps. Give the correct notice set out in the employment agreement. Pay the final wages properly, including any leave still owed. Put the reason and the key details in a short written letter so there is a clear record. Make sure the financial obligations, the tax and the KiwiSaver, are all squared away. Getting the final pay wrong is a common own goal, because it hands a departing employee a fresh grievance just as everything was nearly settled.
Get advice before you move
Employment law shifts, the details matter and the cost of getting it wrong is high, so this is not the place to wing it. Before you act on a dismissal, read the current guidance at employment.govt.nz and have a quick conversation with an employment adviser or a lawyer. To be clear, none of this is legal advice and every situation is different, which is exactly why a short, specific check before you act is worth it. A phone call up front is far cheaper than a personal grievance after the fact.
What would you do?
Picture an employee who has been underperforming for months despite several informal chats. You are at the end of your patience and ready to let them go. The instinct is to call them in and end it today. Slow down by one step. Put your specific concerns in writing, so the issue is unmistakable. Hold a proper meeting where they can bring a support person and respond. Give them a genuine, time-bound chance to lift their performance. Take a quick piece of advice on the process before you decide. Do all of that. Whichever way it ends, you have been fair to the person and you have protected the business. Skip it and you have handed them a grievance with your name on it.
“How you end it says more about your business than how you began it.”
Nobody enjoys letting someone go and it is right that it should sit uncomfortably. The way to make it bearable is to do it properly. Have a genuine reason, follow a fair process, treat redundancy as being about the role, get the exit details right and take advice before you act. Do that and you protect the departing person's dignity, the watching team's trust and the business you have built. The goal was never to win a fight. It was to never have one.
Next in the series, how to reach the quieter team members who never quite seem to settle in.