How do I dismiss an employee for serious misconduct in New Zealand?

Last updated: 28 August 2026 | Written by Andy Bell, Partner, Lane Neave

To dismiss an employee for serious misconduct in New Zealand, you need two things: conduct serious enough to destroy trust and confidence, and a fair process that meets the section 103A test in the Employment Relations Act 2000. That means investigating properly, putting the allegations and evidence to the employee in writing, giving them a real chance to respond with a support person, genuinely considering their answer, then deciding.

Get either half wrong and you are exposed to an unjustified dismissal personal grievance and a real chance of ending up at the Employment Relations Authority. The Employment Relations Amendment Act 2026 has shifted the odds towards employers who follow a fair process, and removes remedies entirely where the employee’s own serious misconduct contributed. It has not removed the duty to act fairly. A rushed or predetermined process still loses in front of the Authority in Wellington.

What counts as serious misconduct in New Zealand?

Serious misconduct is conduct that deeply impairs or destroys the trust and confidence at the heart of the employment relationship. That is the long-standing test from the Court of Appeal in Northern Distribution Union v BP Oil NZ Ltd [1992] 3 ERNZ 483, and the Authority still applies it.

The Act does not define serious misconduct. The categories most commonly accepted are:

• Theft or fraud: taking money, stock or property, or falsifying records or timesheets.
• Violence or threats: assaulting or threatening a colleague, customer or manager.
• Dishonesty: lying during an investigation (see our post on the Court of Appeal’s warning about lying in a disciplinary interview), misrepresenting qualifications, or concealing material facts.
• Serious health and safety breaches: bypassing safety controls, working impaired, or endangering others.
• Harassment: sexual or racial harassment, or serious bullying.

Your employment agreement and policies matter. If the agreement lists specific conduct as serious misconduct, the Authority will give that real weight, provided the definition is reasonable and the employee knew about it. If it is silent or vague, you rely on the general test. Either way, the label does not decide the case: careless conduct or a first minor breach usually justifies a warning, not dismissal.

What is the section 103A test and what does it require of employers?

Section 103A of the Employment Relations Act 2000 sets the test of justification for every dismissal in New Zealand: whether the employer’s actions, and how it acted, were what a fair and reasonable employer could have done in all the circumstances.

The word “could” matters. The Employment Court in Angus v Ports of Auckland Ltd [2011] NZEmpC 160 confirmed there may be more than one fair and reasonable response open to an employer, and the Authority asks whether dismissal was within that range.

Section 103A(3) lists the procedural factors the Authority must consider:

• Whether the employer sufficiently investigated the allegations, given its resources.
• Whether it raised its concerns with the employee before acting.
• Whether it gave the employee a reasonable opportunity to respond.
• Whether it genuinely considered the employee’s explanation before dismissing.

The 2026 amendments strengthened the employer’s position in two ways. Section 103A(5), as amended, now catches any process defect, not just minor ones: a dismissal is not unjustified solely because of defects that did not result in the employee being treated unfairly. The Authority may also consider whether the employee obstructed the process. Neither change excuses genuine unfairness.

Good faith under section 4 also requires giving the employee access to relevant information, and a chance to comment, before deciding.

What is the step-by-step fair process for a serious misconduct dismissal?

1. Preserve and gather the evidence. Secure CCTV, emails, system logs or witness accounts before they are lost. Decide who will investigate; in a contested case, that person should not be the eventual decision-maker.
2. Consider suspension carefully. You may suspend on full pay if you have a contractual right or a genuine need, such as risk to people, property or the investigation. Even then, propose it, hear the employee, and consider their response first. See how suspension works in New Zealand.
3. Put the allegations in writing. Set out each specific allegation, the evidence relied on, that it may amount to serious misconduct, and that dismissal is a possible outcome.
4. Give reasonable time and invite a support person. Two or three working days is typical for a straightforward matter; complex cases need longer. Confirm they may bring a support person or representative.
5. Hold the meeting and genuinely listen. Put each allegation, let the employee respond, and take notes. If new points arise, adjourn and follow them up.
6. Put your preliminary view to the employee. Explain your findings and the outcome you are considering, and invite comment, including anything that should count against dismissal.
7. Decide and confirm in writing. Consider everything said, decide, and give written reasons, including whether the dismissal is summary and the final pay arrangements.

Before settling on dismissal, ask whether a lesser sanction, such as a final warning, would suffice given the seriousness of the conduct, mitigating factors and the employee’s record. Skipping that proportionality question is a common reason the Authority finds a dismissal outside the range of fair responses.

Summary dismissal or dismissal on notice: which applies?

Summary dismissal means dismissal without notice or payment in lieu. It is available only for serious misconduct, because the conduct is a fundamental breach that releases the employer from the notice obligation. Dismissal on notice, or with payment in lieu, is the route for lesser misconduct after warnings, or where the employer chooses to soften the outcome. Both require the same fair process. Our post on working out a notice period in New Zealand covers the notice side in detail.

What are the common mistakes that turn a dismissal into a personal grievance?

The same errors recur in Authority determinations:

• Predetermination: the letter is drafted, the replacement lined up, or colleagues told the person is “gone” before the meeting.
• Rushing: a meeting with no notice, no written allegations, and a decision on the spot.
• Not sharing the evidence: relying on CCTV, statements or data the employee never sees.
• Investigator and decision-maker are the same person: a risk in any contested case, and fatal where that person is also a witness or the complainant.
• Suspending without process: sending someone home without proposing suspension and hearing them first.
• Sloppy paperwork: if it is not documented, the Authority may treat it as if it did not happen.

“In my experience advising Wellington employers, serious misconduct dismissals rarely fail because the conduct was not serious enough. They fail because the employer already knew the answer before the meeting, or could not show the Authority the evidence and reasoning. Slow the process down by a week and you almost always get a stronger outcome, and often no claim at all.” Andy Bell, Partner, Lane Neave (Legal 500 Asia Pacific Recommended Lawyer; Doyle’s Guide Recommended Employment Lawyer 2026)

What is the risk if the employee raises an unjustified dismissal grievance?

A dismissed employee has 90 days to raise a personal grievance for unjustified dismissal under section 114 of the Employment Relations Act 2000. If it is not resolved directly, the usual path is MBIE mediation in Wellington, then the Employment Relations Authority. The Authority received 2,745 applications in 2024, up 29.6% on 2023, and 1,539 of them included an unjustified dismissal claim (ERA Annual Report 2024).

Remedies under section 123 include reinstatement, lost wages, and compensation for humiliation, loss of dignity and injury to feelings. The Employment Court’s bands in GF v Comptroller of New Zealand Customs Service [2023] NZEmpC 101 run from up to $12,000 (low), $12,000 to $50,000 (mid), to above $50,000 (high); see our post on compensation for humiliation, loss of dignity and injury to feelings.

The Employment Relations Amendment Act 2026, in force from 21 February 2026, changed remedies:

Situation	Effect on remedies after the 2026 amendments
Employee’s contributing conduct amounted to serious misconduct	No remedy at all (new section 123B)
Employee’s conduct contributed but fell short of serious misconduct	No reinstatement and no humiliation compensation (new section 123C); other remedies reducible by up to 100% (amended section 124)
Employee earned $200,000 or more in total remuneration	No unjustified dismissal grievance. Applies to agreements from 21 February 2026; employees already in the same job on that date keep unjustified dismissal protection until 21 February 2027 unless both parties agree in writing to bring the change forward; the parties can also agree in writing that the threshold will not apply to them

The section 123B bar only helps if the Authority accepts the conduct happened and was serious misconduct, so evidence matters more than ever. The high income threshold does not remove other grounds such as discrimination or harassment. For detail, read our summary of what changed in the Employment Relations Amendment Act 2026 and our post on the $200k trap.

When should an employer get advice before dismissing?

Get advice before you suspend or send the allegation letter, not after the dismissal: early errors are hard to cure. It matters most where the employee is senior or already in dispute with you, the allegations involve harassment or discrimination, the evidence rests on one witness, or the threshold is doubtful. Our disciplinary process and investigation services for employers are built for this stage.

Key takeaways: the employer checklist before you dismiss for serious misconduct

• Definition: The agreement or policy identifies this conduct as serious misconduct, and the employee knew the rule.
• Evidence: All relevant evidence secured and reviewed, including anything that helps the employee.
• Allegation letter: Specific allegations, evidence attached, possible outcomes stated, support person offered, reasonable time given.
• Meeting and preliminary view: Each allegation put, response recorded, new points followed up, proposed outcome put to the employee before finalising.
• Decision: Written, reasoned, proportionate: warning versus dismissal, summary versus notice.
• Records and advice: Every letter, note and piece of evidence filed, and a second set of eyes before the outcome letter goes out.

Frequently Asked Questions

Can I dismiss an employee on the spot for serious misconduct in New Zealand?

No. Even for the clearest serious misconduct, section 103A of the Employment Relations Act 2000 requires you to investigate, put the allegations to the employee, give them a reasonable chance to respond, and genuinely consider their explanation first. Summary dismissal means without notice, not without process.

Do I have to pay notice if I dismiss for serious misconduct?

No. A justified summary dismissal for serious misconduct does not require notice or payment in lieu. You must still pay final wages and accrued holiday pay to the dismissal date, and a fair process is still required before you decide.

Can I suspend an employee while I investigate serious misconduct?

Yes, but only if you have a contractual right or a genuine reason, and only after proposing the suspension and giving the employee a chance to comment. Suspension should be on full pay unless the agreement clearly allows otherwise. Suspending without this process can itself found an unjustified disadvantage grievance.

What happens if I make a small procedural mistake in a serious misconduct dismissal?

Since 21 February 2026, section 103A(5) of the Employment Relations Act 2000, as amended, catches any process defect, not just minor ones: a dismissal is not unjustified solely because of defects that did not result in the employee being treated unfairly. Mistakes that did cause unfairness, such as withholding evidence or predetermining the outcome, can still make the dismissal unjustified.

How long does an employee have to challenge a dismissal for serious misconduct?

An employee has 90 days from the dismissal, or from when it came to their notice, to raise a personal grievance under section 114 of the Employment Relations Act 2000. If it is raised in time and not resolved, it can proceed to MBIE mediation and then the Employment Relations Authority.

For employers: employment law services for employers. For employees: employment law services for employees.

Andy Bell is a Partner at Lane Neave, an employment lawyer acting for employers and employees in Wellington. He is a Recommended Lawyer in the Legal 500 Asia Pacific and a Recommended Employment Lawyer in Doyle’s Guide 2026.

Last updated: 28 August 2026