Understanding Unjustified Dismissal – Your Rights and Obligations
Ron Mckenzie | August 11, 2025
In New Zealand, unjustified dismissal is more than a workplace grievance — it’s a legal claim with potentially serious consequences. For employers, it can result in financial penalties, reinstatement orders, and reputational harm. For employees, it can mean sudden job loss, financial hardship, and emotional distress.
This guide explains what unjustified dismissal means under NZ law, outlines the legal tests applied by the Employment Relations Authority (ERA), and provides steps for both employers and employees.
What is Unjustified Dismissal?
The Employment Relations Act 2000 defines unjustified dismissal as a situation where an employer’s decision to terminate employment fails to meet both:
- Substantive justification – having a genuine, valid reason for the dismissal.
- Procedural fairness – following a fair process before deciding.
Even if there’s a valid reason, a flawed process can still make the dismissal unjustified.
Examples from NZ Case Law
- Performance issues with no formal warnings.
- Misconduct cases where the employee was not given the chance to respond.
- Restructures used as a pretext to remove staff without genuine business reasons.
The Legal Test – “What a Fair and Reasonable Employer Would Do”
When hearing a claim, the ERA considers whether a fair and reasonable employer, in the same circumstances, could have made the same decision.
Factors include:- Whether the allegations were put to the employee clearly.
- Whether the employee was given enough time to respond.
- Whether the employer genuinely considered the employee’s explanation.
Remedies for Employees
Reinstatement
Returning the employee to their role (or an equivalent one).
Compensation
Covering humiliation, loss of dignity, and injury to feelings.
Lost Wages
Payment for income lost between dismissal and finding new work.
Steps for Employers to Minimise Risk
Always follow a documented process.
Present allegations and supporting evidence clearly.
Allow reasonable time for the employee to respond.
Genuinely consider their explanation before making a decision.
Unjustified dismissal claims can often be avoided through clear procedures and early legal advice. Whether you’re an employer navigating a complex termination or an employee seeking justice, knowing your rights and obligations is essential.
At McKenzie Law, we guide both employers and employees through dismissal situations with clarity and fairness.
📞 Contact us today for confidential advice and representation.
