Unfair Dismissal

In the ordinary dismissal case, procedural and substantive justification matter. Employers must act in good faith, have a legally sufficient reason to terminate employment, and follow a fair and reasonable process. The employer bears the onus of demonstrating that a dismissal was justified.

There are now important exceptions to that ordinary position. Different dismissal rules can apply to a valid trial period and, from 21 February 2026, to employees at or above the statutory high-income remuneration threshold unless dismissal protections apply under the transitional or opt-in rules. We check which regime applies before assessing the case.

No Win No Fee Case Form Quick Contact

What is unfair or unjustified dismissal?

"The right to employment is a substantial right requiring protection. Therefore, the starting-point for a dismissal to be valid is that it must be justifiable and fair."
Hayashi v Sky City Management Ltd

"The test is whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred."
Section 103A, Employment Relations Act 2000

In New Zealand, an unfair dismissal is commonly pursued as a personal grievance (PG) for unjustified dismissal. In an ordinary s103A case, the question is not simply whether something went wrong at work. The employer's reason, investigation, information provided to the employee, opportunity to respond, consideration of the response, and overall fairness are examined together.

---

Common reasons employers rely on

Common reasons for dismissal include, but are not limited to:

• Misconduct and serious misconduct
• Misconduct outside the workplace
• A breakdown in trust and confidence
• Unsatisfactory work performance
• Breaches of workplace policies and rules
• Disobedience and insubordination
• Dishonesty, negligence, incompetence or inability
• Misrepresentation of skills or qualifications
• Incapacity and long-term illness
• Irreconcilable breakdown or incompatibility
• Misuse of drugs or alcohol
• Misuse of computers and information systems
• Workplace violence and intimidation
• Redundancy or other genuine workplace change

The list is not exhaustive. Different legal tests and factual questions arise depending on the reason relied on. A performance dismissal is not analysed in exactly the same way as serious misconduct, redundancy, medical incapacity or a fixed-term expiry.

---

The current s103A process factors

Section 103A remains the central test for ordinary unjustified dismissal and unjustified disadvantage claims. From 21 February 2026, the statutory factors expressly include whether the employee obstructed the employer from taking the usual procedural steps.

1. Whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations before dismissing or taking action.
2. Whether the employer raised its concerns with the employee before dismissing or taking action.
3. Whether the employer gave the employee a reasonable opportunity to respond.
4. Whether the employer genuinely considered the employee's explanation, if any.
5. Whether the employer was obstructed by the employee from taking those steps, or from taking another relevant step considered by the Authority or Court.

The Authority or Court may also consider other relevant factors. The 2026 amendments also make clear that a dismissal or action is not unjustifiable solely because of procedural defects if those defects did not result in the employee being treated unfairly. That means the real effect of the defect matters, not simply the existence of a technical mistake.

"The Employment Court: could really only conclude that the Authority and the Court should try to give sensible interpretation to this provision."
Angus v Ports of Auckland Ltd

---

Serious misconduct: the label is not enough

Employers sometimes describe conduct as “serious misconduct” when the facts do not justify that conclusion. The description used in the invitation letter does not decide the case. The nature of the conduct, the evidence, the employment agreement and policies, consistency of treatment, the investigation and the proportionality of dismissal all need to be considered.

Performance: ordinarily a process of improvement

Poor performance is not automatically misconduct. Where performance is the genuine issue, employers ordinarily need to identify what is deficient, make expectations clear, provide an appropriate opportunity to improve, and warn the employee if continued employment is at risk. We regularly see performance and disciplinary concepts confused.

Read about Performance Meetings

---

What to do right now

1. Get the dismissal in writing: the reason, effective date and notice position.
2. Save the evidence: allegations, meeting letters, emails, texts, rosters, CCTV requests, policies and notes.
3. Write a short dated timeline: what happened, who was present and what documents exist.
4. Do not sign a settlement blindly: “full and final” wording can release claims.
5. Keep job-search evidence: applications and responses can be relevant to lost-wage claims.
6. Raise the PG in time: do not assume a complaint to someone else automatically protects the statutory deadline.

What can be claimed?

Depending on the facts and the applicable legal regime, remedies may include:

• Lost wages
• Compensation for humiliation, loss of dignity and injury to feelings
• Reinstatement in an appropriate case
• Correction of final pay or other employment entitlements
• Contribution to costs where available
• Agreed reference, statement of service or other settlement terms

Many cases settle through direct negotiation or mediation. If a suitable case does not settle, it can be progressed to the Employment Relations Authority. See how the resolution process works.

---

2026 dismissal-law changes: who needs extra checking?

Frequently asked questions

Is having a reason enough to dismiss me?

In an ordinary dismissal case, no. The reason and the way the employer acted are both relevant. Different rules can apply to valid trial periods and some high-income employees.

What if I was pressured to resign?

That may raise constructive dismissal issues. Do not resign first if you can obtain advice before doing so. Read about Constructive Dismissal.

Is No Win No Fee available for every dismissal?

No. We assess merit, evidence, likely remedies, recoverability and the work required before accepting a matter on that basis.

Often we find significant defects where an employer has come to a decision to dismiss an employee. Whether you have already been dismissed, or the employer has just commenced an investigation or disciplinary process, send us the documents and we will assess the merits and practical options.