Ending employment can be a difficult moment. The employer and employee have a mutual obligation to deal with each other in good faith, using fair processes and doing things for the right reasons.

Good Faith

  • Not act in a misleading or deceptive way
  • Be responsive and communicate openly
  • Provide information and give opportunity to participate
  • Be respectful of one another

Fair Process

  • Fully investigate the issues raised and raising concerns openly and directly
  • Give one another reasonable time to explain or defend themselves
  • Genuinely consider all information before making a final decision.
  • Set and follow internal processes especially disciplinary and dismissal processes

Right Reasons

  • Have all the facts that can be reasonably gathered
  • Consider the responses from one another
  • Consider one own’s personal reaction in a similar situation
  • Take any other relevant factor into consideration
  • What can be fairly and reasonably expected in the context

There are specific reasons for ending an employment agreement.

1. Resignation

An employee can resign freely from their employment by providing one week’s notice at minimum. (Section 43  of the Employment Relations Act 2012.)

2. Termination by employer for either conduct, performance or restructure of business.

An employer can only terminate an employee’s employment if:

  1. it is in accordance with the redundancy process:
  2. the employee no longer has capacity to carry out the duties required by the employment agreement:
  3. the employee’s conduct warrants termination (either due to misconduct or serious misconduct):
  4. other grounds that may be specified in a person’s employment agreement or at common law.

Before terminating an employee’s employment, the employer is advised to seek legal advice as wrongful termination or repudiation of employment could make them liable for damages.  Employers are also required to notify the employee of the intention to terminate and the reasons for it. This process also includes the opportunity for the employee to be heard in relation to the termination before any final decision is made.

In the event of termination, an employee is entitled to be paid out their accrued annual leave, any outstanding pay and any other entitlements as set out under their employment agreement or under the Employment Relations Act 2012.  An employer should also provide to the employee a written letter setting out the termination and the reasons for it.


Any redundancy must be as a result of a genuine restructuring of an employer’s business that means the employee’s position is no longer available.  Before engaging in the redundancy process the employer should give consideration to discussing with the employee changes to their work arrangement. Any redundancy must be carried out in accordance with proper redundancy processes which includes consultation with the employee through all stages of the process.

The employee is entitled to the benefits and entitlements otherwise applicable on them being made redundant.


Furlough is defined as an extended leave with or without pay. Whilst furlough is not a recognized practice under the Employment Relations Act 2012, employers and employees can agree to an extended leave with or without pay and the conditions attached should be agreed upon by both parties.

For more guidance on ending employment agreements during COVID19, click here.

Changes to the employer/employee employment agreement

Working conditions fluctuate and it may happen that working conditions change. To facilitate the change and avoid any employment dispute, employers and employees can follow a change process.

Employers and employees must deal with each other in good faith and have transparent discussions on their work arrangements.  Changes to the work arrangement can occur in many different ways, such as:

  1. Changing normal hours of work
  2. Changing an employee’s job description
  3. Reducing the rate of pay

Any changes to the work arrangements must be as a result of a legitimate need on behalf of the employer and must be done in consultation with the employee. When the employer has a legitimate need to change the work arrangements, the employer should:

  1. consult with affected employees:
  2. advise employees of the effect of the changes on the workplace and why changes are necessary
  3. give consideration to other means available in terms of how they deal with the employee
  4. not be harsh or oppressive during any discussions about changing the work arrangements
  5. recognize that the minimum terms and conditions under the ERA 2012 cannot be contracted out of.

Employees should:

  1. be realistic about the current environment and the position of the employer:
  2. bear in mind that redundancy or termination may be valid options for the employer if changes to the work arrangements are not made.

Grievances in the Workplace

Employment relationships may sometimes be difficult and employers and employees may have to resolve disputes arising from their working relationship.

All businesses should have an internal grievance mechanism, clearly indicated in their contracts and/or in the staff manual. Employees should be properly and regularly inducted on how to resolve any grievances and misunderstandings that may arise in the workplace, either between employees themselves, employees and clients or employees and management.

If the dispute fails to be resolved internally, the Employment Relations Act 2012 requires that parties take their dispute to mediation for resolution. If that fails, the dispute should then be taken to Arbitration Court.

The Labour and Consumer Inspectorate assists parties in the resolution of disputes on an informal basis and provides assistance to both sides to encourage swift and amicable resolution.