If you’re running a small business, dealing with poor performance can feel like a constant drain. You want to be fair, but you also need the work done properly - and you can’t always afford weeks (or months) of disruption.
So it’s no surprise many business owners ask the same question: can you dismiss an employee for poor performance without warning in New Zealand?
In most situations, the practical answer is: it’s risky. In NZ, an employer generally needs to be able to show both a good reason and a fair process. Even where performance is genuinely below standard, a dismissal can still be challenged if the process wasn’t what a fair and reasonable employer would have done in the circumstances.
Below, we’ll walk you through how dismissal for poor performance usually works in NZ, when (if ever) a “no warning” dismissal might be lawful, and what steps you can take to protect your business from day one.
If your employee is underperforming, it can be tempting to end the employment relationship quickly - especially if the role is customer-facing, time-sensitive, or critical to operations.
However, in New Zealand, dismissing for poor performance without warning is generally high-risk unless you’ve first:
- clearly explained what the performance problem is (with specific examples)
- given the employee a genuine opportunity to respond
- provided a reasonable chance to improve (often with support/training)
- made it clear that dismissal is a possible outcome if performance doesn’t improve
This reflects the legal expectation that employers act as a fair and reasonable employer would in the circumstances. If you don’t, you may face a personal grievance claim (for example, unjustified dismissal or unjustified disadvantage).
In other words, even if the performance is genuinely poor, a dismissal can still be found unjustified if the process wasn’t fair.
It also matters what you’ve already set in writing. A well-drafted Employment Contract should outline expectations like duties, KPIs (if relevant), probation/trial clauses (if applicable), and performance processes. If it’s vague, disputes become more likely.
From a business owner’s perspective, poor performance often feels straightforward: the employee isn’t meeting the standard, so you end the employment relationship.
But employment law doesn’t just ask, “Was the employee good at their job?” It also asks:
- Did you clearly communicate what “good performance” looks like?
- Did the employee know they weren’t meeting the standard?
- Did you provide support and a chance to improve?
- Did you properly investigate and consider the employee’s explanation?
- Did you warned them that their job could be on the line?
If the answer to those is “no”, you could be exposed even if you had genuine reasons.
Common “no warning” scenarios that still cause legal issues include:
- You’ve been informally unhappy for months but never documented it or raised it formally.
- You assumed the employee “should know” what’s required (but you never set clear standards).
- You’re comparing them to a strong performer, rather than the requirements of the role.
- You dismissed them after one mistake that wasn’t serious misconduct.
Think of it this way: if you ever needed to justify your decision later, you want a clear paper trail showing you acted fairly and gave the employee a real chance.
This is where things get nuanced.
Usually, poor performance is handled through a performance management process (with warnings and support). Immediate dismissal is more commonly linked to serious misconduct - which is a different legal category altogether.
That said, there are limited situations where a “without warning” dismissal might be argued, for example:
- Probation or trial period scenarios (for example, where there’s a valid trial period clause, it was agreed correctly and on time, and you follow the steps required to rely on it).
- Extreme incapability where the employee cannot perform the job at all and there is no reasonable prospect of improvement (this is uncommon and still generally requires a fair process).
- Risk to health and safety where performance issues create an immediate and serious safety risk (even then, you’ll normally still need a process, but timeframes may be compressed).
One of the biggest traps is treating performance issues like misconduct because you’re frustrated.
For example:
- Consistently slow work output is typically a performance issue.
- Refusing to follow a lawful instruction may be misconduct.
- Deliberately falsifying timesheets could be serious misconduct.
If it’s misconduct, the right approach is a disciplinary process. If it’s performance, it’s usually performance management. Getting this wrong can make your dismissal harder to defend.
To protect your business, it’s worth ensuring your employment documents and policies align - including conduct and confidentiality expectations (for example, using a Confidentiality Clause where appropriate).
There isn’t a single mandatory script for every workplace, but a fair process usually includes the same core building blocks.
Here’s a practical, employer-friendly framework you can follow.
1) Get Clear On The Standard Required
Before you start, make sure you can clearly explain:
- what the employee is expected to do (their duties)
- what “meeting expectations” looks like in the role
- how you measure performance (deadlines, quality targets, customer feedback, error rates, etc.)
If you don’t have written job descriptions or measurable expectations, the first step might be tightening up your documentation. It’s much easier to manage performance when expectations are crystal clear from day one.
2) Raise The Issue Early (And Keep It Specific)
Have an initial conversation as soon as the pattern becomes clear.
Avoid vague feedback like “your attitude isn’t great” or “you’re not performing”. Instead, point to real examples, such as:
- missed deadlines (with dates)
- customer complaints (with details)
- repeated errors (with samples)
- failure to follow processes (what happened, when, and impact)
Keep notes. If the issue escalates, those notes can become important evidence of what was raised and when.
3) Give The Employee A Chance To Respond
Fairness includes genuinely listening to their side. Poor performance isn’t always about effort - it can also be caused by:
- unclear training
- health issues (including mental health)
- workplace conflict or bullying
- unreasonable workloads
- personal circumstances
You don’t need to accept every explanation - but you do need to consider it. If health issues are raised, you may need to think about your obligations and safe workplace responsibilities as part of managing the situation.
A performance improvement plan doesn’t have to be overly formal, but it should be written and practical.
It typically includes:
- the specific areas needing improvement
- what improvement looks like (measurable goals)
- support you’ll provide (training, supervision, check-ins)
- timeframes to improve
- what may happen if improvement doesn’t occur (including that dismissal is possible)
This is also where many employers go wrong: they either don’t provide enough support, or they set unrealistic targets/timeframes that make the process look like a “set-up”.
5) Issue Warnings If There’s No Improvement
If performance doesn’t improve after support and a reasonable opportunity, warnings may be justified.
Warnings should be:
- clear and in writing
- linked to the prior conversations/support provided
- explicit about what needs to change
- explicit that continued poor performance may lead to dismissal
Some businesses use a staged approach (verbal warning, written warning, final warning). The exact number can vary depending on seriousness and context - but what matters most is that the employee is genuinely on notice and has had a real chance to improve.
6) Only Move To Dismissal After A Fair Decision-Making Process
Even when you think dismissal is the likely outcome, you should still follow a proper process before making the final decision, including:
- inviting the employee to a meeting (with enough information to understand what it’s about)
- allowing them to bring a support person
- sharing relevant evidence
- considering alternatives (redeployment, different duties, extra training - where reasonable)
- confirming your decision in writing with reasons
If dismissal does happen, make sure you handle the end-of-employment steps correctly too (final pay, notice, accrued entitlements). If you’re considering paying out notice instead of having them work it, this needs to be done carefully - payment in lieu of notice often depends on what the contract allows and whether the process is handled fairly.
Even well-meaning employers can slip up here - especially when you’re busy, wearing multiple hats, and trying to keep your business running.
Here are some of the most common mistakes we see.
Relying On “Probation” Without A Valid Clause Or Process
Many employers assume a new employee is automatically “on probation” for the first few months. In NZ, that’s not automatically true.
If you’re relying on a trial period or probation arrangement, the wording and timing need to be right, and you may need to meet specific legal requirements to rely on it. In practice, you’ll also still want to act fairly and document your approach. Getting the clause wrong can remove the protection you thought you had.
If it’s not written down, it can be hard to prove later.
You don’t need to create a mountain of paperwork - but you should keep a clear record of:
- dates of meetings
- what was raised
- what support was offered
- what improvement was expected
- the employee’s response
Changing Expectations Mid-Stream
If the role has changed (for example, you’ve introduced new systems, new KPIs, or higher workloads), make sure the employee has been properly trained and the expectations are reasonable.
Otherwise, the “poor performance” might actually be a symptom of poor onboarding or unclear management - and that can weaken your position in any dispute.
Skipping The “Opportunity To Respond” Step
This is a big one.
Even if you feel confident you’re right, you still need to give the employee a meaningful chance to respond before decisions are made. A rushed dismissal can quickly turn into an expensive and distracting process for your business.
Not Matching Your Process To Your Own Documents
If your employment agreement or workplace policies promise a certain disciplinary or performance process, you should follow it (or have a very good reason not to).
This is one reason why having properly drafted employment documents matters. Alongside the employment agreement, many businesses choose to implement a consistent policy framework (especially as they grow) so managers handle issues the same way every time.
Performance problems are much easier to manage when your legal foundations are in place from the start.
If you want to reduce the risk of disputes (and make it easier to act decisively when needed), focus on these practical protections.
Use A Strong Employment Agreement From Day One
A properly tailored employment agreement can:
- set clear duties and expectations
- include appropriate clauses around performance management and misconduct
- deal with notice periods and termination process
- reduce uncertainty if you ever need to exit someone
It’s also an easy way to set the tone in your workplace: clear, fair, and professional.
Have Clear Policies And Role Expectations
Even in a small team, written expectations help. These might include:
- job descriptions
- training and onboarding checklists
- internal procedures (how tasks are done)
- code of conduct / behavioural expectations
They don’t need to be fancy - they just need to be clear and consistently applied.
Many performance issues escalate because managers avoid the awkward early conversation.
If you lead a small team, this may be you.
Getting comfortable with early, respectful feedback can prevent a future dismissal situation entirely - or, if you do need to dismiss later, it makes your process much stronger.
Get Legal Advice Early If You’re Thinking About Termination
If you’re at the point where you’re considering ending someone’s employment, a quick check-in with a lawyer can save you a lot of time and cost later.
It’s often easier (and cheaper) to adjust your process at the beginning than to defend a personal grievance after the fact.
And if the employment relationship is ending in a more negotiated way, you may want to document that properly with a Deed of Settlement so everyone has clarity about what’s been agreed and what happens next.
Key Takeaways
- In New Zealand, dismissing an employee for poor performance without warning is usually high-risk because employers are generally expected to follow a fair process and give a genuine chance to improve.
- Poor performance is generally managed through performance management (clear feedback, support, time to improve, and warnings), while immediate dismissal is more commonly linked to serious misconduct.
- A fair process typically involves setting clear expectations, providing specific examples of underperformance, allowing the employee to respond, offering support, documenting steps, and warning that dismissal may occur.
- Even where dismissal seems justified, employers can still face legal risk if the process is rushed, undocumented, or inconsistent with the employment agreement and workplace policies.
- Strong legal foundations - including a tailored Employment Contract - make performance management clearer and reduce the chance of disputes.
- If you’re close to termination (or negotiating an exit), getting advice early and documenting outcomes properly can protect your business and help you move forward confidently.
This article is general information only and isn’t legal advice. If you’d like advice on your specific situation, get in touch with a lawyer.
If you’d like help managing a poor performance process or you’re considering termination and want to reduce risk, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
