Process Is King: The Legal and Commercial Risks of Getting It Wrong
Employment issues can arise because decisions are made under pressure - operational demands, time constraints, or frustrations with poor behaviour and performance which have not been addressed formally and the employer has simply had enough and makes the decision to terminate.
Recent Employment Relations Authority (ERA) decisions serve as a clear reminder that in New Zealand employment law, process is not secondary to substance.
Even where misconduct is clear, performance concerns are genuine, or restructuring is commercially justified, failure to follow a fair and reasonable process can expose employers to significant legal and financial risk.
The consistent message from the Authority is simple: process is king.
Why process matters from a business perspective
Process is often viewed as administrative or procedural. In practice, it is a critical risk management tool.
A sound process protects disciplinary and redundancy decisions, reduces exposure to unjustified dismissal claims, limits compensation, and provides clarity and defensibility if decisions are challenged. It also plays an important role in protecting directors and senior leaders from personal liability.
Three recent cases illustrate how consistently the Authority applies this principle.
JAGJIT SINGH v L&B FOODS LIMITED and ANOR: Serious misconduct does not remove the need for process
In the Whangamatā hospitality case, an employee arrived at work intoxicated, left the premises, then returned still under the influence. The behaviour was witnessed by staff and customers. The director dismissed the employee by email the following day.
The ERA accepted that the misconduct occurred. However, the dismissal was found to be unjustified because the employee was not given a proper opportunity to respond before the decision was made.
The consequences were significant. Compensation was awarded, wage and holiday pay breaches were upheld, and the director was held personally liable due to his control over the employment decision-making.
The Authority made it clear that even where misconduct appears obvious, a fair disciplinary process is still required. Direct knowledge of events does not displace the obligation to follow proper steps.
KMW v ZIB DIGITAL LIMITED: Redundancy undermined by flawed consultation
In the marketing manager case, the employer believed the role was no longer required and initiated a restructure. The ERA accepted that businesses are entitled to reorganise and change roles.
However, the dismissal was found to be unjustified because the consultation process was deficient. The Authority found that the outcome appeared predetermined, the reasoning provided was insufficiently detailed, and redeployment options were not genuinely explored with the employee.
As a result, compensation and lost wages were awarded.
KNIGHT v ASUREQUALITY LIMITED: Genuine redundancy, but unfair selection process
In the nationwide restructuring case, the ERA accepted that the redundancy was based on a genuine organisational need. However, the Authority identified shortcomings in how the employee was selected and consulted. Early communications suggested decisions had already been made, alternatives proposed by the employee were not meaningfully considered, and redeployment discussions were unclear and incomplete.
While the ERA did not award lost wages, it still found the process procedurally unfair, exposing the employer to remedies and reputational risk.
This decision reinforces that even where the commercial case is sound, poor process can still lead to liability.
Well-designed process does not undermine commercial decision-making. It strengthens it. Employers who pause before finalising dismissals or redundancies, clearly outline concerns and proposed outcomes in writing, and give employees a genuine opportunity to respond are far better placed to defend their decisions. Actively considering alternatives, including redeployment where relevant, and maintaining accurate records of consultation, decision-making, hours and pay further reduces risk.
If you’d like support managing disciplinary processes, restructures, or handling complex staff exits, Knowhow can help.