Navigating Employment Risks: A Guide for Employers.

Introduction:

Hiring and terminating employees are crucial aspects of running a business, and New Zealand employers must be aware of the potential risks associated with these processes. Effective human resource management requires a thorough understanding of employment laws and the implications of non-compliance. In this blog, we will explore the potential risks employers in New Zealand face when hiring and terminating employees, along with some proactive steps to mitigate these risks.

Hiring Risks:

a) Discrimination Claims:

Discrimination claims can arise if an employer demonstrates bias or treats job applicants unfairly based on protected characteristics. To mitigate this risk, employers should establish standardized recruitment processes that focus solely on qualifications, skills, and experience relevant to the position. It is crucial to avoid making decisions based on age, gender, race, religion, or disability. Ensuring transparency and consistency throughout the hiring process helps build a diverse and inclusive workforce while reducing the risk of discrimination claims.

b) Inadequate Background Checks:

Conducting thorough background checks is essential to verify an applicant's credentials, work history, and character. Employers should verify qualifications, reach out to references, and perform criminal record checks, as permitted by law. Neglecting these checks can lead to hiring individuals who may not possess the necessary qualifications or have a history of misconduct. Such situations can affect team dynamics, productivity, and potentially damage the company's reputation. Implementing robust background screening processes helps mitigate these risks.

c) Poor Employment Agreements:

Employment agreements form the foundation of the employer-employee relationship. Inadequate or ambiguous agreements can create confusion and disagreement, potentially resulting in legal disputes. To mitigate this risk, employers should ensure employment agreements are clear, comprehensive, and compliant with the Employment Relations Act 2000. Clearly outline terms of employment, remuneration, leave entitlements, notice periods, and any relevant policies or procedures and include a job description. Seeking professional advice when drafting employment agreements can help ensure they meet requirements and protect the interests of both parties.

Terminating Risks:

a) Unfair Dismissal Claims:

Terminating an employee's contract without proper justification or following due process can expose employers to claims of unfair dismissal. Employment laws require employers to have valid reasons for termination and provide employees with fair notice or severance pay. Termination should follow a fair and consistent process, which may involve verbal or written warnings, performance improvement plans, or disciplinary actions. Employers should document all instances of underperformance or misconduct and provide employees with an opportunity to respond before making any termination decisions. Following proper procedures minimises the risk of unfair dismissal claims.

b) Inadequate Documentation:

Accurate and comprehensive documentation is crucial when terminating an employee. Employers should maintain records of performance issues, disciplinary actions taken, and any warnings or evaluations provided to the employee. These documents serve as evidence in case of disputes or legal claims, demonstrating that the termination decision was justified and fair. By consistently documenting all relevant interactions and maintaining a paper trail, employers strengthen their position in case of potential legal challenges.

c) Breach of Confidentiality:

When an employee is terminated, there is a risk that confidential company information may be misused or shared without authorization. Employers should have protocols in place to protect sensitive data and ensure departing employees return any company property or information they had access to. This may include revoking system access, collecting company devices, and reminding employees of their obligations regarding confidentiality. By safeguarding confidential information, employers can mitigate the risk of data breaches or competitive harm resulting from terminated employees.

Conclusion:

By addressing these hiring and terminating risks proactively, New Zealand employers can foster a fair and compliant work environment while minimizing legal and financial liabilities associated with employee management. Terminating employees in accordance with legal requirements and maintaining accurate documentation helps protect employers from unfair dismissal claims and strengthens their position in any potential legal proceedings. Contact us today if you need any assistance.