How to manage serious misconduct in the workplace

Jocelyn Visser, HR Business Partner
By Jocelyn Visser, HR Business Partner


At MyHR, our HR advisory team has been dealing with many requests for help with cases of serious misconduct.

Lots of things, inside and outside the workplace, influence employee conduct and performance, but some unique factors are contributing to this current increase:

  • Cost of living pressures: people are under more stress, leading to incidents at work.
  • Tight labour market and staff shortages: employers are doing all they can to keep people, even those they might normally have dismissed, so bad behaviour keeps escalating.

As its name implies, serious misconduct is serious, and both employers and employees need to understand what it is, how it should be handled, and the potential consequences.

We’ve created this blog to look at misconduct and serious misconduct, what your obligations are, and advice for responding to instances when employee behaviour is majorly out of line with expectations.

Misconduct vs serious misconduct

There are two different levels of misconduct: misconduct and serious misconduct.

Neither are defined in employment legislation and there is no clear line where misconduct becomes serious. However, case law has established working definitions and the two can be distinguished by the outcome and the employer’s obligations in responding.

Misconduct is typically minor and covers a whole raft of behaviour, actions or inaction, e.g. failing to follow an employer’s reasonable and lawful instruction, using inappropriate language, repeated lateness, behaving unprofessionally, breaching confidentiality, breaching clauses in the employment agreement, unsafe behaviour. An instance of misconduct isn't enough to justify terminating employment unless it is repeated.

Serious misconduct, on the other hand, is serious because it has significant implications or consequences for the business. A single instance can fundamentally damage or destroy an employee's and employer's trust and confidence.

Serious misconduct usually involves the employee doing something deliberately, however, there may be occasions when an employee doesn’t act, or acts so recklessly, that it amounts to serious misconduct.

The best way to differentiate between an instance of misconduct and serious misconduct is to consider whether, on its own, the trust and confidence in the employment relationship has been so harmed that it would be impractical and unreasonable for it to continue.

Examples of serious misconduct

Serious misconduct includes, but is not limited to:

  • Assault (sexual or otherwise).
  • Theft.
  • Harassment of a colleague or customer.
  • Intoxication or use of illegal drugs at work.
  • Repeated failure to follow reasonable instruction.
  • Deliberate destruction of company property.
  • Health & Safety breaches.
  • Actions that seriously damage the business’ reputation.
  • A serious breach of company policy or procedure.

Your legal obligations

Employers are required to take allegations of serious misconduct seriously. However, in all circumstances, your response to any instance of misconduct must be fair and reasonable.

  • You must have reasonable grounds (i.e. strong reasons for believing the person has behaved this badly).
  • You must conduct a full and fair investigation, without predetermining what the employee may or may not have done.
  • You must follow a fair process and allow the employee an opportunity to respond to the allegations.
  • Only once you’re sure it is serious misconduct can you move to dismiss the employee without notice or payment of notice (again, following due process).

Learn more about terminating employment correctly 

Our tips on handling serious misconduct

Have clearly-defined policies and expectations

We don’t recommend having separate company policies on disciplinary process or misconduct, as these can be too inflexible and trip you up when managing disciplinary issues (if you don’t follow your policy to the letter).

What we do recommend, however, is having clear policies relating to key topics such as bullying & harassment, Health & Safety, use of company property etc. These will clearly outline what you expect of your people as well as the consequences if they don’t meet those expectations.

Keep the policies up-to-date and make sure all employees are aware of them and can access them easily. Everyone in the business needs to be on the same page.

Include a clause in the employment agreement

It's not mandatory to have a clause in your employment agreements that covers summary dismissal (instant dismissal) in the event of serious misconduct, but having the clause will make your expectations clear and the decision for a summary dismissal more reasonable, so long as you always follow fair process in reaching that decision.

Don’t assume you know what happened

It’s essential to be objective and approach any allegations of misconduct with an open mind to find out what happened. Even if the facts of the case appear clear-cut, you must still investigate fairly, consult with the employee, and consider their response in making a decision.

If you just issue a formal warning or terminate the employment relationship without undergoing fair and reasonable process, the employee will have a very strong case for personal grievance action and you could end up having to pay them money (decisions by the Employment Relations Authority demonstrate that even if the employee was found to have been in the wrong, employers who make procedural errors can face significant penalties).

Did we mention fair process?

It can be difficult to distinguish between misconduct and serious misconduct, however, having clear policies and following a robust process can sort it out and ensure you reach a fair and justifiable decision.

Don’t be unjust, too hurried, or too harsh. You can’t fire an employee for a minor breach of workplace rules or company policy.

You must investigate the incident and then raise your concerns with the person. They may well dispute the allegations. Natural justice and your good faith obligations require giving employees a reasonable opportunity to present their side of the story (and bring a representative or support person if they want).

You also need to genuinely consider their explanation in your decision and weigh whether the act or conduct has caused a loss of trust and confidence in the employee and whether there are possible and practical alternatives to dismissal.

Remember, the process by which you manage and analyse the concerns or allegations is as important as the concerns themselves.

Find out more about getting the disciplinary process right.

Get good advice

If you believe an employee has committed serious misconduct and you may have to terminate their employment, get expert advice to ensure the process you follow is fair and you reach the right conclusion.

Any people management issue can be handled by MyHR's expert HR advisors, including guidance on disciplinaries, termination, and mediation. Get in touch today to learn how we can help!

Speak to an HR solutions advisor

Related Resources

Misconduct: Make sure you get the process right
Misconduct: Make sure you get the process right
By Jason Ennor, Co-founder and CEO at MyHR - 03 May 2015

A case of a caregiver in Nelson being awarded over $6,000 compensation because of procedural flaws in her dismissal - despite her behaviour being serious misconduct - highlights the need to get the process right.

Read more
Terminating employment - Part 1: Employer-led termination
Terminating employment - Part 1: Employer-led termination
By Isla Amin - 02 Dec 2020

Terminating an employee's employment agreement is not a one-size-fits-all process. But in a world where being a good human matters more than ever, it pays to get it right - for the sake of your employee’s wellbeing, your company’s reputation, and to minimise your exposure to legal action.

Read more
Mediation: All you need to know
Mediation: All you need to know
By Sylvie Thrush Marsh, Chief Evangelist - 12 Sep 2021

Most people have heard of mediation. In the context of the employment relationship, mediation is a free and confidential tool to resolve problems. But what does that mean in practice? Who’s involved? What happens when you go? And why would you choose mediation over other ways of resolving employment issues?

Read more
Get Started with MyHR

Make HR easy

Experiencing is believing. Book a demo today.

Book a demo Start free trial