Employee Exits: Common pitfalls you should avoid

Published 30 August 2024 | 2 min read

Exiting an employee is never easy, especially when the circumstances are less than ideal. Conversations about parting ways can be uncomfortable, fraught with tension and uncertainty. Imagine being in a situation where you’ve decided that an employee's last four weeks should be spent on paid leave for the good of everyone involved. It sounds simple, right?

Yet, as a recent Employment Relations Authority (ERA) case involving a former Reserve Bank of New Zealand (RBNZ) employee shows, these decisions can lead to unexpected legal challenges and stress for all parties.

In this case, the employee—let's call her "Jane"—found herself in a difficult position. After being passed over for a job she had her heart set on, Jane became confrontational with her colleagues. RBNZ, aiming to support her well-being and job search, decided to place her on paid leave for her remaining weeks. However, Jane perceived this as a slight, accusing the bank of trying to "constructively dismiss" her. What followed was a series of tense exchanges, eventually leading Jane to file an unjustified disadvantage claim against her employer.

Grey areas of employee exits

When an employee's departure isn't straightforward, grey areas often emerge, turning what should be a smooth transition into a quagmire of stress and confusion. For Jane, this situation became more complicated when she was rejected from the job she applied for. She believed that negative comments from her RBNZ colleagues during reference checks were to blame. Her frustration boiled over, damaging relationships within her current workplace and leading her to make accusations that strained the situation further.

The emotional toll on Jane was clear, but the ripple effect on her team was also significant. Her accusations created tension, disrupted the work environment, and ultimately led to her removal from the workplace. RBNZ’s attempts to handle the situation with care—offering paid leave and engaging in direct communication—were met with resistance, culminating in legal action that was both costly and time-consuming for the organisation.

Complexities of the ERA case

The Employment Relations Authority (ERA) was called upon to untangle this complex web. Their decision highlighted the difficulties employers face when navigating the tricky waters of employee exits. Here’s a brief overview of the ERA’s findings:

• Paid leave decision: The ERA found that placing Jane on paid leave was a fair and reasonable action by RBNZ, considering her behaviour and the need to maintain workplace harmony.
• Electronic access removal: RBNZ’s decision to restrict Jane’s access to workplace systems was deemed justified due to her "intemperate comments."
• Communication gaps: While there was an acknowledged lapse in responding to Jane’s request to return to work, the ERA ruled that this did not amount to unjustified disadvantage.

Despite the ruling in favour of RBNZ, this case serves as a reminder of how quickly an employment situation can escalate, with potentially damaging consequences for both the individual and the organisation.

How to avoid common pitfalls

The intricacies of this case highlight several key areas where employers can improve their exit processes to avoid similar conflicts. Here are a few strategies that could have prevented the escalation:

1. Ensure that all communications with departing employees are documented and transparent. Misunderstandings or gaps in communication can easily be misinterpreted.
2. Any decision to place an employee on leave or restrict access to work systems should be well-documented, with clear reasoning tied to the employee’s behaviour or performance.
3. Providing support, such as outplacement services, can help the departing employee transition smoothly and reduce the likelihood of negative fallout.

Positive exit process

A well-managed exit process is not just about avoiding legal trouble; it’s about fostering a positive environment that supports all employees, both those leaving and those staying. This is where incorporating outplacement services can make a significant difference.

At EQ Consultants, we specialise in guiding both employees and employers through the transition process with empathy and professionalism. Our Outplacement Consultant, Lyndal Miller, brings over 20 years of experience in career consulting, offering tailored support that includes:

• Personalised career guidance: Each departing employee works one-on-one with Lyndal to navigate their next career steps, from crafting a standout CV to honing interview skills.
• Reputation management: A positive exit process reflects well on your organisation, helping maintain a strong employer brand that attracts top talent.
• Stress-free transitions: By providing comprehensive outplacement services, you ensure that your departing employees leave with dignity and confidence, which in turn boosts the morale of your remaining team.

Learn more about outplacement

Building a stronger workplace

Employee exits are a challenging aspect of managing a team, but with the right approach, they can be handled smoothly and positively. As this ERA case demonstrates, the stakes are high, and the consequences of mismanagement can be severe. By implementing a clear, supportive exit process and considering outplacement services, you can protect your organisation from potential disputes while also supporting your employees' well-being.

For more information on how EQ Consultants can help you manage workforce changes and provide a smooth transition for departing employees, contact us today.