Employee Suspension
On very rare occasions during an employee’s period of employment with the company, a situation or event may arise where you may need to consider suspending the employee for a period while an investigation or disciplinary process occurs. The process of suspension can in itself be a minefield of risk and liability if not implemented correctly. Ensuring that all legal requirements are met will enable you to achieve the outcomes required while also retaining the dignity of the employee until such time as the matters of concern are fully addressed.
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Employers are not obligated to hold an employee’s position open for them for an indefinite period of time where the ongoing absence of the employee is causing an unreasonable detrimental impact on the company’s operations. Where the absence becomes prolonged, and is impacting on the company’s operations, the employer may consider terminating the employee’s employment following the implementation and completion of a fair and reasonable process.
However, ensuring the right process is implemented is important.
Frequently Asked Questions.
What is suspension from employment?
The Employment Relations Authority (ERA) and the Employment Court have reinforced that the action of suspending an employee from their employment for a period is a significant step and as such must be justified and must only be implemented as a result of a procedurally fair process.
The primary consideration in determining whether suspension is justified is assessing whether the employee’s continued presence within the workplace could compromise an investigation or disciplinary process into a potentially serious misconduct matter or pose a health and safety risk to the employee or to others they work with.
Suspension would generally therefore apply to situations such as:
- An event involving physical violence or abuse or another employee, or the threat of such violence.
- A significant health and safety breach – including a failed drug or alcohol test
- An action of fraud or dishonesty that places the company’s systems or resources at risk
- The receipt of a formal complaint requiring an investigation that could lead to a serious misconduct disciplinary process.
Suspension from employment would generally always be on full pay, however where extenuating circumstances arise that seek to unreasonably delay the process (or investigation or disciplinary) there may be justifiable grounds to continue the period of suspension without pay until such time as the employee returns to the process.
How do I suspend an employee legally?
Suspension can only occur where the provision for such is recorded within the employee employment agreement, (including a Collective Agreement or the Company Handbook, where this has been provided to the employee)
Prior to any decision to suspend an employee being determined, the employer must assess the justification (circumstances) surrounding the proposed suspension in order to determine that there are valid grounds to support the need for such action. The employer must therefore first assess all viable options to imposing a period of suspension on the employee.
The suspension decision cannot be made until the affected employee has had the opportunity to consider and respond to the proposal to suspend them, and to seek independent support and representation in doing so.
The process relating to the suspension must not be prolonged as this may in itself lead to a successful unjustified disadvantage claim being raised against the employer – see Williams v Bassett Plumbing and Drainage Ltd [2024] NZERA 596. https://determinations.era.govt.nz/assets/elawpdf/2024/2024-NZERA-596.pdf
What are the risks of an unjustified suspension?
An employee who successfully raises a personal grievance claim with respect to a suspension being imposed upon them may be deemed to have been unjustifiably disadvantaged, and if the process leads to the ending of their employment, they may also be deemed to have been unjustifiably dismissed.
In such case, the employee may claim compensation for hurt and humiliation associated with the unjustified disadvantage and dismissal, reimbursement of lost wages or even reinstatement to their former employment and a contribution to any legal costs incurred in seeking redress.
In addition, the Employment Relations Authority (ERA) or Employment Court may impose a penalty upon the employer of up to $10,000.
What is the difference between a suspension and a stand down?
A period of paid stand-down may at times precede the decision to move to a formal suspension. The stand-down period may occur without the same consultation requirements and should only be used where the employee needs to be removed from the situation / workplace immediately. This might include such circumstances as to enable a ‘cool down period’ after an altercation, or where the employee has failed a preliminary drug or alcohol test. Stand down periods will therefore generally be applied for ‘health and safety’ reasons with the period of standdown only being long enough to enable an informed decision being made regarding a longer period of paid suspension.