Good reason

Before taking any action against an employee, employers must have a genuine and valid reason.

What is 'good reason'?

When taking action against an employee, employers should make sure that they meet the requirements of ‘good reason’ (sometimes called ‘substantive justification’). These are:

  • having a valid reason to begin the action or process, and 
  • making any decision for a good and fair reason.

An employer’s reasons for the action must be what a ‘fair and reasonable employer’ could have done at the time of the dismissal or action. To be fair in making decisions, employers should make sure:

  • that they have all the facts that they can reasonably gather
  • that they have heard the employee’s response to those facts
  • that they have considered how they have acted in similar circumstances, and
  • they have taken account of any other relevant considerations (such as length of service, and any mitigating circumstances).

Every situation must be considered on its merits and in the context of the workplace. Generally, it might not be reasonable to dismiss an employee instantly for what might be viewed as a minor action; however, this may depend on the situation.

An example might be the theft of social club funds. An employer that is a bank, and where the employee has access to money, may consider this differently than a large building contractor employing a carpenter. The situation may be different again if this did not occur in the workplace but went through the courts and was widely published.

Examples of ‘good reason’

The following are some reasons that might support taking action against an employee:

  • misconduct, or serious misconduct


  • where ongoing performance has not improved after a performance improvement plan has been completed and the employee fails to meet reasonable expectations

Managing performance issues

  • the employee’s job is disestablished for a genuine work-related reason


  • the employee is unable to continue to do their job properly due to health reasons

Illness and injury

  • there is a fundamental breakdown in the employment relationship, which makes continuing employment unworkable.

Work relationship problems 

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