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Incompatibility; when things just aren’t working.

Updated: Feb 28, 2020

Most of us will know the common reasons for dismissal; serious misconduct, poor performance, medical incapacity, redundancy. But what about when things just aren’t working?

Incompatibility is an interesting and lesser well-known area of employment law, and, as stressed by the Employment Court, it will only be in rare cases that such a dismissal will be justified.

The Test

The first stage in determining whether incompatibility exists is to determine if there is an employment relationship problem. This can be a problem between the employee and the company, the employee and their manager, or between the employee and another employee. As part of this step, it is simply important to acknowledge that there is a problem, and that this problem can be easily defined.

After recognising that a problem that exists, the employer must then consider whether the problem is substantially attributable to the employee. The most common examples of this is when an employee has made false claims and accusations against their manager, another employee, or the company as a whole. However, it can be difficult to impartially ascertain that a problem is substantially attributable to the employee, and at times, the employer may be required to engage an independent investigator to determine the root causes of the employment relationship problem.

The next step the employer must do is ask itself; “is the employment relationship problem irreconcilable?” In considering this, it is important to remember the statutory obligation of good faith; that is, that an employer must be active and constructive in maintaining the employment relationship. This means that it is not enough for an employer to simply determine that the relationship is irreparable; it must firstly take significant steps to resolve the issues. In some instances, the issues may be resolved my moving the employee to another team, by having a meeting with the employee, by further investigating their concerns or by inviting them to mediation.

Only after an employer has decided that an irreparable employment relationship problem exists, which is largely attributable to the employee, it may consider terminating the employee’s employment on the basis of incompatibility. But, as with all dismissals, it must be conducted in a fair and reasonable manner. This means that the employer must:

  • Raise its concerns with the employee prior to making any decision regarding the employee’s employment.

  • Engage in a thorough and meaningful consultation process with the employee.

  • Consider all the circumstances of the situation.

  • Present the employee with its preliminary decision on the matter, including its concerns and reasoning.

  • Provide the employee with an opportunity to respond to the preliminary decision.

  • Provide a written final decision on the matter.

Don’t panic: It’s a high threshold

As stated, it is only in very rare cases that a dismissal will be justified on the basis of incompatibility. This is because there is a significantly high threshold associated with incompatibility cases.

For example, in one case, an employee brought a number of frivolous and vexatious court proceedings against her employer while she was still employed. In fact, she claimed to have spent about $3.5 million in pursuing her claims at the Employment Relations Authority and the Employment Court. She was unsuccessful in all of her claims. Needless to say, the employer determined enough is enough and dismissed the employee on the basis of incompatibility. This was one of the few cases where the Employment Court determined that the dismissal was justified.

While there are other cases which have been found to be justified, they are of similar magnitude to this case. I must stress; it is not easy for an employer to dismiss an employee on the basis of incompatibility.

Concerned? Contact Me!

Has your employer stated that an employment relationship problem exists?

Has your employer claimed that there may be an irreconcilable breakdown in trust and confidence?

Have you been dismissed for incompatibility?

If you have answered yes to any of these questions, please contact me for a free and confidential discussion about your options.


Ashleigh Fechney

LLM(Hons), BA

027 555 999 5

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