Forms of Termination of Employment

There are many forms of dismissing an employee, this means that there are a number of factors an employer needs to consider before making a decision surrounding termination of employment. These decisions include the amount of notice required, award and legislative requirements, the terms and conditions in the contract of employment, and the reasons for dismissal.
When approaching the subject of employment termination, employers must ensure they understand all relevant requirements to avoid legal risk such as an unfair dismissal claim from arising later on.

Termination​ of Employment

Identifying the type of employment termination you may be dealing with is important when aligning with relevant legislation and maintaining compliance. There may be different processes to follow depending on the nature of the termination, and you may need to consider additional factors such as the employee’s tenure, past performance or the severity of the issues in determining the appropriate steps to take. Further, different terminations may result in different entitlements that are required to be paid such as whether notice of termination is payable or redundancy entitlements.

At a minimum, it is important that a business has a valid reason to dismiss an employee. There are a number of claims that can arise during a dismissal, including where a dismissal was for an unlawful or prohibited reason, as such it is vital a business can demonstrate a lawful and fair reason for termination. However, there may be other obligations to follow to reduce the risk of any further claims, as such the business should always seek professional advice prior to terminating an employee’s employment.

Generally where an employee is dismissed they will be entitled to be paid notice of termination, any relevant accrued entitlements and any outstanding wages. Casual employees are not entitled to payment of notice. There are some instances where an employee will not be entitled to notice of termination such as where they are dismissed as a result of serious misconduct, however, typically they must still be paid any accrued entitlements.

Where a termination is as a result of redundancy, the business will need to consider whether redundancy pay is owed. The Fair Work Act outlines redundancy pay, which varies depending on the employee’s length of service with the business. Typically small business employers are excluded from paying redundancy pay; however, awards, agreements and contracts can set out different rules – so it is important to consider these factors prior to proceeding.

Identifying the correct form of termination is important to understanding what processes to undertake to minimise risk and what entitlements the employee may be owed. Always speak to a professional if you are uncertain about what legislation applies to your situation.

 

 

Notice Period of Termination​ of Employment

Under the Fair Work Act 2009, an employer has to give the following minimum notice periods when dismissing an employee:

Period of continuous service Minimum notice period
1 year or less 1 week
More than 1 year to 3 years 2 weeks
More than 3 years to 5 years 3 weeks
More than 5 years 4 weeks

In the instance where an employee is over 45 years of age and has worked for the employer for at least 2 years, they are entitled to an additional week of notice. 

An Award, Registered Agreement or Employment Contract can provide for more generous notice periods; so it is vital that you consider these factors when determining the correct amount of notice. 

When an employee resigns, they may also have to give notice to their employer based on the terms of their award, contract of employment, or enterprise agreements.

 

 

Award Requirements Surrounding Termination​ of Employment

Employers should always refer to all relevant awards or agreements that cover the terminated employee to determine if any additional obligations may apply to the termination procedures or employee entitlements.

Common award provisions the business may need to consider include consultation about all major workplace changes, notice periods, job search entitlement (allowing a terminated employee to take time off without loss of pay to seek other employment during their notice period), redundancy pay, the timing of termination payments and any rules around making deductions from an employee’s final pay on termination.

 

 

Unfair dismissal claims and unlawful termination

Under the Fair Work Act, employees may be able to seek remedies in regards to unfair dismissal or unlawful termination. This means it is pivotal that employers are aware of the risks when considering termination of employment, and have processes in place to reduce the likelihood of such claims arising.

In the instance where an employee believes they’ve been unfairly dismissed, or the employee resigns because they were forced to do so, they may be able to make an unfair dismissal claim. To be eligible to make such a claim, an employee must have completed the minimum employment period (6 months or 12 months if the employer is a small business with less than 15 employees) and earn less than the high-income threshold. Casual employees who are regular and systematic will be able to access this type of claim. Employees who earn over the high-income threshold can still have access to unfair dismissal if their employment is covered by a modern award or enterprise agreement.

An unfair dismissal claim is where an employee alleges that a dismissal was harsh, unjust, unreasonable or that there was not a valid reason for dismissal. This includes where a dismissal was not procedurally fair, such as following sound processes prior to dismissing an employee.

The Fair Work Act also prohibits unlawful termination. This prohibits an employee from being terminated due to an unlawful reason (i.e. taking leave or raising a workplace complaint etc.) or because of a protected attribute (i.e. for a discriminatory reason). All employees, including prospective employees, have access to make a claim of this nature, called a general protections claim – there is no minimum time they must complete before they can access such a claim.

An employer should always seek HR advice before considering terminating an employee

 

 

Contract Terms & Conditions for Termination​ of Employment

Both the employer and the employee need to take into account the relevant clauses outlined in the employee’s contract and agreement, in order to determine if there are any other responsibilities that pertain to the dismissal or benefits the employee.

This is especially important when dealing with senior and executive staff, as their contracts might outline extended notification periods (for either party) and incorporate limitations following the conclusion of their employment.

 

About HR Connect

HR Connect is one of Australia’s leading providers of Human Resources services designed to increase productivity and ensure compliance within small to medium businesses. We provide actionable solutions through tailored HR advice – including compliance health checks through an HR audit, HR documents for compliant policies and procedures, WHS compliance, and advice on employment.

 

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice.

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