termination of employment

If an employee’s performance does not improve to an acceptable standard, termination of their employment may be an option. It’s important to be fair to employees particularly when it comes to termination of employment. They should be given reasons for dismissal and an opportunity to respond to those reasons.

If an employer needs to dismiss an employee due to poor conduct, it is very important this is done properly – otherwise an employee may be able to lodge a case for unfair dismissal. Factors the Fair Work Commission may consider to be ‘harsh, unjust or unreasonable’ can include:

  • whether there was a valid reason for the employee’s dismissal relating to his or her capacity or conduct
  • whether the employee was notified of that reason and given a chance to respond
  • whether the employer unreasonably refused to allow the employee to have a support person present to assist at any of the discussions relating to dismissal
  • if the dismissal related to unsatisfactory performance, whether the employee had been warned about the unsatisfactory performance before the dismissal.

The Commission must also take into account other relevant factors, including whether the size of the employer’s organisation and whether the absence of dedicated HR specialists or expertise might have affected the procedures followed in relation to the dismissal.

A dismissed employee has 21 days after the date of dismissal to lodge an unfair dismissal application with the Commission. Most applications are resolved through mediation, but the Commission does have the power to order costs against a party, where that party has caused the other to incur costs by acting unreasonably, for example, by failing to agree to terms of settlement that could have led to the resolution of the application.

The ability of an employee to lodge an unfair dismissal application under federal laws is limited to those who are covered by a modern award or enterprise agreement; or whose annual rate of earnings was less than the high income threshold. Casual employees can lodge an application if they have been employed systematically for six months and had a reasonable expectation of the employment continuing on that basis. Employees who are not covered by the national workplace relations system may be able to submit a claim for unlawful termination.

minimum notice periods

If the disciplinary procedure has been followed and the employer decides there are grounds for dismissal, a reasonable notice period must be given, unless there are express terms within the contract of employment covering notice in the event of dismissal, or where summary or immediate dismissal is justified. ‘Reasonable’ depends on factors such as:

  • the employee’s age
  • the employee’s length of service
  • remuneration
  • whether the employee was induced to join from another employer
  • the seniority of the position, and
  • prospects of the employee finding alternative employment.

Under the Fair Work Act, the minimum notice periods range from one week for employees with up to one year’s service to four weeks for those who have been employed for more than five years. For employees over the age of 45 and who have been employed for at least two years, the notice period increases by one week. The Fair Work Commission enables employers to waive these notice periods if the employee is given written notice on the day of dismissal and payment at the full rate of pay in lieu of the notice period.

dismissal and entitlements

If you dismiss an employee, make sure they receive their entitlements including, but not limited to, notice of termination and any annual leave they have accrued. For more information on the entitlements you may owe upon termination, visit www.fairwork.gov.au or contact the Fair Work Infoline on 13 13 94.

If an employee believes they have not received payment for all of their entitlements at the time their employment ends, the Fair Work Ombudsman can investigate and take action to make sure all legal entitlements under relevant commonwealth workplace laws are paid. An employer may be liable to a penalty of up to $51,000 per contravention if they have not complied with their obligations under relevant commonwealth workplace laws dealing with absenteeism.

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