Employment termination – How to terminate an employee

Employment Termination can be a complex process. An employee’s employment is terminated when their employment with their employer ends.  An employee’s employment may be terminated by way of dismissal, resignation or redundancy.

Prior to the Employment Termination

Care must be taken by an employer during the process of employment termination. Federal workplace laws provide protections to employees in certain circumstances where their employment is terminated by their employer. These laws allow an employee to commence proceedings against their former employer following the termination of their employment. For example:

• an employee may commence proceedings for unlawful termination if their employment is terminated for a discriminatory reason, or otherwise against the law;
• if an employer does not take care in terminating or dismissing an employee then the dismissal may be considered by the Fair Work Commission to be harsh, unjust or unreasonable.  Generally, a dismissal will not be harsh, unjust or unreasonable where there is a valid reason for the dismissal relating to the employee’s conduct; the employee is notified of the reason for dismissal and the employer gives the employee an opportunity to respond; the employee receives one or more warnings about unsatisfactory performance before being dismissed and the employee’s dismissal relates to unsatisfactory performance.

If you commence the employment termination process due to poor performance or misconduct, then the employer must have sufficient grounds for termination. In the case of poor performance, the employer must have previously warned the employee about their poor performance, provided training (where appropriate) and given the employee an opportunity to improve their performance.

Process of Employment Termination

An employer should also take into account the following matters, amongst other things, in terminating the employment of an employee:

• Notice – generally, an employee must be given notice of termination of their employment (or payment in lieu of notice), which notice period is generally determined by either the terms of an employee’s employment contract or their length of service as an employee.  For example, under the National Employment Standards (NES) most employees are entitled to between 1 and 4 weeks notice of termination.  An additional week’s notice must be given if an employee is over 45 years of age and has two years continuous service.  However, no notice of termination is required for casual employees and employees terminated due to serious misconduct.
• Entitlements – an employee is entitled to payment of their outstanding employee entitlements on termination of their employment, including wages, payment in lieu of notice (if any), accrued annual leave and long service leave entitlements, severance pay entitlements (e.g. for redundancy).  The final payment should be made on the employee’s last day of work, wherever possible.

Conclusion

Before commencing the employment termination process, an employer should understand its obligations under the employee’s employment contract, award and at law. Care must be taken by an employer in terminating the employment of an employee in order to minimise the risk of an employee commencing proceedings against his or her former employer following the termination of their employment. Make sure you get the employment termination process right the first time by having one of our lawyers review your Employment contract.