Termination of an Employee


Termination of an employee, whilst often unpleasant,  is a common business reality. Gone are the days where employers could simply fire a staff member on the spot without consequences, and rightly so.

Termination may occur as a result of:

  • Poor performance
  • Misconduct
  • Inappropriate behaviour
  • Redundancy

No matter what the reason for termination, employers must be diligent in satisfying provisions in legislation.  So, why is this so important? It is simple really; to reduce the risk of claims occurring, to place the business in a good position and to reduce further financial costs by way of compensation.

Australian business are exposed to significant risk of claims when making a decision to terminate an employee.  This isn’t just unfair dismissal claims, but also unlawful dismissal, adverse action/general protections, bullying and/or harassment and workers’ compensation.

Before terminating an employee there are many considerations that you should make…

Legislative compliance

In any decision of termination, employers must comply with all relevant legislation. To understand the risks fully, we need to understand what legislation businesses must comply with.

  1. The Fair Work Act 2009 (Cth) – complying with the Fair Work Act 2009 (Cth) will reduce risk of unfair dismissal, unlawful dismissal or general protections/adverse action claims;
  2. Equal Employment Opportunity (EEO) (federal anti-discrimination legislation as well as state based EEO legislation) – complying with EEO legislation will reduce risk of discrimination, harassment, sexual harassment or victimisation claims;
  3. Occupational Health & Safety (OH&S) Legislation (state based legislation) – complying with OH&S legislation will reduce risk of worker’s compensation and bullying claims;

A claim of any type can be a messy and lengthy ordeal for any business. However, other consequences can include reinstatement of an employee (which can be extremely awkward) and payment of compensation.

Procedural correctness

Together with ensuring that you comply with the relevant legislative requirements is following clear and correct procedures for disciplinary action, performance management and redundancy.

Procedures and guidelines are integral to any termination decision, whether these exist within the Fair Work Act 2009 (Cth), a relevant Modern Award or in your own internal policies and procedures. Failure to follow these procedures can be dangerous and is highly criticised by the Fair Work Commission. Even in cases where the termination is reasonable, the delivery of the termination and lack of due process followed can put you in a sticky situation.

For performance and behaviour related issues, the commonly understood “three-strikes” policy is not in fact a legal requirement. However, this does not mean that you can simply terminate an employee at the first sign of trouble. When engaging in the performance management process to curb underperformance or unsatisfactory conduct, every stage of the process must be conducted fairly and meet the provisions of any relevant internal policies (grievance and/or performance management procedures etc.), employment contract or other industrial instrument (e.g. Enterprise Bargaining Agreement).

The employee must be afforded  with “procedural fairness.”  This includes providing them with an opportunity to respond and give their side of the story. Furthermore, when the issue is performance related, it is seen as fair and reasonable to provide an employee the opportunity to improve their performance and support them to meet the required expectations (by providing further training and support etc.).

Not affording an employee procedural fairness and carrying out a flawed process can result under Fair Work legislation in reinstatement or compensation when it comes to unfair and unlawful dismissal claims.

Pleading ignorance is not a sufficient excuse these days regardless of whether you are a small business. As such, make sure you do it right, don’t act with haste and don’t skimp on the process to save time. If in doubt consult your HR representatives.

Before terminating an employee, consider HR Centrals top 5 tips:

  1. Don’t land on a decision to terminate the employee hastily;
  2. Ensure the dismissal is lawful and/or fair and reasonable;
  3. Tighten up contracts and internal policies & procedures so you don’t get caught out;
  4. Always follow the correct procedure;
  5. If you are unsure, consult an expert.
Disclaimer the content of this resource should be used as a general guide only. The benchbook is not intended to be an authority to be used in support of a case at hearing.

The Fair Work Act 2009 (Cth) is the backbone of Australia’s Workplace Relations system. It is the main piece of legislation that governs any national system employers. The Fair Work Act protects employees from unfair dismissal and unlawful dismissal.

Unfair Dismissal

Unfair Dismissal is when an employee is dismissed in a harsh, unjust or unreasonable manner.  This often occurs when a redundancy doesn’t satisfy the
“genuine redundancy” provisions in the Fair Work Act 2009 (Cth).

Section 389 of the Fair Work Act 2009 states that a genuine redundancy is when:

  • the person’s job no longer needs to be done by anyone;
  • the employer followed any consultation requirements in the award, enterprise agreement or other registered agreement.

To ensure a redundancy is genuine the process outlined in the Modern Award, Individual contract or other registered agreement must be followed, appropriate opportunities for redeployment must also be undertaken.

Unlawful Dismissal

Unlawful Dismissal provisions in the Fair Work Act state that an employer can’t not terminate an employee for an unlawful reason, this can include:

  • A temporary absence from work because of illness or injury;
  • Trade union membership or activity;
  • Making a complaint or participating in legal proceedings against the employer where alleged to have violated laws or regulations;
  • Race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

General Protections

Are to protect employees from claims of discrimination or exercising a workplace right. Under the legislation, employers must not take “adverse action” against an employee, for exercising their workplace rights. Adverse actions include many disadvantages relating to employment and includes dismissing an employee.

Equal employment opportunity legislation also known as EEO, covers discrimination and associated topics such as harassment, sexual harassment and victimisation. In Australia, both federal and state laws cover equal employment opportunity and anti-discrimination in the workplace.

For both unlawful dismissal and general protections claims, Equal Employment Opportunity legislation works in conjunction with the Fair Work Act 2009(Cth).

HR Central

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