Thinking about terminating an employee? Make sure you do it the right way

As an employer, it is essential that you are aware of how to terminate an employee correctly, so as to avoid any claims of unfair dismissal. This Legal Kitz blog will cover the issues around terminating an employee and providing information about how you might avoid the risks associated with not following the proper procedures.

 How can employment end?

Employment can be ended in the following ways:

• the employee may be made redundant;
• the employee may resign; or
• the employee may be terminated.

 What rules are there about terminating an employee?

The Fair Work Act 2009 (Cth) prescribes the ways in which termination must be performed. An employer cannot:

• unfairly dismiss an employee (in a harsh, unjust or unreasonable manner);
• force an employee to resign;
• dismiss an employee in contravention of the general protections (which include exercising workplace rights, undertaking industrial activities or on discriminatory bases);
• unlawfully terminate an employee based on reasons, including but not limited to:
  • temporary absence from work because of illness or injury;
  • trade union membership or non-membership;
  • filing a complaint against the employer;
  • attributes such as race, sex, age, disability, religion etc.; or
  • absence from work because of maternity or parental leave.

What are the risks of terminating an employee incorrectly?

There are several risks involved in incorrectly terminating an employee, including an employee may make a claim to the Fair Work Commission for a:

• unfair dismissal;
• general protection dismissal; or
• unlawful termination.

If an employer has not complied with their obligations under the relevant Commonwealth workplace laws, they may be liable for up to $66,600 per contravention.

 How to correctly terminate an employee

Although the process of terminating an employee might sound impossible to navigate, we have devised a five-step process to follow to avoid as much risk as possible:

1. Once a decision has been made to dismiss an employee, you should meet with the employee to inform them of the decision.
2. The termination of the employment and the meeting leading up to it should be documented in writing.
3. You should clearly communicate to the employee (ideally in writing):
   • the decision to terminate;
   • the reason(s) for the termination; and
   • the effective date of termination
4. You should provide a notice period as prescribed by their employment agreement or relevant award
5. Finally, you are required to pay any/all entitlements owed to the employee, including:
   • any outstanding wages or other remuneration still owing;
   • any pay in lieu of notice of termination;
   • any accrued annual leave and long service leave entitlements;
   • the balance of any time off instead of overtime that the employee has accrued by not yet taken; and
   • any redundancy pay or entitlements if the employee has been made redundant and is eligible.

Legal advice 

If you are concerned about your business’ possible compliance issues or liabilities, you should seek legal advice. Legal Kitz employment specialists can assist you with implementing best practice methods to ensure that your business remains compliant with any employee termination legislation and regulations. You can contact Legal Kitz via email at [email protected] or by phone 1300 988 954. 

The above information has been collected from relevant government websites and is subject to change. For the latest information regarding new or amended legislation, please refer to state and federal government websites.