Employee Termination Procedure: Following the Right Steps

It’s paramount that employers should always follow the right employee termination procedure. Letting an employee go is a difficult but sometimes necessary part of running a business. However, how you handle that termination is crucial. Following lawful procedures protects both your company and the employee involved.

 It’s not just about ticking boxes or pinpointing the employee’s shortcomings or faults; it’s about ensuring fairness, minimising risk, and fostering a healthy work environment. Read on to learn about the right employee termination procedure that adheres to law standards. 

The Bottom Line on Notice Periods in Australia

Notice periods in employee termination refer to the amount of time an employer must give an employee (or vice versa) before officially ending the employee’s employment. It’s essentially a heads-up period that allows for a smoother transition and ensures legal compliance. Here’s what the National Employment Standards (NES) say about notice periods:

1. Employers can’t fire someone without giving them a written heads-up. This notice specifies the exact date of termination, which can’t be before the notice is delivered.
2. The length of the termination notice period you need to give depends on how long the employee has been with you. The table below shows the minimums:

Employee Tenure	Minimum Notice Period
Less than 1 year	1 week
1-3 years	2 weeks
3-5 years	3 weeks
Over 5 years	4 weeks

Certain rules apply for an employee who is over 45 and has been working for at least 2 years. If this is the case, the employer needs to add an extra week to their minimum notice period. What if the employer doesn’t want to wait out the notice period? The employer may then pay the employee instead. This amount should equal their full pay for the notice period they would have worked which should be detailed under the employment contract.

When Is It Time To Let an Employee Go?

Letting someone go is a difficult part of any manager’s job. But sometimes, it’s necessary. Here’s a breakdown of common reasons for an employee termination procedure, along with some best practices to follow.

Valid Reasons for Termination:

1. Serious Offences: Criminal activity, breaching confidentiality, repeated misconduct/serious misconduct, insubordination – these are clear justifications for termination.
2. Performance Issues: If an employee consistently fails to meet performance expectations or objectives, despite warnings and coaching, termination might be necessary.
3. Financial Issues: In rare cases, an employee’s bankruptcy could impact their ability to perform their job duties, especially in finance-related roles.
4. Disruptive Behaviour: Actions that create a hostile or unproductive work environment can be grounds for termination.

Every reason should be backed by documentation during an employee termination procedure. This could include performance reviews, disciplinary warnings, or records of inappropriate behaviour.

Before You Say Goodbye:

1. Don’t go at it alone. Consult your supervisor, HR and a legal professional to ensure you’re following proper procedures. This prevents legal disputes from arising during the employee termination procedure. 
2. Give the employee a chance to explain their actions before making a final decision.
3. Unless the offence is severe, consider a written warning as a first step.
4. Check your local employment laws or company policy for notice period requirements.

Employee Termination Procedure: Unfair Dismissal 

Unfair dismissal is when an employee is wrongfully terminated from his/her job. Employees who believe they’ve been unfairly dismissed can file a complaint with a labour tribunal or similar body. If the complaint is upheld, the employee might be awarded compensation or even reinstated to their job.

This can be costly and time-consuming for employers, so it’s important to avoid unfair dismissals in the first place. Unfair dismissal happens when you lose your job, and the Fair Work Commission (FWC) decides the termination was:

• Harsh, Unjust, or Unreasonable: This means the reason for firing you or the way it was handled was unfair.
• Not a Genuine Redundancy: If your position was eliminated due to restructuring or company changes, it might be a genuine redundancy. Unfair dismissal laws wouldn’t apply in that case.
• Not Following the Small Business Fair Dismissal Code (For Small Businesses): Smaller businesses have a specific code for handling terminations. Not following this code could be an unfair dismissal.

The FWC considers several factors to decide if an employee termination procedure was harsh, unjust, or unreasonable. Here are some key points:

• Valid Reason for Dismissal: Was there a legitimate reason for firing you, related to your performance or was there serious misconduct?
• Chance to Respond: Did your employer tell you why you were being fired and give you a chance to explain your side?
• Support Person Allowed?: Were you unreasonably denied having someone present during discussions about your dismissal?
• Previous Warnings: Did you receive prior warnings about performance issues?
• Company Size: Did the company’s size or lack of HR expertise impact the termination process?

Thinking About Filing an Unfair Dismissal Claim?

Here’s a quick guide to see if you qualify for an unfair dismissal claim:

Minimum Employment:

• Small Businesses (less than 15 employees): You need to have been employed for at least 12 months.
• Larger Businesses: At least 6 months of the employee’s employment is required.
• Change in Ownership: If the business changed hands, your service with the previous owner might count towards the minimum period.

Additional Requirements:

• Covered by an Award or Agreement: Employment contracts should be covered by an industry award or company agreement.
• Below the High-Income Threshold: If you’re not covered by an award or agreement, your annual earnings must be below the current threshold (around $167,500 as of July 1, 2023). This amount increases every year.

You only have 21 days from your dismissal date to file a complaint with the Fair Work Commission (FWC). If you want to check your eligibility for an unfair dismissal claim, you may take the FWC’s handy online quiz.

Final Takeaways

An employee termination procedure requires a swift and clear explanation while maintaining a compassionate approach. Plan ahead by scheduling the meeting, gathering documents, and involving HR and management. Remember to follow legal guidelines for notice periods and redundancy pay, and if HR leads the discussion, the manager should be present to answer questions anything about the employee’s job or concerns.

Minimising Legal Disputes in the Workplace

Following proper termination procedures protects both employers and employees. For employers, it minimises the risk of legal disputes arising from unfair dismissal claims. By adhering to notice periods, providing a valid reason for termination, and documenting the process, employers can demonstrate they acted fairly and lawfully. 

For employees, following the proper procedures ensures they receive the appropriate notice and redundancy pay they’re entitled to under the Fair Work Act standards. However, even with the best intentions, situations can become complicated. If you find yourself facing an employment termination issue, seeking legal advice is crucial.

JB Solicitors are experts in employment law and can guide you through the process, ensuring your rights are protected. Are you an employer facing a potential unfair dismissal claim? Were you treated unfairly during an employee termination procedure? 

Our employment and contract lawyers can provide the legal support you need to navigate these challenging situations. Don’t hesitate to reach out to us today.