As a business owner, you will be faced with the need to end an employee’s employment contract at some point. However, when it comes to the termination of employment, there are certain rights, obligations and legislation that you need to comply with.
At Owen Hodge, our experienced employment lawyers are here to answer any questions you may have about terminating employment – so please don’t hesitate to get in touch.
What is an employment contract?
An employment contract is an agreement between an employer and an employee that outlines the terms and conditions of employment.
Reasons for termination of employment
There are a number of reasons why an employer may wish to end an employee’s contract. Some of these include:
- Misconduct: if the employee partakes in behaviour that goes against company policy or terms of an employment agreement, or is unlawful
- Performance: if the employee’s skill levels (or quality of work) are below the job requirements or they don’t meet the standards in their employment contract
- Capacity: if the employee is incapable of completing the requirements of their job description
How to terminate employment
According to the Fair Work Act 2009, an employer can terminate an employment contract if:
- It is a genuine redundancy
- The termination is not harsh, unjust or reasonable
- The termination is in accordance with the Small Business Fair Dismissal Code.
An employer may also terminate the employment contract through the following ways:
- Summary dismissal: summary dismissal is the instant dismissal or on the spot dismissal by the employer for an extremely serious misconduct done by an employee.
- Dismissal in lieu of notice: the employer must have a valid reason for dismissing the employee, including poor performance and gross misconduct on the part of the employee. The employer is required to give a written notice along with the notice period stated in the employment agreement.
Related employment issues:
What is the notice period for termination of employment?
Under the National Employment Standards, an employer needs to provide a certain notice period when terminating a permanent employee.
View the National Employment Standards notice period table below:
An employee who is over 45 years old and has worked at the company for at least 2 years is also entitled to an extra week of notice.
Can my employer terminate me without any warning?
In general, an employer must give an employee notice or a warning before any termination of employment. However, an employer may dismiss an employee on the spot (called a summary dismissal) if the employee was involved in an extremely serious misconduct.
Learn more:
What is the procedure for termination of employment?
The process for employment termination can differ depending on the issues at hand, however, the process should involve the following:
- Identifying and documenting the issues
- Speaking to the employee and giving them an opportunity to rectify them
- If the issue is not resolved, then the employer must give the employee an adequate notice period
- The contract is terminated
Redundancy
In some cases, an employee may become redundant because their job is no longer needed or the company is going through a restructure. If this occurs, a compensatory amount needs to be paid to the employee in the form of redundancy pay.
Unfair dismissal
According to the Fair Work Act 2009, an employee has been unfairly terminated if Fair Work Australia finds that the termination was harsh, unjust and unreasonable or if the termination was not a case of genuine redundancy.
In case of an unfair termination of employment, the employee should speak to an unfair dismissal lawyer as they may be eligible to lodge an unfair dismissal claim.
Under the Fair Dismissal Code, employees of small business employers cannot make a claim for unfair termination in the first 12 months after being appointed. Employees of larger business employers are able to make a claim for unfair termination after the completion of 6 months of employment.
Unlawful termination of employment
In workplace rights and employment law, an employment contract is unlawfully terminated when it is terminated on the following grounds:
- A person’s race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
- Temporary absence from work because of illness or injury.
- Membership of any trade union or participation in trade union activities outside working hours or, with the employer’s consent during working hours.
- Non-membership of a trade union
- Seeking office as, or acting as, a representative of employees.
- Being absent from work during maternity leave or other parental leave.
- Temporary absence from work to engage in a voluntary emergency management activity.
- Filing a complaint, or participating in proceedings against an employer.
Learn more:
- Difference between unfair dismissal and wrongful dismissal
- Terminating an employee on workers compensation NSW
How to avoid unfair dismissal claims: 3 tools
1. Job objectives
If the employer lists the duties, responsibilities and key competencies of a role at the outset of employment, the employer will have a proper basis to establish a performance management process. If it becomes necessary to dismiss an employee, the list or job description will better equip the employer to dismiss the employee on the grounds that they cannot perform their duties properly.
2. Probationary period
Probationary periods are useful because they put the employee on notice that their suitability for the role is to be assessed in the initial period of their employment.
3. Performance guidelines
If the employers have proper procedures in place for dealing with performance issues, the employers will be better able to ensure that their managers follow proper processes.
Turn to Owen Hodge Lawyers
Whether you’re an employee or employer dealing with an employment termination matter, you can trust Owen Hodge to provide you with expert legal advice. Call our employment lawyers on 1800 770 780 to schedule an initial consultation.