Terminating an employee can be a difficult, complex and sensitive process. There are many reasons why termination of employment might be necessary, and, in every case, employers must ensure they have a valid reason for the termination, which is justifiable given the facts. So what are the legal requirements for terminating an employee?

Terminating an employee’s employment requires employers to consider several factors to ensure they are meeting their legal requirements under employment law. Compliance with employment law not only ensures fair, just, reasonable and lawful practices in the workplace but protects employers from potential claims such as unfair dismissal and general protections (e.g. correct pay, leave and other entitlements).

 Key rules and requirements employers need to be aware of when terminating an employee include:

Genuine redundancy  

Redundancy occurs when an employer no longer requires an employee’s job to be done by anyone. Genuine redundancy is not considered unfair dismissal. If a termination will result from a redundancy, employers must first consider whether the redundancy is ‘genuine’.

For a redundancy to be deemed ‘genuine’ the following conditions must be met:

  • the employer has provided evidence that the role is no longer required to be performed by anyone due to organisational changes;
  • the employer has adhered to consultation requirements outlined in relevant award or enterprise agreement; and
  • the Employer has made a genuine effort to look for an alternative employment opportunity that may be suitable for the employee within their organisation or associated entity.

A redundancy is not considered genuine if the employer still needs the employees job done by someone (i.e. hires someone else to do the job), they have not followed the requirements to consult with the employee, or they could have reasonably given the employee another job in the company.

When an employee’s dismissal is a genuine redundancy, the employee cannot make an unfair dismissal claim.

Unfair Dismissal laws

When considering whether a dismissal is unfair, the Fair Work Commission (the “Commission”) will assess whether it is “harsh, unjust or unreasonable”. In most cases it is accepted that an employer must follow a procedurally fair process prior to terminating an employee.

Employers should be aware of the criteria that makes a dismissal procedurally ‘fair’, this includes:

  • having valid reasons for the termination relating to the employee’s capacity or conduct;
  • providing procedural fairness (i.e. providing the employee with written notification that their employment has been terminated, the reason why);
  • offering the employee an opportunity to respond to allegations, with a support person present If they wish;
  • whether the employee had been previously warned that their performance was unsatisfactory;
  • the size of the business or lack of Human Resource management expertise that impacted on the termination process; and
  • any other matters the Commission considers relevant.

Small businesses have different rules for dismissal which are set out in the Small Business Fair Dismissal Code (the Code). The Code provides protection for small business employers against unfair dismissal claims where they have followed the ‘Small Business Fair Dismissal Code’.

Discrimination and Adverse Action laws

Termination must always be based on a valid reason. Employees are protected under adverse action laws from termination based on prohibited grounds such as: race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carers responsibilities, pregnancy, religion, political opinion, national extraction and social origin.

Employees are also protected from termination if they are temporarily absent from work because of illness or injury, absent from work during parental leave or because of union involvement (or non-involvement).

Termination for serious misconduct

Notice of termination should be given to an employee in writing, except in cases of serious misconduct where immediate termination may be justified.

Serious misconduct may include incidents such as theft, fraud, workplace violence or refusing to carry out a lawful and reasonable instruction that is part of the job. In these instances, employers should make sure the process is fair, investigate the allegations, provide the employee with the opportunity to respond to the claims and pay out all outstanding entitlements.

Termination notice periods

An employer must provide an employee with written notice of the day of termination as outlined in the National Employment Standards (NES). Employees are generally entitled to notice, or payment in lieu of the minimum amounts of notice upon termination.

Notice periods are outlined in the NES or relevant industrial instrument and vary based on the employee’s length of service.

There are instances in which a notice period is not required including but not limited to termination of casuals and employees employed for a fixed period of time (other than apprentices). It is also not necessary for a termination notice period if the employee is being dismissed due to serious misconduct.

Consultation and procedural fairness

Consultation is key in any termination process. Regardless of whether the termination has come about due to serious misconduct, consultation and procedural fairness should be a part of every process.

Employers should always inform the employee of the reason(s) for the termination, provide the employee with an opportunity to respond (with a support person present if applicable) and consider alternative options to dismissal.

Post-employment obligations

Final pay is what an employer owes an employee when their employment ends. Following termination, employers are obligated to pay the employee their outstanding entitlements including wages, accrued annual leave and if applicable redundancy pay which is based on the employee’s length of service.

An award, employment contract, enterprise agreement or other register agreement can specify when final pay must be paid. If they do not the best practice is for an employee to be paid within 7 days of their employment ending or on the next scheduled pay day.


Understanding legal obligations when it comes to termination can be overwhelming. Employers should ensure they are well informed of their obligations under employment law and seek advice from a HR specialist. If you are considering termination Industryus can assist you to navigate the process, contact  Industryus HR to discuss.

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