Termination Process Guide

Termination of employment is when an employee’s employment with an employer ends. Employment can

end for many different reasons. An employee may resign or can be dismissed (fired). However, it ends, it’s

important to follow the rules about dismissal, notice and final pay. There are also different rights and

obligations when a job is made redundant or when a business is bankrupt.

What is a dismissal?

A person has been dismissed from their employment when:

• their employment has been terminated at the initiative of the employer, or
• they have resigned from their employment but the resignation was forced by something the employer did (this can also be known as constructive dismissal e.g., when an employee has been forced to resign from employment because of conduct engaged in by the employer, such as harassment.)

Difference between “Unfair Dismissal” and “Unlawful Termination”

• Unfair Dismissal - where the employee believes the termination of their employment was harsh, unjust or unreasonable (whether the employee was given a “fair go”).
• Unlawful Termination - where the employee believes the reason for their termination is an unlawful reason, as specified in the Fair Work Act 2009 (the Act) e.g., discrimination.

Employees excluded from claiming Unfair Dismissal

Certain categories of employees are excluded from the unfair dismissal laws under the Act. These categories

include:

• an employee employed for a specified task, a specified period of time or a seasonal worker and who is terminated at the end of that time, task or season;
• an employee subject to a training agreement whose employment is limited to the duration of that agreement;
• an employee dismissed in the case of a genuine redundancy;
• employees earning above the high-income threshold which is indexed each July;
• an employee who has not met the minimum employment period (see below); and
• casual employees employed on an irregular basis (note: casual employees employed on 
• regular and systematic basis who have a reasonable expectation of ongoing employment can make an unfair dismissal claim).

Minimum employment period

An employee must serve a minimum employment period before being able to make an unfair dismissal claim. The Act prescribes a “minimum employment period” for small business employers (that is employers who employ less than 15 full time equivalent (FTE*) employees) of 12months, and for all other employers, 6 months.

Unlawful Termination

Employees who are excluded from making a claim of unfair dismissal are not excluded from

claiming unlawful termination.

It is unlawful for an employer to terminate the employment of any employee (including short- term casuals) for reasons that include anyone or more of the following:

• Temporary absence from work due to illness or injury;
• discrimination on the grounds of race, colour, sex, sexual preference, age, disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin;
• trade union membership or non-membership
• participation in union activities outside of working hours or, with the employer’s consent, during working hours;
• seeking office as, or acting or having acted as, a representative of employees;
• the filing of a complaint, or involvement in proceedings, against an employer regarding an alleged breach of the law;
• absence from work during maternity leave or other parental leave; or
• temporary absence from work due to undertaking voluntary emergency management
• activity, where the absence is reasonable.

Notice of Termination Requirements

Should an employee be given notice of termination?

Generally, an employer must not terminate an employee’s employment unless they have given the employee written notice of the last day of employment. An employer can either let the employee work through their notice period, or pay it out to them (also known as pay in lieu of notice).

The amount of notice depends on the age of the employee and how long the employer has employed them on a continuous basis.

Length of continuous service Notice period

Note: if the employee is over the age of 45 and has completed at least 2 years continuous service you must increase the notice period by one week.

Notice of termination requirements do not apply to the following employees,

• an employee employed for a specified period of time, for a specified task or for the duration of a specified season;
• an employee who is terminated for serious misconduct; casual employee; or
• an employee (other than an apprentice) to whom a training arrangement applies and whose employment is for a specified period of time.

What entitlements should be paid termination?

When an employment relationship ends, employees should receive the following entitlements in their final pay:

• 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 but not yet taken
• any redundancy pay or entitlements if the employee has been made redundant and is eligible.
• If an employee has taken leave in advance and their employment ends before they’ve accrued it all back, the employer can deduct the amount still owing from the employee’s final pay.

If an employee believes that they have not been paid for all of their entitlements when their employment ends, the Fair Work Ombudsman can investigate and take action to make sure that all entitlements are paid.

An employer can be liable to pay a penalty if they have not complied with their obligations under relevant Commonwealth workplace laws.