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Navigating employee terminations is never easy – but doing it the right way is crucial for protecting your business. Whether you’re leading a small team or running a growing company, understanding your legal obligations when ending employment is essential. In Australia, Section 117 of the Fair Work Act sets out clear rules around notice of termination. Failing to comply can lead to legal disputes, unnecessary costs, and damaged workplace morale.
In this guide, we’ll break down Fair Work Act section 117 in plain English, outlining what you need to know as an employer: what counts as proper notice, when you can terminate without notice, and how to make sure your process is both fair and legally compliant. We’ll also point you to essential contracts and policies to help safeguard your business.
If you’re unsure about your legal obligations or want to avoid common mistakes, keep reading – we’ll help you navigate the rules so you can approach workforce changes with confidence.
What Is Fair Work Act Section 117?
Let’s start by clarifying what this section of the law covers. Section 117 of the Fair Work Act 2009 (Cth) – often shortened to “s117 Fair Work Act” – deals with the minimum notice period employers must give when terminating an employee’s employment.
The law aims to ensure that employees have adequate time to adjust to the loss of their job and, if possible, find new employment. For employers, following these rules correctly helps avoid legal claims such as unfair dismissal and shows respect for your team.
What Does Section 117 Require?
- When you terminate an employee (except in very limited circumstances), you must provide written notice of the last day of employment.
- The minimum notice period depends on the employee’s length of continuous service and their age.
- Instead of notice, you can pay the employee in lieu of notice – that is, provide the notice period’s wages rather than requiring them to work during that time.
Section 117 works alongside other rules in the Fair Work Act and any applicable Modern Awards, workplace agreements, or employment contracts.
Why Is Notice of Termination So Important?
Terminating someone’s employment is a big step – and doing it correctly matters for several reasons:
- Legal compliance: Incorrect notice is a common trigger for unfair dismissal claims or adverse action claims.
- Workplace culture: Clear, respectful processes reinforce trust and can protect your reputation as an employer.
- Minimising disputes: Following section 117 (and documenting it!) reduces risk and provides evidence if issues arise later.
If you don’t follow the required notice periods, your business could be exposed to penalties or court-ordered compensation.
Who Does Section 117 Apply To?
Generally, section 117 applies to employees covered by the national workplace relations system (most employees in Australia) – whether they’re full-time, part-time, or even casual (in certain rare cases, like where a casual is guaranteed ongoing work). Independent contractors are not covered.
Note: If your employees are covered by a Modern Award, Enterprise Agreement, or employment contract with a better notice entitlement than the Act, you must follow the more generous provision.
How Much Notice Do I Need to Give?
Fair Work Act Section 117 provides a handy table for minimum notice periods, depending on length of continuous service:
| Period of Continuous Service | Minimum Notice |
|---|---|
| 1 year or less | 1 week |
| More than 1 year, up to 3 years | 2 weeks |
| More than 3 years, up to 5 years | 3 weeks |
| More than 5 years | 4 weeks |
If an employee is over 45 years old and has completed at least two years of continuous service, you need to add one extra week to the above entitlements.
How Do I Calculate Continuous Service?
“Continuous service” means the whole period the employee has worked for you without a formal break in employment (excluding some types of unpaid leave). If you’re unsure how to calculate this, consult your employment contracts or speak with a legal expert.
What Form Must the Notice Take?
Section 117 specifically requires you to give written notice to the employee, stating the date of termination. This notice can be:
- Handed directly to the employee
- Left at or posted to the employee’s address on record
- Electronically delivered (such as via work email) – as long as the employee actually receives it
Best practice is to keep a copy of all communications, so you have clear evidence if questions ever come up.
Can I Pay in Lieu of Giving Notice?
Yes. S117 Fair Work Act allows you to pay the employee for the notice period rather than requiring them to work it out. This is known as payment in lieu of notice (sometimes just called “pay in lieu”).
If you go down this path:
- The payment must equal what the employee would have earned if they had worked until the end of the notice period (including wages, overtime, and usual allowances).
- You still need to confirm the exact last day of employment in writing – and make it clear you are paying out the notice period.
Paying in lieu can be helpful if you’d prefer the employee not remain in the workplace after giving notice, but you still need to observe the legal entitlements.
Are There Any Exceptions to Giving Notice?
Under Section 117, there are specific situations where the minimum notice of termination rules do not apply:
- Employees dismissed for serious misconduct: If an employee commits something like theft, fraud, violence, or serious safety breaches, you can terminate their employment immediately without notice (but always follow a proper investigation and document your decision).
- Casual employees: In most cases, genuine casuals do not require notice of termination.
- Fixed-term employees: If their contract clearly states an end date, and you’re ending employment at that point, no notice is required (unless otherwise stated in their contract).
- Probationary periods: Some contracts specify shorter or no notice during probation – but check that these comply with the Fair Work Act and other workplace agreements.
- Other exceptions: Seasonal workers, some trainees, and certain short-term employees may not be covered. Always check the Act, awards, and contracts.
Remember: even if notice is not required, providing clear written confirmation of employment ending is good practice – and can help avoid confusion or disputes.
Step-By-Step Guide: Lawful Termination and Notice
- Check Applicable Rules: Review employment contracts, awards, and any enterprise or registered agreements as these might require longer notice than the Fair Work Act minimum.
- Calculate Notice Period: Based on continuous service and age, determine the correct weeks of notice under s117 Fair Work Act.
-
Prepare a Written Notice: Draft a notice letter (and keep a copy!), stating clearly:
- The employment is being terminated
- The last day of employment
- Optionally, include the reason for termination (be careful: this can be sensitive)
- Decide: Work Notice or Pay in Lieu? Choose if the employee will continue to work during the notice period or if you’ll pay them instead. Clarify this decision in writing.
- Observe Other Legal Obligations: Ensure you meet any requirements under Modern Awards, NES entitlements (such as redundancy pay), or internal workplace policies.
- Final Pay and Documents: Provide the final payslip, any outstanding entitlements (like accrued leave), and a separation certificate if requested.
Are There Risks or Common Mistakes?
Even with the best intentions, termination can go wrong for small business owners. Here are some risks to watch out for:
- Insufficient notice: Accidentally providing less notice than required by law or contract.
- No documentation: Terminating verbally or failing to give written confirmation.
- Incorrect classification: Treating an employee as a “casual” or “serious misconduct” case when those definitions don’t actually apply.
- Not checking other obligations: Overlooking award or agreement rules, redundancy pay, or other entitlements when applicable.
These mistakes can lead to unfair dismissal claims, Fair Work Commission disputes, or even civil penalties.
What Other Employment Laws Should I Know?
Notice of termination is just one small piece of the bigger employment law puzzle. When you end an employment contract, always consider:
- General protections against unfair or unlawful termination – these might apply even if you follow notice rules.
- Contract terms – ensure there’s a valid basis to end employment.
- Commission, bonuses, or incentive schemes – check if these affect the employee’s final pay.
- Unpaid leave, annual leave, and long service leave – pay out what’s due according to law.
- Performance management and record-keeping – especially if dismissing for conduct or performance reasons.
Getting the notice period right is only part of the job. Make sure your process covers all bases for a clean, fair, and lawful transition.
What Legal Documents Should I Have for Terminations?
Setting up clear, tailored legal documents is the best way to reduce risk around dismissals. Here are some essentials for small businesses:
- Employment Contract: Spell out notice periods, probation rules, misconduct procedures, and any company-specific requirements.
- Termination Letter Template: Have a compliant, ready-to-use template for written notices (and update it whenever laws change).
- Workplace Policy Suite: Set expectations around performance, misconduct, absence, and termination procedures – this creates a fair process for everyone.
- Record-Keeping Policy: Ensure all employment changes are documented thoroughly (this helps if only disputes arise).
- Separation Certificate: Provide this on request to help employees with Centrelink or superannuation matters.
You can read more about drafting employment contracts and why they’re vital for avoiding misunderstandings with staff.
Tips for a Respectful and Legally Compliant Termination
- Treat employees with dignity – even in difficult situations, a fair process can protect your reputation and team morale.
- Offer support – confirm access to employee assistance programs or outplacement if you have these resources available.
- Make sure notice periods fulfil both the letter and the spirit of the law – sometimes it is worth giving “goodwill” notice even if strictly not required.
- Get advice if you’re unsure, especially for complex or high-risk situations (like mass redundancies or potential legal action). Legal experts can review your process and documents to ensure compliance.
Are There Special Cases or Alternatives?
Sometimes, employment ends due to different circumstances – for example, company closure, redundancy, or mutual agreement. In these scenarios:
- Redundancy: Extra rules may apply, including redundancy pay and consultation (learn about redundancy entitlements here).
- Mutual resignation or agreed exit: Document the outcome carefully and ensure all entitlements – including notice, if relevant – are paid out correctly.
- Serious misconduct: Always follow due process. Conduct a fair investigation, allow the employee to respond, and keep records. Avoid summary dismissal unless you’re certain the situation meets the legal benchmark.
Each situation can be unique. If in doubt, seek tailored legal guidance.
Key Takeaways
- Fair Work Act Section 117 sets out the minimum notice periods and process for lawful employee termination in Australia.
- Always give written notice (or equivalent pay in lieu), and base notice on length of service and employee age.
- Certain exceptions apply (serious misconduct, true casuals, fixed-term contracts), but a fair process is always best practice.
- Check employment contracts, Modern Awards, and agreements as they may offer more favourable notice than s117 Fair Work Act requires.
- Have clear legal documents in place – including contracts and a termination letter template – to avoid claims and disputes.
- Get professional advice if you’re unsure how to handle a complex or sensitive termination – it saves time, money, and stress in the long run.
If you would like a consultation on employee terminations, Fair Work compliance, or drafting the right employment contracts for your business, you can reach us at team@sprintlaw.com.au or call 1800 730 617 for a free, no-obligations chat.
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