When you’re running a business, having a great team by your side is essential. Productivity and passion can all be enhanced with the right personalities coming together with a single goal. However, there is a downside to having employees. Sometimes, it means having to make tough decisions and letting someone go. 

As an employer, if you find yourself in this position then it’s important to navigate the termination of an employee with utmost care. The last thing you want is legal trouble because you didn’t go about it the right way. On the contrary, if you take the proper steps, then termination of employment can be made easier on both parties. Keep reading to find out more.

When Can I Terminate An Employee? 

When terminating an employee, it’s important to follow the provisions set out by the Fair Work Act. The legislation determines the appropriate methods and circumstances for terminating an employee. As a general rule, you need to have reasonable reasons for terminating an employee, such as their performance or conduct. 

Additionally, you will likely be required to undertake steps to rectify the issue, as opposed to just letting the employee go after one mistake. For example, some employers might have their employee on probation period if they’re not performing up to the standard. Whatever process you opt to undertake, it’s important to have a written record of it. 

Keep in mind, employees have rights when it comes to their dismissal. If they feel they have been wrongly or unfairly dismissed, they have the right to lodge a complaint. This can be a headache to deal with, not to mention your business’s reputation might suffer from such claims. However, if you’ve taken all the appropriate measures then you won’t have anything to worry about. 

To learn more about unfair or wrongful termination of an employee, check out our article, Wrongful Dismissal Vs Unfair Dismissal: What’s The Difference? 

What Is The Small Business Fair Dismissal Code?  

The Small Business Fair Dismissal Code is a set of guidelines that small business’s need to follow when dismissing an employee. According to the Fair Work Act, a small business is defined as an organisation that employs less than 15 people. 

Aside from the code, there’s a number of other legal factors that will determine what, when and how it is appropriate to dismiss your employees. For instance, your employee might be entitled to a modern award that outlines some of their key employment rights. As an employer, it’s your duty to be familiar with this and take the necessary steps to ensure your employee receives what they are entitled to.

Employment Contracts also play a key role in determining what happens during dismissal. If you’re an employer, you need to review the contracts you have with your employees prior to dismissing them. If there’s instructions or procedures in the contract regarding dismissal, then it’s important to follow them. You want to avoid being in breach of a contract when dismissing an employee. 

If you’re unsure about your employment contracts or need advice regarding your specific circumstances, then it’s always a good idea to chat with a legal expert. They can take a look at your situation and advise you on the best way to proceed with matters legally.   

Does An Employer Have To Give Notice Of Termination?

Yes. Giving notice when terminating an employee is required for all full time or part time employees. For casual employees, giving notice generally isn’t essential (this goes both ways) however some employers often like to give notice regardless, as a courtesy.  

Should I Give Written Notice?  

In most cases, you will need to give your employees written notice of employment. Even if you’re not required to in certain circumstances, we always recommend having it on paper. That way, if there’s ever any confusion or misunderstandings down the road, you can always refer back to the notice you gave your former employee. 

What Is The Notice Period For Termination Of Employment? 

The notice period for termination of employment will depend on a number of different factors. As we mentioned, employment contracts and modern awards can play a role in determining  the notice period for termination of employment. If you’re wondering about the minimum period of time to give notice, it’s best to look in those places first. 

If contracts and modern awards aren’t providing you with any answers, then it’s best to follow the regulations set out by the Fair Work Act on notice periods for dismissal. According to Fair Work Australia, the amount of time an employee has spent employed with a workplace determines what their minimum notice period is. 

The general rule is as follows:

  • Less than one year = 1 week minimum notice 
  • 1-3 years = 2 weeks minimum notice 
  • 3-5 years = 3 weeks minimum notice
  • More than 5 years = 4 weeks minimum notice

However, other factors can shape the minimum period of notice for an employee. For example, Fair Work Australia has determined that employees over the age of 45 years old that have been employed with their current employer for more than two years should be given an extra week of notice. 

If you’re thinking of dismissing an employee, it’s best to take a look at Fair Work Australia regulations to see what your obligations are. If you need help, chat with one of our legal experts

What About Redundancy Pay?  

When an employee’s job is no longer needed or your business is in financial trouble then you may be able to declare an employee redundant. There’s a pretty strict threshold on what constitutes redundancy, so it’s important to make sure you meet it. 

After you declare an employee redundant, you’ll owe them redundancy pay. This is calculated by establishing the amount of time an employee has been with you (which determines how many weeks of redundancy pay they are entitled to) and multiplying it with their base pay.

Generally, the weeks of redundancy play is calculated like this: 

  • 1-2 years of employment = 4 weeks of redundancy pay 
  • 2-3 years of employment = 6 weeks of redundancy pay 
  • 3-4 years of employment = 7 weeks of redundancy pay 
  • 4-5 years of employment = 8 weeks of redundancy pay 
  • 5-6 years of employment = 10 weeks of redundancy pay 
  • 6-7 years of employment = 11 weeks of redundancy pay 
  • 7-8 years of employment = 13 weeks of redundancy pay 
  • 8-9 years of employment = 14 weeks of redundancy pay 
  • 9-10 years of employment = 16 weeks of redundancy pay 
  • At least 10 years of employment = 12 weeks of redundancy pay 

Other factors may impact how much redundancy pay is owed, so it’s important to do your research and keep an eye out for that. 

In most cases however, redundancy pay is calculated as shown: 

Person X has served at Company Y for 5 years and earns a weekly salary of $1, 200.

Their redundancy pay is calculated by:

$1, 200 x 10 weeks of redundancy pay = $12, 000. 

When Can I Immediately Dismiss An Employee?

Even though giving adequate notice is imperative when dismissing an employee, there are certain circumstances where the immediate dismissal of an employee can be considered appropriate. For instance, criminal conduct by an employee can warrant an immediate dismissal.

Before you take this step, make sure you have not only due cause and reason, it’s also important to have undeniable evidence. That way, you can be sure you’re not making any mistakes. Moreover, if the dismissal is disputed by the employee, you’ll have evidence to back up your claims. 

If you’re unsure about whether an immediate dismissal is appropriate, then it’s best to chat with a legal expert about your situation.  

As An Employer, Can I Withdraw A Notice Of Termination? 

So, you’ve let an employee go, given them their notice and know you’ve realised that perhaps that wasn’t the best decision after all. As natural as mistakes are, it’s important to acknowledge them as best you can. 

If you have given an employee their notice of termination and they have accepted it, then by most standards you have effectively ended your employment agreement with them. As a result, it would be difficult (and most likely considered unfair) if you opted to change your mind and tell the employee they are in fact, not fired. 

If you have made the wrong decision in dismissing an employee, then you’ll need to let them know of your intention to rehire them. If the employee agrees to continue working for you, it may be best to draft a new contract from there, depending on your circumstances. 

Keep in mind, not all situations are the same when it comes to dismissing an employee. If you find yourself in a unique predicament like the one we just mentioned, it’s best to get expert advice on how to proceed. Discussing things through with an Employment Law Expert can help you gain much needed clarity. From there, you can make the best decision possible for your business and employees. 

Next Steps 

When you’re terminating an employee, it’s important to carefully navigate through employment law regulations to make sure your actions are legally compliant. If you need help, it’s always best to contact a legal expert for advice. To summarise what we’ve discussed: 

  • Terminating an employee should be done with care to avoid legal issues
  • Reasons for termination should be reasonable and you may need to address the issue first
  • Employees have rights and can file complaints if they feel unfairly dismissed
  • Small businesses must follow the small business guidelines when dismissing employees
  • Review employment contracts to ensure compliance with dismissal procedures
  • Written notice is recommended when terminating employees
  • The notice period depends on various factors, including employment duration
  • Redundancy pay is owed based on years of service and base pay
  • Immediate dismissal may be appropriate for criminal conduct with strong evidence 
  • Consult with a legal expert if unsure about dismissal decisions
  • Generally, once notice is given and accepted, it’s challenging to withdraw it
  • Seek expert advice for unique dismissal situations and legal compliance

If you would like a consultation on terminating employees, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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