Termination Under The Fair Work Act 2009 Explained

Ending employment is rarely straightforward. Whether you’re managing a restructure or responding to performance issues, getting termination right under the Fair Work Act 2009 (Cth) is essential in Australia.

If you don’t follow the rules, you risk unfair dismissal claims, civil penalties or costly disputes. The good news is that with a clear process and the right documents, you can handle termination lawfully and with respect.

In this guide, we unpack how termination works under the Fair Work Act 2009, including notice, final pay, unfair dismissal, unlawful termination and redundancy obligations-so you can make informed, compliant decisions.

What Does The Fair Work Act 2009 Cover When Employment Ends?

The Fair Work Act 2009 (the Act) sets national minimum standards and processes for ending employment, and applies to most private-sector employers and employees in Australia. Termination can be initiated by either party (dismissal by the employer, or resignation by the employee), but the Act-and any applicable modern award, enterprise agreement or contract-sets out what must happen for it to be lawful and fair.

• Termination: The employment relationship ends (by dismissal, redundancy or resignation).
• Unfair dismissal: A dismissal that is “harsh, unjust or unreasonable” (and not a genuine redundancy) where the employee is eligible to claim.
• Unlawful termination/adverse action: Ending employment for a prohibited reason (e.g. discrimination, exercising a workplace right), which can attract significant penalties.

Alongside the Act, always check the employment contract and any applicable award or enterprise agreement. These instruments often impose additional process requirements (like consultation) and can specify longer notice periods than the statutory minimums.

When Can Employment End, And What Process Applies?

Both employers and employees can end employment, but the steps differ depending on the reason and the instrument that applies.

Dismissal For Performance, Conduct Or Capacity

If you’re ending employment for performance or conduct, follow a procedurally fair process: set clear expectations, provide warnings where appropriate, give a genuine opportunity to respond and improve, and document each step. Tools like show cause letters can help you invite a response before making a final decision.

Serious Misconduct

Serious misconduct (for example, theft, violence or serious safety breaches) can justify summary dismissal without notice. You should still conduct a fair process to establish facts and give the employee a chance to respond. In some cases, it’s sensible to consider standing the employee down pending investigation.

Resignation By The Employee

An employee can resign by giving the notice required by their contract or applicable award/enterprise agreement. The Act’s section 117 notice rules apply to employer-initiated termination, not to employee resignations. If an employee gives insufficient notice, any deduction from wages or entitlements must be clearly authorised by an award/EA or contract and also comply with section 324 of the Fair Work Act.

Probation And Casual Employment

Employees on probation or casual employees may have different eligibility for unfair dismissal protections, but they’re still protected from unlawful (prohibited) reasons for termination. If you’re unsure about eligibility or timing, our team can help you navigate termination during probation and related risks.

Notice, Final Pay And Paperwork: What’s Required?

Getting the basics right reduces disputes and shows you’re acting fairly.

Minimum Notice (Employer Termination)

Under section 117 of the Act, employers must provide the minimum notice (or payment in lieu) unless dismissal is for serious misconduct. These minimums increase with service length, and employees aged 45+ with at least 2 years’ service are entitled to an extra week. Contracts or awards can require longer notice.

Many employers choose payment in lieu of notice to end employment immediately and pay out the notice period instead. If you’re considering paying in lieu, check any superannuation implications using guidance on payment in lieu and superannuation and ensure the contract allows it.

To sanity-check timing, you can cross-reference award or contract requirements and use resources about calculating employee notice periods.

Resignation Notice (Employee Termination)

When an employee resigns, their notice obligations come from their contract or any applicable award/EA. Again, the Act’s section 117 notice doesn’t apply to employee-initiated resignations. If a deduction is contemplated for insufficient notice, make sure it’s permitted by the relevant instrument and compliant with section 324.

Final Pay And Accrued Entitlements

On termination, pay out all amounts due, including wages to the last day worked, any accrued and untaken annual leave, and where applicable, long service leave. If the role is redundant, redundancy pay may also be due (see below). For timing and contents, practical checklists for calculating final pay can help you avoid common errors.

Written Notice And Key Documents

• Written termination notice: Provide dismissal notice in writing, clearly stating the last day and whether notice is worked or paid in lieu.
• Separation certificate: Only required if requested by the employee or Services Australia. See employer obligations around separation certificates.
• Record-keeping: Keep copies of warnings, meeting notes, responses and final calculations-good records are your best defence.

Unfair Dismissal Vs Unlawful Termination: What’s The Difference?

These two concepts are often confused-but they’re different, with different risks and remedies.

Unfair Dismissal (Process And Substantive Fairness)

An eligible employee can claim unfair dismissal if the dismissal was “harsh, unjust or unreasonable,” or not a genuine redundancy. The Fair Work Commission looks at factors in section 387 of the Act, including whether there was a valid reason, whether the employee was notified and given a chance to respond, and whether there was a fair process.

Eligibility generally requires the minimum employment period (6 months, or 12 months for small business employers with fewer than 15 employees), and that the employee is covered by a modern award or enterprise agreement, or earns less than the high-income threshold.

Unlawful Termination/Adverse Action (Prohibited Reasons)

It’s unlawful to end employment for prohibited reasons like discrimination (e.g. pregnancy, race, sex), because an employee exercised a workplace right (e.g. took sick leave or made a complaint), or due to temporary absence because of illness or injury. These claims do not turn on “harsh, unjust or unreasonable”-they focus on the reason for the decision and can result in penalties as well as compensation.

Practically, always separate performance or conduct issues from protected attributes or activities, and document the objective reasons for your decision.

Redundancy, Consultation And Redeployment Obligations

Genuine redundancy has its own rules. If a job is no longer required due to operational changes, and you follow the correct process, dismissal can be lawful and not “unfair.” If you miss steps, the dismissal may be challenged.

Is It A Genuine Redundancy?

The Commission applies the test in section 389 of the Act. A redundancy is “genuine” if:

• the job is no longer required to be performed by anyone;
• the employer complied with any consultation obligations in an applicable award or enterprise agreement; and
• it was not reasonable to redeploy the employee within the enterprise (or an associated entity).

Consultation Under Awards/Enterprise Agreements

Most modern awards and enterprise agreements require consultation when major workplace change is proposed. This typically involves notifying affected employees, discussing the change and any measures to avert or mitigate adverse effects, and considering feedback before final decisions are made.

Redeployment And Redundancy Pay

Consider suitable redeployment options-different roles, locations or hours-before confirming redundancy. If redundancy proceeds, redundancy pay may be required based on service, unless an exception applies. For budgeting and communication, many employers use a redundancy calculator and review guidance on calculating redundancy payments.

Plan your communications carefully, and issue clear letters-your internal policies and templates can sit within a broader employee termination documents suite for consistency across the organisation.

Practical Steps To Reduce Risk (And Keep Things Respectful)

A fair, consistent approach helps you comply with the law and support your team through change.

1) Follow A Fair Process

• Set expectations and give warnings for performance issues.
• Offer a real opportunity to respond and improve.
• Use structured letters and meetings to keep everyone on the same page.

If the issues are complex, consider a short stand-down during investigation where appropriate, using clear suspension procedures.

2) Use Clear, Up-To-Date Documents

• Employment Contract: spells out notice, misconduct, performance and termination clauses.
• Workplace Policy: sets expectations around conduct, performance management and grievances.
• Termination letters and checklists: keep your process consistent and compliant.

3) Get The Numbers Right

• Check award/EA/contract notice requirements, and consider whether payment in lieu is appropriate.
• Reconcile leave and calculate final pay using a reliable approach, such as this guide to final pay.
• If redundancy applies, cross-check consultation, redeployment and entitlements using redundancy payment guidance.

4) Communicate With Care

Be clear, respectful and consistent. Confirm outcomes in writing, and provide a separation certificate on request. Encourage employees to bring a support person to significant meetings where appropriate.

5) Keep Strong Records

Keep detailed file notes, copies of letters, and calculations. If a dispute arises, your records will be essential. A structured HR file aligned to your policies makes this simple.

Key Takeaways

• Termination under the Fair Work Act 2009 requires both a valid reason and a fair process; rushing or skipping steps increases the risk of claims.
• Section 117 notice rules apply to employer-initiated termination; employee resignation notice comes from the contract or award/EA, and any deduction for insufficient notice must comply with section 324.
• Final pay must include all owed entitlements; consider whether payment in lieu of notice is appropriate and calculate amounts carefully using a robust final pay process.
• Unfair dismissal focuses on procedural and substantive fairness; unlawful termination focuses on prohibited reasons-both carry serious consequences.
• For redundancy, you must consult under any award/EA, consider redeployment, and meet the test for a genuine redundancy in section 389, including any redundancy pay.
• Clear contracts, practical policies and consistent documentation are your best safeguards, supported by timely legal advice when issues arise.

If you’d like a consultation on managing termination under the Fair Work Act 2009, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.