Termination in Australian employment law refers to the ending of an employment relationship between an employer and employee. This can occur through various means including dismissal by the employer, resignation by the employee, mutual agreement, or expiry of a fixed-term contract. The termination process in Australia is governed by a complex framework of legislation, awards, enterprise agreements, and employment contracts, with the Fair Work Act 2009 providing the primary regulatory foundation.

Types of termination

Termination by employer

• Dismissal with notice: When an employer ends employment with the required notice period
• Summary dismissal: Immediate termination without notice for serious misconduct
• Redundancy: When a position is no longer required due to operational changes
• Unsatisfactory performance: Dismissal following performance management processes
• Probationary termination: Dismissal during or at the end of a probation period
• Abandonment of employment: When an employer terminates after employee absence without notification

Termination by employee

• Resignation with notice: Employee provides required notice as per contract or award
• Resignation without notice: Employee leaves immediately (may have financial consequences)
• Constructive dismissal: Employee resigns due to employer conduct that forces resignation

Other forms of termination

• Mutual agreement: Both parties agree to end the employment relationship
• Expiry of fixed-term contract: Automatic termination when a contract period ends
• Frustration of contract: Employment becomes impossible to perform (e.g., loss of essential qualification)
• Termination during insolvency: Special rules apply when business enters administration or liquidation

Legal framework for termination

Fair Work Act 2009

• Establishes National Employment Standards (NES)
• Defines unfair dismissal protections
• Outlines notice and redundancy requirements
• Provides general protections against adverse action
• Creates remedies for unlawful termination

Modern Awards and Enterprise Agreements

• May contain additional termination provisions
• Can specify industry-specific dismissal procedures
• Often include consultation requirements
• May enhance minimum entitlements

Employment contracts

• Can establish contractual notice periods (cannot be less than statutory minimums)
• May define probationary periods
• Can include post-employment restraints
• May specify termination procedures

Common Law

• Underpins contractual obligations
• Establishes implied terms of mutual trust and confidence
• Provides remedies for wrongful dismissal
• Governs interpretation of employment terms

Notice of Termination

Minimum Notice Periods

Under the National Employment Standards:

• Less than 1 year of service: 1 week
• 1-3 years of service: 2 weeks
• 3-5 years of service: 3 weeks
• More than 5 years of service: 4 weeks
• Plus 1 additional week if the employee is over 45 years old and has completed at least 2 years of continuous service

Payment in lieu of notice

• Employer pays the amount the employee would have earned during the notice period
• Includes ordinary hours, allowances, loadings, and other entitlements
• Must include superannuation contributions
• Taxed as ordinary income

Exceptions to notice requirements

• Serious misconduct (summary dismissal)
• Casual employees (unless regular and systematic)
• Fixed-term contracts ending at the specified time
• Seasonal workers at end of season
• Daily hire employees in certain industries
• Training arrangement employees completing training

Unfair dismissal

A dismissal is unfair if it is:

• Harsh, unjust, or unreasonable
• Not a case of genuine redundancy
• In the case of small business (less than 15 employees), not consistent with the Small Business Fair Dismissal Code

Eligibility to make a claim

• Completed minimum employment period (6 months, or 12 months for small business)
• Covered by unfair dismissal laws (excludes certain categories)
• Earning under the high-income threshold (unless covered by award/agreement)
• Application lodged within 21 days of dismissal taking effect

Fair work commission process

• Application for unfair dismissal remedy
• Conciliation conference
• If unresolved, proceeds to hearing
• Possible outcomes: reinstatement, compensation (capped at 26 weeks’ pay), or dismissal of application

Determining “Harsh, unjust or unreasonable”

The Fair Work Commission considers:

• Valid reason related to capacity or conduct
• Notification of the reason
• Opportunity to respond
• Support person allowed during discussions
• Warnings for unsatisfactory performance
• Size of the business affecting procedures
• Absence of dedicated HR specialists
• Other relevant matters

General protections (Adverse action)

Protected Attributes and Activities

Protection from termination based on:

• Temporary absence due to illness or injury
• Trade union membership or activities
• Race, colour, sex, sexual orientation, age, disability, marital status, family responsibilities
• Pregnancy or potential pregnancy
• Religion, political opinion, national extraction, social origin
• Exercising or proposing to exercise a workplace right

Adverse action claims

• No minimum employment period required
• Application within 21 days for dismissal cases
• Reverse onus of proof on employer
• Conference at Fair Work Commission
• If unresolved, may proceed to court
• Uncapped compensation plus penalties possible

Wrongful termination

• Termination in breach of employment contract
• May overlap with unfair dismissal but legally distinct
• Common law remedy rather than statutory

Examples

• Dismissal without contractual notice period
• Breach of contractual termination procedures
• Dismissal contrary to enterprise agreement or award procedures
• Summary dismissal without sufficient serious misconduct

Remedies

• Damages for contractual breach
• Usually limited to notice period value
• May include lost contractual benefits
• Generally pursued in courts rather than Fair Work Commission

Final pay entitlements

Statutory entitlements

• Outstanding wages for hours worked
• Accrued annual leave (paid at full rate including leave loading)
• Accrued or pro-rata long service leave (subject to state/territory thresholds)
• Notice payment (if applicable)
• Redundancy pay (if applicable)
• Unused time in lieu or rostered days off

Payment timeframe

• Final pay must be made on the last day of employment or as soon as practicable
• Withholding final pay may breach Fair Work Act
• Specific payment timing may be defined in awards or agreements

Tax treatment

• Different components may have different tax treatments
• Genuine redundancy payments may have tax-free components
• Employment Termination Payments (ETPs) have specific tax rules
• Leave payments taxed according to ATO guidelines

Redundancy

• Employer no longer requires the job to be done by anyone
• Employer has complied with consultation obligations
• No reasonable redeployment opportunities exist

Redundancy pay entitlements

Based on continuous service:

• 1-2 years: 4 weeks’ pay
• 2-3 years: 6 weeks’ pay
• 3-4 years: 7 weeks’ pay
• 4-5 years: 8 weeks’ pay
• 5-6 years: 10 weeks’ pay
• 6-7 years: 11 weeks’ pay
• 7-8 years: 13 weeks’ pay
• 8-9 years: 14 weeks’ pay
• 9-10 years: 16 weeks’ pay
• 10+ years: 12 weeks’ pay

Small business exemption

• Businesses with fewer than 15 employees exempt from redundancy pay requirements
• Some industry-specific redundancy schemes apply regardless of size

Redundancy process requirements

• Consultation with affected employees
• Consideration of redeployment options
• Selection process based on objective criteria
• Provision of support services where appropriate
• Documentation of process and decisions

Termination documentation and process

Written notice of termination

• Clear statement of termination date
• Specified notice period or payment in lieu
• Reasons for termination (if appropriate)
• Return of company property requirements
• Final pay details

Separation certificate

• Required for Centrelink benefits
• Details reason for employment ending
• Confirms employment period
• Verifies final payment details

Exit interview

• Not legally required but good practice
• Opportunity for feedback
• Clarification of post-employment obligations
• Handover arrangements
• Return of company property

Record keeping requirements

• Records of termination must be kept for 7 years
• Should include all relevant documentation supporting decision
• Records must be available for inspection if requested by Fair Work Inspectors

Post-employment restrictions

Restraint of trade

• Must protect legitimate business interests
• Reasonable in duration, geographic scope, and activities restricted
• Enforceable only to the extent reasonably necessary
• State variation: NSW has specific legislation (Restraints of Trade Act 1976)

Confidentiality obligations

• Continue after employment ends
• Protect trade secrets and confidential information
• Distinguished from general skills and knowledge
• May require specific contractual provisions

Intellectual property

• Ownership typically remains with employer
• May require specific assignment provisions
• Moral rights considerations
• Potential for disputes over creations post-employment

State and territory variations

Long service leave

Different entitlements and portability across jurisdictions:

• NSW: 2 months after 10 years
• Victoria: 8.67 weeks after 10 years
• Queensland: 8.67 weeks after 10 years
• WA: 8.67 weeks after 10 years
• SA: 13 weeks after 10 years
• Tasmania: 8.67 weeks after 10 years
• ACT: 6.06 weeks after 7 years
• NT: 13 weeks after 10 years

Workers compensation

• Termination during workers compensation claims has special protections
• Protected period varies by state/territory (typically 6-12 months)
• Unlawful to dismiss solely because of temporary absence due to illness or injury

Special circumstances

Termination during probation

• Unfair dismissal protections generally don’t apply during minimum employment period
• General protections and discrimination laws still apply
• Contractual terms regarding probation must be followed
• Best practice includes feedback and fair process

Transfer of business

• Employee entitlements may transfer to new employer
• Service recognition for redundancy and notice purposes
• Special provisions in Fair Work Act regulate transfers
• Variations based on nature of transfer and connection between employers

Termination during parental leave

• Special protection against dismissal
• Return to work guarantee after leave
• Consultation requirements for workplace changes
• Remedies for breach include compensation and penalties