Terminating an employee in Australia can be a legally sensitive and high-stakes process. Whether you’re navigating redundancies, performance concerns or restructuring, following the correct employee termination procedures is essential to stay compliant and avoid unfair dismissal claims. In this article, we examine a real-world case to highlight where things went wrong—and what employers can learn.
The Cost of Not Following Employee Termination Procedure
Following our recent article, The Cost of Flawed Dismissals: What You Need to Know, another case has emerged that serves as a stark warning for business owners and managers about the consequences of failing to follow correct termination procedures in Australia.
A recent Fair Work Commission (FWC) ruling found that an employer acted unfairly when it abruptly dismissed a senior application manager of nearly eight (8) years via email, awarding the worker $7,700 in compensation. Despite the employer citing financial difficulties as the reason for ending employment, their failure to follow the proper termination process and provide adequate written notice resulted in a ruling against them.
This case is a powerful reminder that even when redundancies are necessary due to genuine business needs, employers cannot simply cut ties without adhering to legal and procedural obligations. Poorly handled termination of employment can lead to financial penalties, reputational damage, and decreased morale among remaining staff.
What Went Wrong?
In this particular case, the employer dismissed the employee via email without prior consultation or giving them notice. The day of termination took effect immediately, leaving the employee without an opportunity to respond or make alternative arrangements. Worse still, when the employee attempted to contact the employer about their dismissal and outstanding entitlements, they received no response.
The Fair Work Commission determined that, although the employer’s financial struggles may have necessitated workforce reductions, the termination was not a genuine redundancy under the Fair Work Act 2009. The key issue was the employer’s failure to consult with the employee in line with their obligations under the Clerks – Private Sector Award 2020, which forms part of the national employment standards.
This ruling highlights that even when redundancy is justified, failing to follow the correct process can still result in an unfair dismissal claim.
Key Lessons for Employers
Avoiding costly mistakes in employee termination procedures is critical for business owners. Here are the key takeaways from this case:
If you’re considering termination or restructuring your team, we recommend speaking with an HR expert before making any decisions. A quick consultation could save you thousands in avoidable penalties.
1. Consultation is NOT Optional
Under the Fair Work Act and many modern awards or enterprise agreements, employers must consult with employees before making redundancies or significant workplace changes. Termination policies and procedures should reflect this.
This process involves:
Informing the employee of the proposed change as early as possible.
Discussing the reasons why employment may need to end and exploring any alternatives.
Giving the employee an opportunity to respond and raise concerns.
Failure to provide an opportunity for the employee to respond may result in a finding of unlawful termination.
Had the employer in this case followed these steps, they may have avoided legal action and a payout.
2. Dismissing Employees by Email is EXTREMELY Risky
While employers are required to give employees written notice of the day their employment ends, terminating an employee’s employment solely by email—without a prior discussion—is a high-risk approach.
Best practice is to conduct the termination meeting in person or via video call, especially when the employment relationship has been longstanding. This allows for a respectful conversation and ensures the employee understands the termination notice period and any entitlements such as redundancy pay, final pay, or pay in lieu of notice.
3. Know Your LEGAL OBLIGATIONS
Employers must comply with relevant modern awards, enterprise agreements, and the employee’s contract of employment when managing termination of employment.
This includes understanding:
– The minimum notice period based on the employee’s length of service.
– When a valid reason for termination is required.
– Whether the employee is entitled to redundancy pay under the National Employment Standards.
– Obligations related to final pay and recordkeeping.
Small businesses have different obligations under the Small Business Fair Dismissal Code, but they are not exempt from following workplace laws about terminating employment.
4. Protect Your BUSINESS and REPUTATION
Terminating employment improperly doesn’t just result in unfair dismissal claims. It can damage your employer brand, affect team morale, and in some cases, even lead to public scrutiny.
Employers must be aware of how they terminate an employee and ensure the termination process is fair, lawful, and in line with best practice HR policies.
Providing clear termination clauses in employment contracts and offering training to managers on how to legally dismiss an employee can reduce the risk of disputes.
How Strategic HR Australia Can Help
At Strategic HR Australia, we understand that terminating an employee in—whether due to redundancy, performance, misconduct, or other valid reasons—can be legally complex and emotionally difficult.
We guide business owners through the entire employment termination process, from considering termination to delivering notice of termination and finalising entitlements.
Our support includes:
- Ensuring compliance with the Fair Work Act, enterprise agreements, and national employment standards.
- Designing HR policies and termination procedures aligned with Australian employment law.
- Advising on the correct amount of notice and whether to allow the employee to work their notice period or offer pay in lieu of notice.
- Helping you give the employee clear, respectful communication about why their employment ends.
- Conducting HR audits and minimising legal risks before they escalate.
Whether you’re looking to terminate an employee or restructure your team, our team helps you do it lawfully and confidently.
Don’t leave it to chance. Contact Strategic HR Australia to ensure your termination process meets your legal obligations and protects your business.
Frequently Asked Questions About Termination of Employment
Understanding your obligations when ending employment is vital—especially in today’s compliance-driven workplace. Below are answers to some of the most common questions Australian employers ask when planning to terminate an employee’s employment, based on employment law, Fair Work guidance, and industry best practices.
What are the risks of unfair dismissal for employers in Australia?
Employers face legal claims, compensation orders, reputational damage, and decreased morale among remaining staff if proper dismissal procedures aren’t followed.
How do I legally terminate an employee in Australia?
To lawfully terminate an employee, you must comply with the Fair Work Act, applicable modern awards or enterprise agreements, and provide adequate notice and consultation.
Is it legal to dismiss an employee without warning?
Generally, no. Unless in cases of serious misconduct, dismissals must be preceded by warnings and a fair process.
Can an employee claim unfair dismissal during redundancy?
Yes. If the redundancy isn’t genuine or consultation isn’t followed, employees may still lodge an unfair dismissal claim.
What should be included in a redundancy consultation?
The process must include early notice, an explanation of reasons, discussion of alternatives, and an opportunity for employee feedback.
Are small businesses exempt from unfair dismissal laws?
No. Small businesses must follow the Small Business Fair Dismissal Code, which sets out a slightly different but still legal process. (Read more about it here)
What is the Fair Work Commission's role in dismissals?
The FWC handles unfair dismissal claims and can order compensation or reinstatement if it finds the termination was not procedurally fair.
What is considered a 'genuine redundancy' under Australian law?
It’s genuine when the job is no longer needed, there’s no suitable alternative role, and the proper consultation process is followed.
How much notice must I give an employee when terminating their employment?
Notice periods depend on length of service and the applicable award, agreement, or employment contract. These range from one to four weeks in most cases.
