Understanding reasons for dismissal

Termination

Wrongful Termination

Wrongful termination, also known as unlawful termination, happens when an employer terminates an employee’s contract without just cause. Australian workplace laws protect employees from being unfairly dismissed in a harsh, unjust or unreasonable way. Violation of these laws can lead to the offending employer paying the victim a sum of money as compensation and a separate government fine. Why are employees wrongfully terminated? Wrongful termination can occur for a range of reasons. However, it normally involves an employer dismissing an employee in a way that breaches the terms of an employment contract or national and state labour laws. In some cases, terminating an employee without the proper amount of severance pay or termination notice can also be considered wrongful termination. Who can apply for wrongful termination? The general protections of the Fair Work Act (2009) offer national system employees protection from unfair dismissal. The general protections are intended to: Uphold workplace rights. Protect freedom of association. Protect against workplace discrimination. Give effective relief for employees who have been otherwise victimised or experienced unfair treatment. For more information about the general protections, see section 336 of the Fair Work Act. If an employee is not eligible to apply for unfair dismissal under the general protections provisions, they can apply for wrongful termination. When should an employee apply for wrongful termination? Employees can make a wrongful termination application to The Fair Work Commision if all the following apply: They are dismissed from a job. The employer dismisses them for prohibited reasons. The employee is not a national systems employee, or they are a national system employee and not entitled to make a general protections dismissal application because the reason for the dismissal is prohibited under the Fair Work Act. It’s also important to note that employees applying to The Fair Work Commision for wrongful termination must: Have worked with the same company for a minimum employment period of at least six months. Have worked with the same company for a minimum employment period of at least a year, if the employer is a small business with fewer than 15 employees. Prohibited reasons for termination Section 772 of the Fair Work Act lays out the following prohibited reasons for terminating an employee’s contract: They are temporarily away from work with illness or injury. They are (or are not) a member of a trade union. They participated in trade union activities outside business hours. They participated in trade union activities during business hours with the employer’s consent. They are seeking office as, acting or have acted as, a representative of employees. They filed a complaint or participated in legal proceedings against the employer. The employee’s race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction, or social origin. They plan to take or have taken maternity or other parental leave. They are volunteering in an emergency management activity and temporarily absent from work for a reasonable period. Examples of wrongful termination Now that you understand what wrongful termination is, you might be wondering how it plays out in the workplace. Here are some examples: Discrimination – Australian employment laws clearly prohibit workplace discrimination based on protected attributes. For example, if an employer fires an employee because they express a political opinion the employer doesn’t agree with, this could easily be interpreted as wrongful termination. In this case, the employee would be covered by general protections. Illegal acts – If you ask your employee to commit an illegal act and then terminate them because they refuse, this could be considered wrongful termination. An illegal act might be asking the employee to avoid a tax payment, discriminate against another employee, or cover up another workplace law violation. If the employee reports an illegal act, or threatens to, and you respond by dismissing them, this may also be considered wrongful termination. In this situation, the employee may not be covered by general protection, but can apply for wrongful termination under the Fair Work Act. Breaches of contact Before deciding to terminate an employee, check their contact and employment agreement. To avoid any wrongful termination or unfair dismissal claims, it’s crucial to make sure that the grounds and process of termination do not breach any binding agreements. A contract or employment agreement will normally clarify the steps you must take before terminating an employee. These might include giving the employee two verbal warnings and a written warning before being able to justly end their employment. If steps are agreed upon in writing and you don’t follow them, you open the possibility of the employee raising a case of wrongful termination. What should wrongfully terminated employees do? Employees who believe they may have been wrongfully terminated should follow these five steps: Step 1: Check the employment contract – Employees should carefully check their employment contract for any terms of dismissal. If the termination reasons or process are inconsistent with the terms of the contract, this could form the basis of the employee’s claim. Step 2: Request a dismissal statement – The employee should ask the employer to lay out the grounds for their dismissal in writing. If the grounds described represent a breach of contract or law, this could also bolster the employee’s case for an unlawful termination claim. Step 3: Raise a case with human resources – If the employee can supply enough evidence to prove that the termination is wrongful, they may be able to resolve the issue internally by raising a case with the company’s human resources department. Step 4: Seek legal advice – If the employee is unable to settle the case with the employer, it may be time to seek out professional legal advice. An employment lawyer will be able to establish if the dismissal constitutes wrongful termination. They can also advise on next steps and help the employee build a legal case. Step 5: Apply for wrongful termination – When all else fails, an employee can file a complaint with The Fair Work Commision. The employee needs to check their circumstances and eligibility, since their complaint will either fall under general protections or wrongful termination laws. Employees should make their complaint within 21 days of termination. After this period, complaints are unlikely to be reviewed by the board. Protect your workplace with Peninsula Get access to accurate advice on termination and dismissal with Peninsula's suite of services. With the latest in employment relations software and customised documents, agreements, and policies, we can protect your business and employees. Call us on 1300761935 to learn more. This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.

Termination

Standing Down Employees

Under the Fair Work Act 2009 (the Act) an employer can stand an employee down without pay if the employer cannot usefully employ the employee for reasons beyond the employer’s control, as set out below. Standing down employees under the Fair Work Act 2009 Under section 524 of the Fair Work Act 2009, an employer can tell an employee to ‘stand down’ during a period in which the employee cannot usefully be employed because of a number of circumstances including: industrial action (other than industrial action organised or engaged by in the employer) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown, or a stoppage of work for any cause for which the employer cannot reasonably be held responsible. This can be due to lack of supply, a natural disaster, or the business has closed because of an enforceable government direction. Employers can't stand an employee down just because the business is quiet or there isn't enough work. This is different from unpaid leave, which is usually initiated by the employee and only affects them personally. An enterprise agreement, award or employment contract may have different or additional provisions that apply, such as consultation or notice requirements. During the COVID-19 pandemic additional temporary provisions in the Act applied i.e. sections 789GDC (qualifying employers) and 789GJA (legacy employers) that allowed stand down as a part of JobKeeper amendments to the Fair Work Act, which allowed the employer to give enabling directions to the employee if both the employer and employee met certain conditions. When can you legally stand down employees? Employers may be able to stand down employees: under an award, enterprise agreement or employment contract, or under the general Fair Work Act provisions If an employer unlawfully stands down employees without pay, the employer may have to back pay the employees the unpaid wages. Things to remember before standing down employees Employers can’t implement the stand down provisions under the Act simply because there is a downturn in business and they have less work for the employees. They should consider all options before making the decision to stand down employees. Some alternatives that employers can consider include: alternative working arrangements such as working from home temporarily changing duties, rosters or hours if it means the employee can keep working offering accrued annual leave to the employee offering other paid leave such as long service leave or paid leave available under an award, enterprise agreement or employment contract offering other paid leave by agreement An employee accessing paid annual leave or long service leave during a stand down won't be considered stood down while on leave. Informing the employees If an employer does stand down employees under the Fair Work Act, it's best practice to tell those employees in writing (where possible), including: the start date of the stand down whether the employees will or will not be paid the effect on other employment entitlements Employers should also try to update employees about when they think the stand down will end. Pay during stand down During a stand down period, an employee doesn’t need to be paid. However, they accrue leave based on their normal hours had they been working. Employers also need to pay employees for any public holidays that fall during the period. Using leave during stand down Employees can agree with their employer to use certain types of paid leave during a stand down. This can include paid annual leave, long service leave, paid leave under an applicable award, enterprise agreement or employment contract. Employees who are stood down without pay under the Fair Work Act can't use paid sick and carer's leave or compassionate leave during the stand down. Time away from work due to a stand down will count towards an employee's service. Time stood down is included when calculating an employee's entitlements under the National Employment Standards (NES) including notice, redundancy, and leave.

Termination

Small Business Fair Dismissal Code

Small business owners and employers have to personally deal with various aspects of staff management including performance management, leave entitlements, and even dismissal. Australian employment laws are complex and employers need to be extremely careful around dismissal or termination. There are codes for small business owners that they need to be aware of, like the Small Business Fair Dismissal Code. In this guide, we explain what the Small Business Fair Dismissal Code is, it's impact on employees and employers, and how Peninsula can help. Small Business Fair Dismissal Code The Small Business Fair Dismissal Code came into operation on 1 July 2009. The purpose of the Small Business Fair Dismissal Code is to give small business owners a framework to follow during the dismissal process to ensure the procedure is fair. It also provides small business owners some level of protection against unfair dismissal claims. Under the Small Business Fair Dismissal Code, a small business is defined as any business that employs less than 15 staff, including casual staff employed on a regular and systematic basis and employees of any associated entities of the employer. Small business employees cannot make a claim for unfair dismissal in the first 12 months of their employment. If an employee is dismissed after this period and the employer followed the Small Business Fair Dismissal Code, the dismissal will be deemed as fair. Summary dismissal Under the Code, it is fair for a small business employer to dismiss an employee without notice if the employer has reasonable grounds to conclude the employee’s behaviour is serious enough to justify immediate termination. The Fair Work Regulations define serious misconduct as behaviour that could cause serious and imminent risk to the reputation or profits of the business, or the health and safety of another person. It can also be deliberate behaviour that is inconsistent with the continuation of employment. The most widely accepted forms of gross or serious misconduct that allow you to dismiss an employee on the first offence, include: Theft Vandalism Fraud Acts of violence Serious breach of Workplace Health and Safety Keep in mind the severity of the act itself, among other deciding factors, will determine if you have reasonable grounds to dismiss an employee without notice. In some cases, if the act is serious enough – for example, following an act of violence, fraud or vandalism – having a police report can be good evidence to prove the immediate dismissal was justified. Of course, you must have a valid reason to submit the police report in the first place. Other dismissal When a small business employee partakes in conduct that is unacceptable, but not serious enough to justify immediate dismissal, it is the employer’s responsibility to manage the issue of conduct or underperformance in a fair, reasonable and defensible manner. For starters, you provide a verbal or written warning to the employee stating their conduct will put them at-risk of dismissal if they do not improve. Of course, it is not enough to simply tell the employee their conduct or performance is not good enough. You must clearly explain what the issue is, let the employee explain their side of the story, and give them easy-to-follow steps on how they can improve. After this first warning, you have to give the employee a chance to improve their conduct over a reasonable period of time. If necessary, you may need to provide additional support, training and resources to help the employee improve. Business downturn and redundancy At some point you may have to dismiss employees due to circumstances out of your control. The most common reason is because of a downturn in the business, or the position is no longer required by the business When this happens, you have to prove the redundancy was genuine and it was not possible to transfer the employee to another suitable role. Just like a standard dismissal you have to follow the correct procedure and provide the required period of notice. Dismissal procedure If enough time has passed and the employee’s conduct or performance has not improved, you may have reasonable grounds to give the employee notice of their dismissal. During these discussions, the employee is allowed to have another person present to assist. But that person cannot be a lawyer acting on behalf of the employee in a professional capacity. You must make sure the procedure is carried out properly and ensure the correct documents have been filled out. These documents can include a statement of termination or signed witness statement. If the employee is owed unpaid wages or entitlements they must be paid out in full. If an employee submits an unfair dismissal claim against you, you have to give evidence that shows you were in compliance with the Code. Accepted forms of evidence include copies of written warnings, completion of Small Business Fair Dismissal Code Checklist, a statement of termination or signed witness statements. Keep up with your obligations Aussie business owners and employers have to manage challenging legislation, duties,and obligations around HR and health and safety without any support. This is where Peninsula steps in. Your external partner and support system for all things HR and health and safety. Call us on 1300750491 to learn how we can help you.

Termination

Notice not worked

Dealing with staff involves dealing with leave requests, managing performance, and handling resignations and terminations. Sometimes an employee will resign and request to not work out their notice period. They may demand payment in lieu of notice. This can be frustrating if you are an employer and must fill an important position quickly. In this guide, we explain the basics of notice periods, your obligations when an employee doesn’t wish to work out their notice period, and ways Peninsula can help your business. Notice period When an employee resigns, they may have to give written notice via a letter (or email) to their employer. Although award and agreement-free employees don’t have to give notice when they resign, generally the employee’s employment contract, if not the applicable award or registered agreement, will set out the amount of notice an employee has to give when the employee resigns. The notice period: Starts the day after the employee gives notice that they want to end their employment. Ends on the last day of employment. Typically, a notice period can be between one week to one month. Some companies have longer notice periods for senior employees or management. Employees who have been hired on a casual basis aren’t required to provide notice. In certain circumstances, casual employees may be required to provide notice, depending on the employment agreement or registered agreement in question. Notice periods and deductions An employee’s award, employment contract, enterprise agreement, or other registered agreement sets out: How much notice (if any) the employee must give when they resign. When an employer can withhold money if the employee does not give the minimum notice period. Taking money out of an employee’s pay before it is paid to them is called a deduction. An employer can only deduct money if: The employee agrees in writing and it’s principally for their benefit. It’s allowed by a law, a court order, or by the Fair Work Commission. It’s allowed under the employee’s award. It’s allowed under the employee’s registered agreement, and the employee agrees to it. It’s important for employers to note deductions outside of these causes run the risk of breaching Wage Theft Provisions which came into effect on 1 January 2025. Many Awards say that in certain circumstances an employer can deduct up to one week’s wages from an employee’s pay if they do not provide the minimum amount of notice. Where an award allows this, an employer can only deduct pay from an employee’s wages under the award, not from other entitlements. Even if the deduction is made in accordance with an award, registered agreement, or contract, an employer can’t deduct if: It benefits the employer, not the employee, and the deduction would be unreasonable in the circumstances. The employee is under 18 years of age, and their parent or guardian hasn’t agreed in writing. Generally, the employee will work the notice period. However, sometimes the employer will not require the employee to work the notice period, in which case the employer and employee may agree that the employer can make payment in lieu of notice. If the employee does not work the notice period when the employment ends, this is notice-not-worked. Waiving notice periods If you do think it is in your best interest to waive the notice period, you can discuss this arrangement with your employee. You can end their contract immediately. You can also put the employee on garden leave if they have access to confidential information and resources. Remember that when an employee resigns, they want to leave as soon as possible. By compromising and negotiating, you are creating a comfortable situation for everyone involved. Payment in lieu of notice When the employer terminates the employee, the employer often does not require the employee to work the notice period, but the employee is still entitled to be paid for that period. In this case, the employer pays the employee in lieu as if they had worked the notice period. Besides other obligations, when terminating an employee’s employment, an employer is required to give the employee written notice of their last day of work. How far in advance they need to do this will depend on how long the employee has been employed. How much notice should employees give employers of resignation? Under the National Employment Standards (NES) employees are not required to give notice of their employment ending. Typically, a full-time or part-time employee’s award, registered agreement, or employment contract will set out how much notice (if any) an employee must give when they resign. But this depends on the contract, award, or agreement terms and type of employment. A casual employee is not required to give notice upon resignation. Likewise, the employer does not have to give a casual employee notice when terminating their employment either due it’s ad hoc nature, though you should tell the employee why you are ending their employment, and there will be a requirement to consult with the employee prior to terminating them under the applicable award or registered agreement. Once you receive notice of resignation from an employee, you can either: Let the employee work out the notice period. Have the employee finish up early and pay them in lieu of notice. A combination of both, where an employee works a portion of their notice and the employer pays the rest of the notice period out. If you pay out any part of the notice period, you must pay the employee the exact same amount they would have received if they worked it. Notice of termination to employee When you end an employee’s employment in most cases you have to give the employee the minimum notice period in writing or pay in lieu of notice. You do not have to give notice to casuals, seasonal workers, fixed-term workers on the expiry of the contract term, daily hire workers in the building construction or meat industries, or employees fired for serious misconduct. The amount of notice you have to give depends on the employee’s number of years of continuous service within the business. Fair work notice periods are listed as: Period of continuous service Minimum notice period 1 year or less 1 week More than 1 year - 3 years 2 weeks More than 3 years - 5 years 3 weeks More than 5 years 4 weeks Employees over 45 years of age with at least two years of continuous service are entitled to an extra week of notice of termination. When you terminate an employee’s employment, you must give the employee an employment termination letter. The letter should clearly state the reason for the termination, the date of the employee’s last day of work, and the fixed amount of entitlements and unpaid wages the employee will receive. Final payment notice When an employee’s employment ends you have to provide a final payment notice – in writing – which sets out the wages and entitlements due to the employee. It is your responsibility to ensure the last pay slip is delivered on time and correctly calculated. To calculate an employee’s final pay, refer to the applicable modern award, registered agreement, or employment contract to find out what entitlements you owe. While each contract is unique, you will most likely need to calculate one or more of the following entitlements: Unpaid wages (including penalty and overtime rates). Expense claims. Accrued annual leave entitlements. Payments in lieu of notice. Allowances. Check the terms of the employee’s Modern Award, registered Agreement, or employment contract to find out the final pay due date. If none of the documents say so, you can process the final pay on their next scheduled payday within seven days of their employment ending. Manage notice periods and resignations Peninsula has worked with thousands of businesses in Australia and supported them in matters of notice periods, resignations, and dismissals. Call our free initial advice line on 1300761935 today. This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.

Termination

Termination of Employment

When you start a business or hire people, termination may be the last thing on your mind. However, letting people go is an inescapable truth of managing staff. You need to understand the basics of termination of employment in Australia. Termination of employment is a delicate topic. In almost every situation, an employee does not welcome losing their job. Business owners and employers must understand employee entitlements and employer obligations set out in the Fair Work Act 2009 and other relevant legislation. Reasons for termination of employment Your employee can leave their job voluntarily for any reason if they give the notice stipulated in their employment agreement or contract. However, for involuntary termination you need to have valid and specific reasons. Broadly, reasons for terminating someone’s employment are one of the following: Misconduct – when an employee partakes in behaviour that is out of line with company policy, goes against the terms of an employment agreement, or is unlawful. Australian employees can be immediately dismissed for serious misconduct, which is defined by the Fair Work Act as wilfully risky behaviour that negatively impacts the business or threatens someone’s safety. Serious breaches of conduct can result in summary dismissal meaning immediate termination without a notice period or pay instead of notice. Poor performance - due to factors such as lack of skill, care, diligence, or quality. However, you can only dismiss someone for poor performance after you have issued warnings and made attempts to improve the performance. These attempts include training, Performance Improvement Plans, and Performance Management Plans. Capacity – reflects on an employee’s ability to fulfil the inherent requirements of their role. Redundancy – when an employer either decides they no longer need an employee’s job to be done by anyone, or the employer becomes insolvent or bankrupt. Probation - You can terminate an employee during the first 6 months of their employment without the need for a performance plan. But you should be mindful that anti-discrimination laws are not breached if considering termination during probation period. In most cases, it is accepted that an employer must follow a procedurally fair process before terminating the employee. This process will include reasons for the proposed dismissal as well as an opportunity for the employee to respond. This is because both the reason for the dismissal and the process adopted in deciding to dismiss will be considered in determining whether a dismissal was a fair one. You should write a letter outlining the reason why termination of employment is being considered and provide evidence. You can meet with the employee in person to share the letter or before sending them the letter and give them the opportunity to ask any questions. Terminating employment contracts An employment contract is a written agreement between an employer and the employee. It sets out enforceable terms and conditions that govern the employment relationship. The Fair Work Act provides minimum conditions and entitlements for employees in the National Employment Standards, and industrial instruments such as Modern Awards, or Registered Agreements. An Employment Contract must provide for at least these minimum conditions but can set out additional requirements regarding termination processes that should be considered. However, any disputes concerning an employment contract are generally enforceable under contract law, rather than through the Fair Work Commission. This means if an employer breaches the termination clauses in the employment contract when terminating an employee, the employee could lodge a claim under contract law as well as in employment law for unfair dismissal under the Fair Work Act, depending on the circumstances. Employment termination notice As outlined in the National Employment Standards, an employer must provide an employee with written notice of the day of termination. Employees must be given (or paid in lieu) the minimum amounts of notice set out in the NES or relevant industrial instrument. Below are outlined the minimum notice periods required to be given and their corresponding periods of employment. Period of continuous employment Minimum notice period Less than 1 year 1 week 1 - 3 years 2 weeks 3 - 5 years 3 weeks Over 5 years 4 weeks Despite the above, there are two scenarios in which there are extenuating circumstances and different periods of notice may apply. If an industrial instrument covering the employee or contract of employment specifies a longer notice period for termination, then it is the specified notice period that applies. The other is that if an employee is over the age of 45 and has worked for at least two years on the day that you give them notice, they are entitled to an extra week’s notice. Termination and notice periods While the National Employment Standards outline compulsory notice periods for employees being terminated, there are scenarios in which a notice period is not necessary. For instance, notice is not required to terminate casuals, employees employed for a fixed period (other than apprentices), employees doing seasonal work, or daily hire employees working in the building and construction or meat industries. There is also no necessity for a termination notice period if the employee is dismissed due to serious misconduct. Some examples of serious misconduct may include theft, fraud, assault, or refusing to carry out a lawful and reasonable instruction that is part of the job. But even though you do not have to give notice of termination of employment or pay instead of the notice period, in these circumstances, you do have to make sure the process is fair and pay out all outstanding entitlements, for example, payment for time worked or annual leave, though not always long service leave, depending on the State or Territory and applicable circumstances. As an employer, you should also know that if an employee thinks that they have been unfairly dismissed, or if they feel that their dismissal was not handled fairly, they can lodge an application for an unfair dismissal remedy. Final pay Final pay is what an employer owes an employee when their employment ends. An employer is obligated to ensure that the employee subject to the termination of employment receives their outstanding wages, including penalty rates and allowances (if applicable) and other paid entitlements, as well as any notice if the employee does work it. This is referred to as ‘final pay’.   If an employee has any outstanding annual leave or is entitled to redundancy pay or long service leave this should also be paid out in their final pay. An award, employment contract, enterprise agreement, or other registered agreements can specify when final pay must be paid. If it does not, the best practice is for an employee to be paid within 7 days of their employment ending or on the next scheduled payday. Managing termination of employment Australian employment legislation and policies can be complex and are ever-changing. Without any assistance, employers can find it difficult to juggle staff, inventory, running the business, and navigate fair dismissal policies. Peninsula’s advisers can help you understand the tricky process of hiring, onboarding, and termination of employment. You can call our team for initial advice 24/7.

Understanding reasons for dismissal

Things to consider before dismissing an employee

Fair reasons for dismissal

Ways to dismiss an employee

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Related Guides

Wrongful Termination

Standing Down Employees

Small Business Fair Dismissal Code

Notice not worked

Termination of Employment

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Wrongful Termination

Standing Down Employees

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