To protect themselves from subsequent legal action, employers need to take certain steps when ending an employee’s employment.

First and foremost the termination must be for a valid reason and not be unlawful.  The termination should not breach any contract provisions or equal opportunity, discrimination or other legislation. It must also be in compliance with the applicable modern award, the Fair Work Act, or the enterprise agreement of an individual workplace that covers the employee. Any notice of termination (by either employer or, if resigning, the employee) should be in writing and adequately set out the reasons for termination.

In addition to a valid reason for termination, an employer should follow a fair and proper process, affording the employee natural fairness and justice.  A fair and proper process involves the employee being aware of the grounds and/or allegations on which their employment may be terminated, an opportunity to respond in a reasonable time frame, and with a support person present.  Awareness by employers of notice periods for termination is also important, with employees entitled to the minimum period of notice required by legislation, award, an employee’s contract or under an enterprise agreement.

The Fair Work Commission sets out minimum periods of notice, however this needs to be considered against the terms of any Award, enterprise agreement or more favourable terms and conditions as contained in a contract of employment.

Depending on the terms of the employment, a terminated employee should receive payment of any accrued entitlements, such as untaken annual and long service leave.

Employers are obliged to have documentation relating to the employee in order from payroll records to providing statements of termination entitlements and certificates of service.

It is also the employer’s responsibility to collect any company property issued to the employee before they depart (vehicles, computers, mobile phones, credit cards, business cards, uniforms, product samples, security/access cards, etc).

Upon termination, employees also need to be reminded of their post-employment obligations in respect to restraint of trade, confidential information and intellectual property.

Some of the reasons outlined here for terminating an employee can arise suddenly and unexpectedly. As with most employment matters, it’s advisable to have a contract of employment which deals with notice and termination. In the event the contract is silent on this issue it is open to an employee to argue that the employee is entitled to “reasonable notice” to be determined by a Court, which may be more than the National Employment Standards.

For executives, provisions related to termination such as notice and entitlements should be discussed during the contract negotiation stage and agreed upon to avoid disputation at the end of the employment (for more information on executive contracts click here). For non-executive employees, the company policies and procedures covering workplace safety, sexual harassment, and use of IT may also include details on termination procedures which would supplement contracts of employment. The contracts should highlight examples of conduct that would be considered to be a serious breach of the employment.

Employers are often fearful of terminating employees who demonstrate poor conduct, capacity or performance, including gross misconduct, but with clearly drawn contractual provisions, supplemented by company policies and sound legal advice, employers should feel confident to make a decision which is defensible in the event the employee takes any steps to challenge their dismissal.