Termination of employment can be one of the most challenging aspects of managing a business. Whether it’s due to performance issues, misconduct, or business restructuring, letting an employee go requires more than just a difficult conversation — it demands compliance, documentation, and empathy. This essential guide will walk you through the process with confidence and care, helping you make legally sound and fair decisions.
Why Understanding Termination of Employment Matters
Every employer, whether managing a small team or a large organisation, must understand the proper process for ending employment. Getting it wrong can result in legal claims, reputational damage, and unnecessary stress for everyone involved. More importantly, handling termination with respect and transparency reflects your values as an employer and helps maintain morale within your team.
Legal Frameworks You Need to Know
Before making any decisions, it’s important to understand the Australian employment law landscape.
- Fair Work Act Compliance: The Fair Work Act 2009 governs how and when employment can be terminated, including minimum notice periods, redundancy entitlements, and unfair dismissal laws.
- Unfair Dismissal Protections: Employees who have worked for a minimum period may have the right to contest a termination they believe to be unjust or unreasonable.
- General Protections: These laws prevent dismissal due to discrimination, temporary absence due to illness or injury, or for exercising workplace rights.
👉 Example: If you’re terminating an employee who has recently taken personal leave, this could fall under general protections and may require legal review before proceeding.
Types of Termination of Employment
There’s no one-size-fits-all approach — the reason for ending employment impacts the process you must follow:
1. Voluntary Resignation
When an employee chooses to leave, the employer must ensure final pay, leave entitlements, and offboarding are handled correctly.
2. Redundancy
Occurs when a role is no longer required. In this case, it’s essential to follow proper consultation and selection processes to avoid claims of unfairness.
3. Dismissal for Misconduct or Performance
These terminations must be backed by documentation, performance management steps, and procedural fairness.
👉 Practical Tip: Always conduct a formal investigation in cases of serious misconduct. Failing to do so can render the dismissal invalid, even if the misconduct is proven.
How to Conduct a Lawful Termination Process
Here’s a step-by-step guide to handling the process professionally and lawfully:
✅ Step 1: Review the Employment Contract
Check notice periods, probation clauses, and termination conditions.
✅ Step 2: Document Everything
Keep a clear record of meetings, performance reviews, warnings, or incidents leading to the decision.
✅ Step 3: Hold a Final Meeting
This is where you clearly communicate the decision, provide written notice, and explain the next steps.
✅ Step 4: Provide Final Entitlements
This includes any unused annual leave, long service leave (if applicable), redundancy payments, and superannuation contributions.
✅ Step 5: Conduct an Exit Interview (Optional but Encouraged)
This helps you gather feedback and ensures a respectful closure to the employment relationship.
Common Mistakes to Avoid
Even well-meaning employers can misstep. Here are some pitfalls to watch for:
- Rushing the Process: Acting on impulse or emotion can create risk.
- Inadequate Documentation: Without proper records, it’s your word against theirs.
- Not Following Policy: If you have internal HR procedures, follow them closely.
- Failure to Communicate: Leaving employees in the dark leads to resentment and confusion.
Frequently Asked Questions (FAQs)
❓ Can I terminate an employee on probation without reason?
Yes, but you still need to provide notice and follow procedural fairness, especially to avoid claims of discrimination.
❓ What if the employee refuses to sign termination paperwork?
That’s okay — you can document that the paperwork was presented. Their refusal doesn’t invalidate the termination.
❓ Do I have to pay redundancy if I restructure?
Only if the role is genuinely redundant and the employee has been employed long enough to qualify. You may also need to consult before making the decision.
❓ Can I terminate an employee on the spot for serious misconduct?
Yes, but only after a fair investigation. Summary dismissal should never be your first step.
Final Thoughts: Stay Confident and Compliant
Termination of employment doesn’t have to be a legal minefield or an emotional nightmare. With the right knowledge, planning, and professional advice, you can manage the process respectfully and by the book.
At HR Gurus, we help businesses like yours navigate the complexities of employment law with practical, people-first solutions. Whether you need support with workplace investigations, performance management, or policy reviews, we’ve got your back.
