Terminating an employment arrangement: what small businesses should know!

Ending an employee’s employment is a sensitive, and in some instances, complex process.

Employers must ensure they have fair and lawful reasons for terminating an employee, for example; capacity, performance, misconduct, or redundancy. It is crucial to document these reasons thoroughly, maintaining a clear record of the issues leading to the decision.

Clear communication with an employee about performance expectations and any areas needing improvement is essential. Providing an employee with feedback and an opportunity to improve on their performance is important prior to considering termination.

Providing copies of the employee handbook that outline the relevant workplace policies and procedures including the disciplinary process is also critical.

The Fair Work Act 2009 places emphasis on procedural fairness. Employers must follow a fair and transparent process when terminating an employee, for example providing feedback and relevant policies, issuing warnings, and giving the employee an opportunity to improve. Failure to comply with these steps may have legal consequences.

Understanding notice periods and final pay entitlements is another aspect of termination. The Fair Work Act 2009 outlines notice periods and, where relevant, severance pay. These entitlements depend on the length of continuous service and the circumstances surrounding the termination. Employers must calculate these entitlements accurately to avoid complications.

If you are a small business with 15 or fewer employees, you must terminate an employee in accordance with the Small Business Fair Dismissal Code.

Ending an employee’s employment requires careful consideration and can be complex. Speak to a NatRoad Advisor or consult with an employment lawyer where any alleged discrimination, workplace rights or workplace injury may be involved. Seeking legal advice before you terminate your employee’s employment would be wise.