One of the most difficult things for employers to understand and manage correctly within their organisations, big and small, is termination of employment. That is, ending employees’ working arrangements with the business. With it being an area of employment that is so important and often quite detrimental to a business if done incorrectly, it is imperative for business owners and employers alike to understand their employees’ entitlements and the relevant legislation which they need to adhere to.
There are many reasons why an employment termination may be necessary, and in each different business and industry, these reasons have their own variances. However, no matter the reason, you need to provide employees with a minimum notice period (or payment in lieu of this notice period) if they are going to have their employment terminated. This notice period is a requirement under the National Employment Standards (NES) and as such must be observed by every business in Australia. The length of notice period which you must give employees is based on how many years that employee has worked for you.
As outlined in the National Employment Standards, employees are required to be given varying periods of notice if they are to be terminated, based on the length of time which they have been working within the organisation or business. Below are outlined the minimum notice periods required to be given and their corresponding periods of employment.
Period of 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 notice periods being standard for all Australian businesses, there are two scenarios in which there are extenuating circumstances and different periods of notice may apply. If an employee’s agreement or contract specifies a longer notice period for termination, then it is the specified notice period which 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.
Ending an employment agreement is something that needs to be done through the correct processes. As it is a delicate area for most businesses, it is important that you read the below information on how to end employment, and implement the same procedure when the situation arises within your business.
The first thing that is necessary is to give the employee written notice on the day of termination by way of a termination letter. You may either give it to them personally, leave it at their last known address or send it by prepaid post to that address. Depending on your personal relationship with the employee, it is up to your discretion to decide which method of delivering the notice is adequate. However, it should be noted on the contrary here, that if an employment is ending due to resignation, the employee only needs to give notice verbally, and a formal written resignation is not necessary.
An interesting area which a lot of employers misunderstand is as to whether you may terminate employment while the employee is on leave or probation. You are permitted to dismiss an employee while they are on leave or probation, however, you still need to give them the correct amount of notice as mentioned earlier.
Once you have given the employee notice of their termination and have accounted for the correct period of notice, the employee has two choices; they may either work through their notice period, or you can pay out the full amount of the notice period to them (this is known as pay in lieu of notice). Pay in lieu of notice may include bonuses, loadings, allowances, penalty rates and overtime depending on the Award that the employee’s employment is governed by.
While the National Employment Standards outlines compulsory notice periods for employees being terminated, there are scenarios in which a notice period is not necessary. For instance, notice periods are not necessary for casuals, employees on a fixed contract, or employees doing seasonal work, or daily hire working in the building and construction or meat industries.
There is also not a necessity for a termination notice period if the employee is being dismissed due to serious misconduct. Some examples of serious misconduct may include theft, fraud, assault, or refusing to carry out an instruction that is part of the job. But even though you do not have to give notice of termination in these circumstances, you do have to pay out all outstanding entitlements, for example, payment for time worked or annual leave.
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 unfair dismissal remedy.
Employsure’s advisers can help you navigate the tricky process of ending someone’s employment. For peace of mind, please call our 24-hour Advice Line now on 1300 651 415.