Termination of Employment and Procedural Compliance
Termination of employment is one of the most important yet the most confusing aspects of business for employers. Termination of employment is defined by the employment contract between two parties, i.e., employer and the employee, ending. It is a delicate matter requiring the employer to justify the termination.
To make the jobs of employers easier and help them understand the entitlements of the employees and their obligations, the Fair Work Act 2009 sets out several rules and regulations, as well as the policies required to be followed by the employer to follow in order to terminate an employment contract. Furthermore, the Commonwealth workplace laws establish rules about terminating employment and these rules must be followed in order to ensure termination is lawful and fair. Employers must choose the right approach as team members never welcome this situation.
What are the potential causes for Termination of Employment?
There may be a vast number of reasons why an employee gets their contract with their employer terminated. Equally, several reasons could make termination necessary; however, at the same time, it is critical to ensure that the termination of employment is for a valid reason. Certain rules such as dismissal, notice, and final pay (severance pay) have to be adhered to, which makes this a challenging task.
Employers have to uphold the rights and obligations of their employees and follow due process as part of the decision. It may be clear in a few cases that a termination of employment is bound to occur.
Below are some of the examples that could cause an employee to get their employment contract terminated –
• When an employee is in breach of the rules, regulations, and policies of the workplace, it may warrant termination. Examples that classify under misconduct are breaching the company policies, going against the terms and conditions mentioned in the employment contract, and undertaking unlawful activities. All of these could cause the employment contract to be terminated.
• Most companies are crystal clear on the type, quality, and quantity of the work they want. Therefore, when employees demonstrate poor performance in aspects of their role, such as lacking skill, not paying attention to the job, being careless, being non-diligent, and delivering low-quality work, the employer can performance manage the employee including up to terminating the employment contract.
• Better yet, certain companies outline the requirements they expect from a certain aspect of the job in their policies, position descriptions (PDs), or key performance indicators (KPIs). If the employee cannot perform the assigned task(s) sustainably, it could mean that they lack the skill required for the job and are unable to fulfill the inherent requirements that their job requires. In this case, the employer has a valid reason for performance management which could include up to termination of employment.
• In some instances, organizations evolve and have to be re-organized. This reorganization can lead to a change in organizational structure and a role no longer being required moving forward. In turn, this would lead to a genuine redundancy.
• Moreover, when a company or an employer goes insolvent or becomes bankrupt, the employer has grounds for the termination of an employment contract.
Unfair or Unlawful Termination From Employment
When the rules and regulations for termination of employment are not followed, such as employees getting a due and fair process, the reason for termination not being valid, or the treatment of the employee unfair, harsh and unreasonable, it is known as unfair dismissal. There are many other reasons, which count as unfair and unlawful termination of employment.
An employee who believes that they have been unlawfully and wrongly terminated from their job can report to the Fair Work Commission, which will further investigate the following points –
• Has the employee has been dismissed unlawfully, harshly, unjustly, or unreasonably;
• Was the reason for termination valid;
• Was there was a case of genuine redundancy; or
• Was the “Small Business Fair Dismissal Code” followed.
If the Fair Work Commission establishes that the elements outlined above are present in a claim, it will proceed to conciliation in an attempt to settle the dispute between the employer and employee. In order to find out if an employee has been unfairly dismissed or not, the following aspects are considered –
• Was the reason for the termination from employment valid and related to the performance or conduct of the employee;
• Did the employer inform the employee of underperformance or misconduct and give them the chance to improve or respond with a possible solution;
• Was the employee offered to have a support person present at the time of disciplinary meetings and or during the termination from employment;
• Did the employer previously inform the employee that their performance hadn’t been up to the required standard which then resulted in termination;
• Were the procedures that the employer followed in line with the due process required or whether it lacked human resources expertise; or
• The Fair Work Commission may investigate any other aspects that might have occurred that led to the employee’s termination.
Termination of Employment Notice (Notice period)
Employees should not have their employment contract terminated without a notice period and their final payment being paid out from there the employer. It is unlawful to terminate an employee without paying a notice period in lieu unless in serious misconduct instances.
Serious misconduct involves an employee deliberately behaving in a way that is not consistent with the continuation of their employment. Some examples include causing serious and imminent risk to the health and safety of another person or to the reputation or profits of their employer’s business, theft, fraud, assault, sexual harassment, or refusing to carry out a lawful and reasonable instruction that is part of the job.
Usually, the notice period varies and is reliant on multiple factors such as an employment agreement, a modern award, an industrial instrument, or a registered agreement. In some cases, it can depend on the employee’s age and the duration for which they have worked at the company in question. However, as a rule of thumb, the notice periods mentioned below are applicable as set out in the National Employment Standards (NES) in the case of mentioned situations. If the employee has worked in the company for less than a year, the minimum notice period must be one week. For an employee that has been employed by the company for one to three years, the termination of employment contract notice has to be at least two weeks. The termination notice period for an employee having worked in the company for three to five years is a minimum of three weeks. However, for an employee who has been employed by the company for more than five years, the employer must give them a notice period of at least four weeks.
The best way to protect your business against unlawful termination is to consider the regulations beforehand and include them in the employment contract. A company should have clear procedures and regulations that the employers and the employees must follow, ensuring that the employees are aware of the situations that may cause a termination of employment.
It is imperative for employers, to understand employees’ entitlements and their obligations as set out in the Fair Work Act 2009 and other relevant legislation. The Commonwealth workplace laws establish rules about terminating employment and these rules must be followed in order to ensure termination is lawful and fair. Our HR consultants can help you ensure you adhere to the Commonwealth workplace laws which are regulated by the Fair Work Ombudsman and the Fair Work Commission.