Terminating employment: a guide for employers – Part 1

For most employers, facing the prospect of terminating an employee’s employment is often, unfortunately, an inevitable part of an employment relationship and can be awkward, emotional, and risky if not done correctly.

If the termination process isn’t conducted in a manner that aligns with the requirements under the Fair Work Act 2009 (FW Act), employer’s open themselves up to an array of potential claims including breach of contract or unfair dismissal.

While there isn’t a one-size-fits-all approach when it comes to termination, the process will differ depending on the individual circumstances. In this article, we explore best-practice considerations all employers should follow when enacting a termination.

How do you terminate an employee?

1. Gather all available information

Whether the termination relates to poor performance or misconduct, the first step in the process is to gather all the evidence.

In relation to poor performance, it’s incumbent of an employer to assess the individual’s performance against the expected standards of the role and collate this information, including highlighting the employee’s shortcomings. Depending on the severity of the poor performance, you may consider placing your employee on a performance improvement plan (PIP). The purpose of the PIP is to support your employee to meet the expectations of their role.

In relation to misconduct, it’s important to determine the precise nature of the misconduct, i.e. has the employee engaged in theft, or is it a case of the employee being accused of bullying behaviour? This may involve gathering witness statements or viewing video surveillance footage, with the primary goal being to determine the particular details of the misconduct. Depending on the nature of the alleged misconduct, you may even be required to conduct an investigation.

2. Invite the employee to a meeting

Once you have exhausted the PIP process and the employee’s performance is simply not improving, or you’ve finalised the investigation which has concluded that your employee has engaged in misconduct and therefore have decided to terminate the employee’s employment, the next step in the process is to invite the employee to a meeting. This is commonly referred to as a show-cause meeting. The show cause meeting provides the employee an opportunity to show cause as to why their employment shouldn’t be terminated.

During this meeting you’ll put the precise reasons as to why the business is currently considering the termination of their employment, i.e. for ongoing poor performance or established misconduct and allow the employee an opportunity to respond.

It’s important that you invite the employee to the meeting by providing at least 24 hours’ notice and offer them the opportunity to bring a support person. The role of the support person isn’t to advocate on the employee’s behalf but to provide emotional support as needed.

3. Review and consider the response

After providing the reasons why you’re considering terminating the employee’s employment, you must allow the employee an opportunity to respond. It may be that the employee provides a genuine reason and/or mitigating factors to support the continuity of their employment. Whatever response is provided, you must genuinely consider this. It’s recommended adjourning the meeting to allow you the opportunity to genuinely consider the employee’s response. It may be sufficient to adjourn the meeting for 15 minutes, or you may need to adjourn the meeting for 24 hours, depending on the employee’s response provided.

4. The outcome

Once you’ve considered the employee’s response and made the decision to terminate, you’re required to reconvene the meeting to deliver the outcome. You must provide clear and unambiguous reasons for why you’ve decided to end the employment relationship.

You must remember that an employer is prohibited from terminating an employee’s employment unless the appropriate notice is provided. The National Employment Standards prescribes the amount of notice which is owed to an employee. However, be careful to cross-check this against the employee’s contract of employment which may prescribe for a more generous entitlement. As the employer, you may choose to have the employee work out their notice period or you can decide to pay the employee in lieu of notice.

5. Other post-employment considerations

There are also a number of considerations employers must take into account when exiting an employee from the business and include:

• Ensuring employees return all company equipment, such as keys.
• Ensuring handovers have been completed where necessary.
• Reminding employees of any ongoing obligations under their contract of employment, such as those relating to confidentiality or post-employment restraints.
• The collection of the employee’s personal items.

Are you thinking of terminating an employee?

Terminating an employee is a complex process that must be handled with care and consideration to avoid claims arising. If termination is deemed necessary, it’s essential to clearly communicate the reasons and ensure compliance with the required notice periods as stipulated by the National Employment Standards and the employee’s contract. If you’re thinking of terminating an employee, we recommend speaking to an expert to make sure you’re not opening yourself up to unfair dismissal claims or general protection claim. You can reach out to Citation HR for a free, confidential, no-obligation chat to see how we can help.

In part 2 of this series, we dive into summary dismissal, what it is, and we point out all the risks.