How To Terminate An Employee

On occasions, after following the step by step managing poor performance process, and where performance or behaviour has not improved or been sustained, it may be necessary to terminate the employee’s employment contract. To avoid unlawful dismissals you need to give the employee appropriate notice in writing.

How To Terminate An Employee

What amount of notice must be given?

An employer needs to know how to terminate an employee legally. That means you cannot terminate an employee unless they have been:

  • given the minimum period of notice (please refer to the table below) or
  • paid the employee in lieu of notice at the full rate of pay for at least the hours the employee would have worked had the employment continued until the end of the minimum period of notice (please refer to the table below).

An employee’s full rate of pay (other than a pieceworker) is the rate of pay payable to an employee, including all the following:

  • incentive based payments and bonuses
  • loadings
  • monetary allowances
  • overtime or penalty rates
  • any other separately identifiable amounts.

If the employer pays out the notice the employee does not accrue any annual leave for the notice period they were paid out for.

Termination Notice Period

Note: Years of service is the employee’s period of continuous service with the employer at the end of the day the notice is given period.

  • Not more than 1 year of service – 1 week
  • More than 1 year but not more than 3 years of service – 2 weeks
  • More than 3 years but not more than 5 years of service – 3 weeks
  • More than 5 years of service – 4 weeks

If the employee is over 45 years old, and has completed at least two years of service at the end of the day notice is given, the employee receives an additional one week’s notice.

The minimum periods of notice apply to all employees employed in Australia (with some exceptions as stated below).

An award or agreement may include terms specifying the period of notice an employee must give in order to terminate his or her employment.

Does notice of termination apply to all employees?

An employer does not need to provide notice of termination (or payment in lieu of notice) to any of the following employees:

  • an employee employed for a specified period of time, for a specified task, or for the duration of a specified season
  • an employee whose employment is terminated because of serious misconduct (for example, an employee who has, in the course of their employment, engaged in theft, fraud or assault);
  • a casual employee
  • an employee (other than an apprentice) to whom a training arrangement applies and whose employment is for a specified period of time or is, for any reason, limited to the duration of the training arrangement
  • a daily hire employee working in the building and construction industry (including working in connection with the erection, repair, renovation, maintenance, ornamentation or demolition of buildings or structures)
  • a daily hire employee working in the meat industry in connection with the slaughter of livestock
  • a weekly hire employee working in connection with the meat industry and whose termination of employment is determined solely by seasonal factors.

How to terminate an employee – other things to consider

Now you know how to terminate an employee, but here are a few other considerations:

  • Before the employee leaves you may need to re­distribute work, tasks and responsibility to another employee.
  • Ensure that all company property is returned and access is ceased. Complete an exit checklist to ensure nothing is missed. Please click here for a sample “Exit Checklist” .
  • Inform HR and Payroll of the termination, include the effective date.
  • Assess how much of a risk the employee is. For example, does the employee need to escort out of the building by security?
  • Communication of the termination. Discuss with the HR Manager the most appropriate way to communicate the termination to the rest of the organization.

Please click here for a sample ”Termination Letter for Poor Performance” .

More information about how to terminate an employee can be found on the Fair Work Ombudsman’s website.

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