Navigating Australia’s employment laws is not an easy task. There are numerous requirements which must be satisfied in order to terminate an employment or make an employee’s role redundant. Failing to comply with these laws could result in the employee commencing an application before the Fair Work Commission, which could result in the employer being required to provide significant financial compensation to the employee.
Termination of employment
Employment agreements frequently contain a provision which allows either the employee or employer to terminate the employment with a certain amount of notice. A common misconception is that such a provision would allow the employer to terminate the employee’s employment at any time. However, this is not the case, and doing so exposes the employer to a claim being made by the employee before the Fair Work Commission.
Serious misconduct
If an employee is found to have been involved in serious misconduct, it is possible to terminate an employee’s employment. What is considered serious misconduct may vary depending on the circumstances and the nature of the employment. If the employee who was terminated is found not to have engaged in serious misconduct, this exposes the employer to being liable to compensate the employee.
Termination for performance
Generally, at least one written warning should be given to an employee regarding their underperformance. Details about the reasons for the warning, expectations about what needs to be done differently, explaining the consequences of not improving, including termination, and an opportunity for the employee to improve should be given before terminating the employee’s employment. Recording these details in writing, and an acknowledgement by the employee will be useful as evidence confirming such steps were taken. If the employee’s performance does not improve, the employer should consider whether another warning or additional training is necessary, with termination of employment being the last resort.
Redundancy
Redundancy occurs when an employee’s role is no longer required. Prior to terminating an employee for redundancy, the employer should consult with the employee about their role, and discuss the possibility of redeploying the employee to another role. It is not appropriate to terminate an employee on the basis of redundancy and immediately hire a new employee for the same role. Keeping written records of such discussions will assist in proving that the redundancy was genuine. Small businesses with under 15 employees are not required to make redundancy payments. When calculating the number of employees, this includes the employees of any related entities of the company.
The law surrounding the termination of employment and redundancy is a complex area. Obtaining legal advice before terminating an employee employment could save employers from having to expend future legal costs in defending a Fair Work Commission claim. MistryFallahi can advise employers to ensure that the termination of employment is in compliance with employment legislation and assist with defending any Fair Work Commission proceedings.