Nearly all businesses will deal with the exit of an employee at some stage, whether it's through resignation, redundancy or dismissal. Though the loss of skills and experience associated with that employee can weaken a business, it also provides an opportunity to refresh internal culture and add different skills to the workforce.
There are different rights and obligations that come as a result of ending employment. These depend on the way in which the employee exits:
An employee has a right to resign without providing you notice of the decision. However modern awards, enterprise agreements and employment contracts may all stipulate minimum notice periods. An employer must provide an employee notice of their termination in writing on the day of the termination, subject to some exceptions. Visit the Fair Work Ombudsman's website for more information about termination of employment.
A job becomes redundant when the work performed by an employee is no longer necessary as the job has been replaced by technology or the work has been restructured.
Employees may be entitled to redundancy benefits, depending on their length of service and the award, agreement or contract of employment they were employed under.
Find out more about redundancy on the Fair Work Ombudsman's website.
In order to dismiss an employee you must have a valid reason. This reason must be based on poor performance, conduct or changes to your operational requirements.
How do I dismiss an employee?
Dismissing an employee can take a number of forms, each with differing requirements. You must make sure you understand these requirements to ensure you avoid any legal problems later. Two areas to be particularly aware of are:
Small businesses with fewer than 15 employees should comply with the Small Business Fair Dismissal Code to ensure any termination processes are fair.
There are certain taxation implications when termination of employment occurs. The Australian Taxation Office (ATO) provides guidance on meeting your obligations to employees who stop working for you.
What to do...
- Visit the Fair Work Ombudsman's website for information on termination of employment, including notice of termination.
- Read the Small Business Fair Dismissal Code on the Fair Work Commission website.
- See the ATO website about Employment termination payments when employees stop working for you
- Read the Fair Work Ombudsman's Consultation and cooperation in the workplace guide for tips to effectively manage your employees.