Terminating a Worker's Employment

Terminating an employee's employment should be done carefully. Before deciding to terminate someone's employment make sure you understand your obligations under their employment contract, award or agreement.

When you terminate an employee's employment you must provide the employee with the following:

  • Appropriate notice (not required if dismissal is for serious misconduct)
  • Any leave entitlements
  • In some instances, redundancy or severance pay
  • In the WA State system, there are a range of other obligations.

How much is ‘appropriate notice'?

The length of notice that you must give an employee is determined by how long they have worked for you, their type of employment and whether they are in the state or national system. For example if someone has worked for you continuously for more than one year but less than three you must give them at least two weeks notice.

An employer can provide payment in lieu of notice, which can be equal to or exceed the total amount the individual would have been paid for the required notice period.

What are employee entitlements?

In most cases full-time and part-time staff will be owed entitlements when their employment ends. These termination entitlements can include payment of any accrued annual and long-service leave.

What do I need to know about redundancy?

Redundancy occurs when a position occupied by a worker is eliminated and the worker is dismissed. The position, not the employee, becomes redundant. The work done by the former employee, or some of it, may be performed by other employees, or the work may no longer be there.

There are a number of reasons why redundancy can arise. These include:

  • Times of economic and financial difficulty
  • Technological change
  • Relocation of the business
  • Slowdowns in the business.

Businesses going through a restructure or operational change may lose talented people who have been valuable to the business and who it would otherwise have been happy to retain.

If you choose to make staff redundant it's important to manage the process well and to comply with the relevant legislation, awards, agreements or contract terms. You must provide:

  • Any relevant standard termination entitlements; and
  • Severance payments if the employee is entitled to them.

Retrenchments should be based on business needs and should not be seen to be a reflection on the competence of those you let go. If handled poorly, retrenchments can reflect badly on the business, affect the morale of remaining staff, and potentially could loose you clients.

You must also provide Centrelink with the following information in writing:

  • Reasons for termination;
  • Number and category of employees likely to be affected;
  • Number of employees normally employed; and
  • Period over which the terminations are likely to be carried out.

Centrelink can also assist you with useful information to distribute to staff facing redundancy or retrenchment, and advice on how you can best support workers who will be made redundant.

For further information go to the Department of Commerce.

What is unlawful termination?

When it comes to unlawful termination, it doesn't matter if you employ staff under the state or national labour relations systems, because national law covers both.

In Australia it is unlawful to dismiss an employee:

  • For a prohibited reason – see the Fair Work Act's general protections
  • Without providing proper notice or payment in lieu of notice and without providing a redundancy payment (where entitled)
  • Without notifying Centrelink (and any relevant registered employee associations) before 15 or more employees are dismissed for economic, technological or structural reasons. (Centrelink is to be advised for any number of employees made redundant in the WA state system.)

The Fair Work Ombudsman website will provide you with further information on unlawful termination of employment in the national workplace system. Alternatively you can call the Fair Work help line on 13 13 94.

The Department of Commerce will provide further information on the WA state system.

What is unfair dismissal?

Unfair dismissal in the State system

Is where an employee is harshly, oppressively or unfairly dismissed. Claims for unfair dismissal can be made to the Western Australian Industrial Relations Commission (WAIRC). There are a number of exceptions, so check the WAIRC site.

For further information, visit the Department of Commerce webpage on dismissing employees.

Unfair dismissal in the national system

A person has been unfairly dismissed if the Fair Work Commission finds that:

  • the dismissal was harsh, unjust or unreasonable, and
  • the dismissal was not a case of genuine redundancy, and
  • the dismissal was not consistent with the Small Business Fair Dismissal Code, where the employee was employed by a small business.

Unfair dismissal applications are made to Fair Work Commission. An employee may not make an application unless they:

Are covered by the national workplace relations system

  • Have been with the employer for at least six months; or 12 months if the employer is a small business employing less than 15 full time equivalent employees
  • Were earning less than $129 300 or were earning more than $129 300 but were covered by an award or an enterprise agreement

For further information on unfair dismissal in the national system, see the Fair Work Ombudsman website.

What’s next…

Related Information

Business Brief to view:


Our free Business Basics workshop will guide you through all the steps involved with establishing and running your own business.