Termination of Employment

Terminating an employment contract can be a fraught exercise.

As a starting point, unless an employee is being terminated for ‘serious misconduct’, the terminating party must give (or if it’s the employer give or pay) the required period of notice set out in the employment contract. The Fair Work Act sets the minimum period of notice, however the parties can agree on a longer notice period, and where the employment contract is silent, a reasonable notice period, longer than the Fair Work Act minimum, can be implied.

An employee may resign for any reason, as long as they give their employer the required notice of their intention to resign.

Except in limited circumstances, an employer cannot terminate an employee’s employment without a valid reason. If they do, the employee may make an unfair dismissal claim, and the relevant tribunal has the power to order the employer to reinstate the employee, or pay them up to 6 months pay, or both.

Employers are also prevented from terminating any employees employment for a prohibited reason- if they do, the employee may make an unlawful termination claim, and the Federal Court may has the power to order the employer to reinstate the employee, or to compensate them, or both.

Before terminating an employee, an employer should seek legal advice.

And employees who have had their employment terminated should be aware that they have a limited period to make a claim for unfair dismissal or unlawful termination and should therefore seek legal advice as soon as possible following their termination.