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Terminating Employment How to Get the Process Right

Dismissing an employee is never easy. But if you understand and fulfill your obligations, it’ll make the process easier for everyone and help you stay on the right side of employment law.

The first step is to make sure you’re well prepared. Under the Fair Work Act, any dismissal must be for good reason and the rationale for terminating employment has to be clear, whether it’s for serious misconduct, continued poor performance, or commercial reasons.

Whatever the reason, you must also be committed to fair process, which includes not predetermining the outcome and considering the employee’s response. Once you have established a fair and reasonable argument, you need to consider how serious the poor conduct or performance is and choose the best option to address it:

  • Counselling - the recommended first course of action for most situations, where problems can be potentially resolved. The process centres on communication to help the employee get back on track.
  • Disciplinary action - consider this if initial counselling isn’t successful. Action may include issuing a formal warning or initiating a performance improvement plan.
  • Final warning - you can issue a first and final warning, but it’s an option reserved for serious misconduct.
  • Resignation - this may be an outcome if the employee doesn’t want to change and elects to leave the business. Ensure you make a written record confirming the detail of any discussions and agreed outcomes, end dates etc.
  • Termination with notice (or pay in lieu of notice) - this should be reserved for serious breaches of the employment contract or in circumstances where an employee flatly refuses to change their behaviour.
  • Summary dismissal - sometimes called instant dismissal, this is the most serious reaction where employment ends immediately. If challenged, you must be able to prove fair and reasonable justification for the decision to instantly dismiss.

This article features key information to help you navigate the choppy waters of terminating an employment contract.

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