Handle employee separation carefully

It is very important to manage employee separation carefully whether the employee is leaving because of resignation, redundancy or dismissal. First, it minimises the risk of legal action and secondly, it protects the reputation of both your business and you as an employer. People who leave employment on a pleasant note are more likely to recommend their previous employer.

Employers should use fair procedures when terminating employees as replacing employees is expensive and claims for unfair or unlawful dismissal can be costly and time consuming to defend. Also, what may be seen as an unfair process can affect workplace morale.

Small Business Fair Dismissal Code

The Small Business Fair Dismissal Code applies to small business employers with fewer than 15 employees. Although this Code is not compulsory, if an employee is dismissed and the employer has followed the Code, then the dismissal will be deemed to be fair.

The Code provides a checklist, which is a tool to help employers comply with the Code. By completing the checklist you are able to assess and record your reasons for dismissing an employee.

Under the Fair Work Act, unfair dismissal is dismissal which is “harsh, unjust or unreasonable” or where the employee is not given “a fair go all round”.

It should be noted that employees of small business employers cannot make a claim for unfair dismissal in the first 12 months following their engagement.

Employees of businesses employing 15 or more employees cannot make a claim for unfair dismissal in the first 6 months following their engagement.

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Terminating the employment of an under-performing employee
A sample dismissal process
  • You must clearly warn the employee (preferably in writing) that the employee is not doing the job properly and state that dismissal might occur if performance does not improve. Use the warning letter template.
  • You must give the employee a fair opportunity to respond to any allegations of poor performance or misconduct.
  • You must allow the employee to have a support person present at any discipline interview.
  • You must provide the employee with a reasonable amount of time to improve his or her performance or conduct.
  • You should offer to provide the employee with any training or opportunity to develop his or her skills and provide feedback about their performance or conduct.
  • You should keep any records of warning(s) made to the employee and of any discussions on how his or her conduct or performance could be improved. Use the Record of employee warning template.
  • You can use the Termination of employment example when terminating an employee’s employment because of unsatisfactory performance or conduct.

You must give an employee a reason why they are at risk of being dismissed and an opportunity to improve.

Can I sack someone on the spot?

Under the Small Business Fair Dismissal Code a, it is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.

Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Do I have to give three written warnings?

If you employ fewer than 15 employees, the answer is ‘No’. You follow the process as outlined in the Small Business Fair Dismissal Code

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If I’m putting someone off, what do I have to pay them?

You may need to pay any or all of the following:

  • Accrued annual leave
  • Annual leave loading
  • Long service leave
  • Payment in lieu of notice
  • Payment for work performed until time of termination
  • Superannuation

Before doing anything, consider the employment arrangements you have in place, including employee entitlements: Understanding employee’s final pay (updated Aug 2019-PDF)

As of 26 August 2019, clause 16.3 of the Pastoral Award 2010 has been varied to provide different time frames for the payment of entitlements on termination of employment – read more here

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If a worker’s no good, can I make them redundant?

Redundancy must be genuine or it will be considered to be an unfair dismissal. Among other things, genuine redundancy requires that the job is no longer required to be done by anybody.

I’m downsizing – how do I make an employee redundant?

A job becomes redundant when an employer decides that the job the employee has been doing is no longer needed or that fewer employees are needed to do that type of job because of the operational requirements of the employer’s business.

Redundancies usually occur in farming where a farmer is retiring, cutting staff to save costs or introducing new machinery or technology.

Under the federal industrial laws which commenced on 1 July 2009, a redundancy may also be regarded as an unfair dismissal if the employer could have redeployed the employee elsewhere in the business.

Redundancy entitlements include:

  • Notice of termination and redundancy pay – amount and duration depending on years of service and age
  • Paid leave to look for work
How much notice must I give?

Notice periods are calculated according to the length of the employee’s continuous service. These periods are a minimum only and longer notice periods can be given.

Employee’s period of continuous service with the employer
at the end of the day notice is given

Notice period

Not more than 1 year 1 week
More than 1 year but not more than 3 years 2 weeks
More than 3 years but not more than 5 years 3 weeks
More than 5 years 4 weeks

If the employee is over 45 years old and has completed at least two years of continuous service with the employer at the end of the day the notice is given, the employee is entitled to an extra week’s notice

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Resources, support material and updates

The ESKi is designed to get you started and is integrated with the resources on this website, designed to develop processes and/or documents that will help make your farm safer.

The documents and links below will help you with this topic. We’ve included word templates you can download, customise and PDFs you can print and write on.

People issues are constantly changing. If you would like us to keep you up to date with a regular, short bulletin subscribe here (you can unsubscribe at any time).

Termination checklist
  • Did you know that a position can only be declared redundant if the job is no longer required to be done by anybody?
  • Did you know that employees must be given an opportunity to improve their performance?

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