5 Mistakes Employers make when Terminating Employment


Employers can often make mistakes when terminating a worker’s employment and become confused about procedural requirements. It is very important to be aware of these common mistakes, to prevent and safeguard from an unfair dismissal claim sought by a terminated employee. Some of the top mistakes that employers make when terminating employment include:


  1. Not giving enough notice

The Fair Work Act 2009 provides for a mandatory minimum period of notice to be provided when dismissing a full-time or part-time employee. Giving notice or payment in lieu is required regardless of the reason for dismissal (except for serious misconduct) and so must be given whether the dismissal is for misconduct, poor performance or redundancy among many other reasons.

A sliding scale of notice is provided in Section 117 of the Fair Work Act 2009 and can range from one week to five weeks. The amount of notice to be given can be depend on the employee’s age and length of service. Certain modern awards or enterprise agreements can also affect notice periods.

It is important for employers to seek advice on calculating the notice period they need to give when terminating employment to avoid risks of penalties.


  1. Incorrect termination pay

Errors are often made when it comes to termination pay as the rules can be quite complex. Some of the most common areas of confusion include:

  • Whether annual leave is paid out on termination
  • Whether personal leave is paid out on termination
  • Whether long service leave is paid out on termination

Annual leave is required to be paid out when terminating an employee while personal leave is not and long service leave depends on a number of factors.

Another area of confusion can arise when an employer decides to end employment immediately or part way through a notice period. If this happens, the employee must be paid an amount in lieu of the notice period they were entitled to (or the part of the notice period which they did not work). Again, it is important to seek advice when calculating the correct termination pay.


  1. When minimum employment periods and unfair dismissal are not considered

Many employers may reference a probation period within an employment contract in order to assess the employee’s performance however, it is important to understand that probation periods are not acknowledged in the Fair Work Act but rather minimum periods of employment.

The minimum period of employment for small business employers (less than 15 employees) is 12 months. This means that an employee will only be able to make a claim for unfair dismissal where they have a period of continuous service of at least 12 months. The minimum period of employment for employers with 15 employees or more, is 6 months meaning an unfair dismissal claim can be made where an employee has at least 6 months of continuous service.

Whilst probationary periods are a useful tool to assess the suitability of the employee it is important to remain vigilant of the applicable minimum periods of employment for the purpose of unfair dismissal claims.


  1. Failing to follow a fair dismissal procedure

Employers can often make the mistake of failing to provide employees with “procedural fairness”. According to the Fair Work Act 2009, an employer must have a valid reason to terminate employment (such as misconduct or poor performance) and have followed a procedurally fair process in reaching the decision to terminate. This includes ensuring that:

  • A series of disciplinary meetings and warnings have occurred
  • Allegations of misconduct are investigated
  • The employee is given an opportunity to address allegations made against them
  • Employees are given adequate and written notice of any meetings and the issues to be discussed
  • Employees are allowed to bring a support person to the meetings
  • The outcome of the meeting is not pre-determined


  1. Not considering alternatives to dismissal

Often, despite the employer having a valid reason to dismiss, following procedural fairness and making sure considerations have been taken before making a decision to terminate, an employee dismissal can still be considered “harsh, unjust or unreasonable.” It is often the claim of ‘harshness’ that poses problems for employers and whether the penalty of dismissal is a proportionate response to the offence.

Employers should make sure they consider all other alternatives before taking action to dismiss an employee such as offering written warnings or compulsory training. It is important to keep a record of these options being considered and the reasons why they did not work to defend against any unfair dismissal claims that may be brought.


For advice regarding terminating employment, please contact us on (08) 9316 9896 or enquiries@processworx.com.au.



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