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Categories of termination

Employment Essentials

Quick guide to ending employment  (pdf - 1,374Kb)

Dismissing an employee can take a number of forms, each with differing requirements. You must make sure you understand these requirements to ensure you avoid any legal problems later. These categories and requirements are discussed here.

Summary dismissals

What is a summary dismissal?

A summary dismissal is an instant or "on-the-spot" dismissal usually for misconduct by the employee. It should be avoided except in the cases of extremely serious misconduct.

If you are in the situation where you are considering a summary dismissal, you should ask yourself the following questions:

• have I given her or him a chance to explain what happened?
• did I act promptly when the incident happened?
• would someone outside the situation (ie. not emotionally involved) agree with me that his or her conduct was seriously improper?
• have I followed proper policy and procedure and verified that the alleged misconduct actually took place and by the person alleged?

If you answer "no" to any of these questions it is probably not a good idea to proceed with a summary dismissal. See Managing Performance to assist you in taking the necessary steps before dismissing the employee.

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Forced dismissals

What is a forced dismissal?

A "forced" or "constructive" dismissal is when an employee is told to "resign or be dismissed". If your employee can prove that he or she was threatened with dismissal, it may be determined that your employee did not resign but was dismissed.

Another form of forced dismissal is when an employee's responsibilities or duties are fundamentally altered so that you are in fact changing his or her contract of employment.

In this case, you must formally offer the employee a new contract of employment. If the employee declines to accept the new contract, ensure that you follow the appropriate termination procedure.

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Resignation

What are my responsibilities if my employee resigns?

An employee has the right to resign but to avoid any misunderstanding or dispute, notice should be given by your employee in writing or perhaps in front of a witness, even though this may not be a requirement of the relevant award.

Can an employee withdraw notice?

Generally no, unless you decide that you want to keep the employee on.

But you should receive the employee's resignation in writing. Hasty words can be spoken in moments of high stress, and to avoid confusion later on it is probably better to really be sure that your employee really means to resign.

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When a fixed contract is completed

What are "fixed" contracts?

A fixed contract is a contract of employment that is "fixed" for a certain period or for a particular task or project.

To avoid confusion or legal problems at the completion of the contract, you need the contract to be in writing. It should state the termination date or circumstances in which the contract is fulfilled.

Apart from setting the termination date or circumstances, the contract should cover all the circumstances that would allow the contract to be terminated earlier by either party. This would outline the circumstances that would constitute unsatisfactory performance by the employee or failure to fulfil the contract requirements of the contract by you.

If you and your employee agree to extend or amend the original contract in any way make sure these are agreed in writing and signed by both parties.

It would be a good practice for you to issue your employee with a notice reminding them of impending completion of the contract.

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Can I offer a new contract?

You should formally terminate the first contract either by mutually agreeing to do so or by formal notification after the first contract is fulfilled.

Take the time to prepare a new contract and avoid the temptation to "roll over" the original contract. Confusion and dispute may occur if you and your employee have not agreed in writing about any changes to the original contract.

What is a redundancy?

Redundancy occurs when the work performed by an employee is no longer required to be done by anyone.

This can happen because:

• the job is replaced by technology
• the business is restructured and the job no longer exists
• you can no longer afford to retain the employee due to economic circumstances.

There is a minimum scale of severance payments in most awards which is identical to that provided by the Employment Protection Act 1982. The Act applies to all permanent employees under NSW awards who work for an employer with more than 15 employees. Employers with less than 15 employees are exempt from these provisions.

The relevant state award or agreement can provide for greater entitlements than the Act, so make sure you pay the greater entitlement, if appropriate.

You are required by law to consult with your employees or their representatives when restructuring the workplace. Opportunities to discuss the changes and ways to avoid redundancy such as retraining, redeployment and counselling should be offered to your employees.

Ending Employment Checklist  (pdf)

Other titles in the Employment Essentials series

• Managing People
• Managing Performance
• Recruitment
• Workplace Policies and Procedures