All questions

Discontinuing employment

i Dismissal

Dismissal usually requires notice unless the reason for dismissal was serious misconduct, in which case the employer can dismiss summarily without notice.

The NES prescribes the minimum statutory notice period (one to five weeks, depending on age and length of service). This notice must be in writing and may be paid in lieu at the time of termination. Contractual notice periods are often longer.

A person is protected from unfair dismissal (and can make an unfair dismissal claim seeking reinstatement and back pay or compensation) if:

  1. he or she has at least six months' service at the time of the dismissal or on the date that he or she is given notice; and
  2. either he or she is covered by a modern award or enterprise agreement; or he or she earns less than A$145,400 per annum (excluding superannuation, bonuses, overtime and commissions).

To avoid a finding that a dismissal is harsh, unjust or unreasonable (and therefore unfair), the employer must be able to establish a valid reason for the dismissal related to the person's capacity or conduct and show that the dismissal was, among other things, procedurally fair. In particular, an employer must establish that the employee was notified of the reason for dismissal, given an opportunity to respond, not unreasonably refused a support person at meetings, and given appropriate warnings and opportunities to improve if appropriate (e.g., in relation to poor performance).

Genuine redundancy is also a defence to an unfair dismissal claim (see subsection ii).

If the dismissal is owing to a discriminatory reason or is in response to an employee having or exercising (or threatening to exercise) a workplace right, it will be unlawful. Workplace rights are broadly defined, and include rights under legislation or industrial instruments and complaints or enquiries about employment.

There is no requirement to notify any government body or union unless the employer decides to dismiss 15 or more employees for reasons of an economic, technological, structural or similar nature. In those circumstances, the employer must give a written notice about the proposed dismissals to Centrelink – a government service that provides support to individuals who face financial hardship – before the dismissals occur. This also triggers the union consultation obligation referred to in Section X.

It is not uncommon for an employer and employee to mutually agree, and document in a deed of release (i.e., a settlement agreement), terms for an employee's dismissal.

ii Redundancies

A redundancy is where an employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the employer's enterprise.

Unless an exception applies, an employee who is made redundant will be entitled to a statutory redundancy payment of between four and 16 weeks' pay (depending on length of service). Enterprise agreements will often provide for more generous redundancy provisions. In addition, an employee will be entitled to notice of termination (or pay in lieu) plus payment for untaken annual leave and possibly long service leave.

Concessional tax arrangements apply to redundancy payments with a tax free amount (based on length of service) up to a specified cap and reduced rates thereafter.

As noted in Section X, consultation obligations may be triggered in cases of redundancy.

An employer will be able to avoid an unfair dismissal claim on redundancy if it complies with all applicable consultation obligations (e.g., where a modern award or enterprise agreement applies to the employee), and it was not reasonable under all the circumstances for that person to be redeployed within the employer's business or the wider group (which could potentially include international opportunities, although there is no obligation to pay the costs of redeployment).