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The risks of terminating employees

The greatest risk for employers in having to terminate someone’s employment is the employee disputing the termination through one of four methods of claim:

  1. Unfair Dismissal
  2. General Protections/ Adverse Actions
  3. Breach of Contract
  4. Discrimination

Any of the methods of dispute can negatively impact businesses through;

  • lost time,
  • compensation and penalty costs (the compensation for unfair dismissal claims is capped at 6 months wages or up to $71k in compensation)
  • legal costs to defend,
  • possible forced reinstatement of the employee, and
  • damage to their reputation.

Unfair Dismissal is the most common claim by dismissed employees, it requires the employee to have been dismissed and the dismissal to be considered harsh, unjust or unreasonable by the former employee.

Terminated employees can only bring an unfair dismissal claim against your business if they have been employed by the business for a period of at least 6 months. For small businesses (businesses employing 14 or less employees by headcount) the qualifying period of employment before they could make a claim is 12 months.

  1. Valid reasons for dismissal

    • The employee has an unsatisfactory response to performance/conduct management
    • The employee commits an act of serious misconduct
    • The employee’s role becomes redundant
    • The employee is unable to perform the inherent requirements of their role
  2. Fair procedure leading to terminationTermination notification processes for the variety of valid reasons for dismissal are all similar in that it is a sequential communication process and employees’ right of response needs to be observed. Post-dismissal employees need to be notified in writing of the reason for the termination of employment and the effective date of termination. Employees also have a right to not unreasonably refused their request to have a support person in attendance at any disciplinary meetings.

Process for terminating an employee due to misconduct

  1. Conduct occurs – employer suspects it could be misconduct
  2. Immediate action – investigate the conduct, stand down the employee if necessary (check wording in applicable Award, collective agreement or employment contract as to whether stand down period should be paid)
  3. Conduct investigation into the alleged misconduct – gather evidence and witness statements
  4. Invite the employee to a meeting
  5. State the allegations of misconduct and provide the opportunity for the employee to respond
  6. Consider the employee’s response
  7. Make findings of misconduct and/or determine disciplinary action if necessary
  8. Findings/ Termination meeting – explain the background of the matter, tell them you have considered their response(s) and inform them of the findings that have been made.If there are any further matters arising out of their response, adjourn the meeting and take the time to further investigate. If the employee does not offer up anything further, proceed to verbally terminate the employee. Do not walk into a termination meeting with a letter already prepared.
  9. Confirm the termination in writing, with their entitlements in the letter, Centrelink Separation Certificate and maybe a Statement of Service.

For further advice on employment termination, contact Harrison Human ResourcesTM.

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