Managing employee dismissal and redundancy

An employment relationship can be ended by the employee or the employer for many different reasons. As an employer, you must be aware of your obligations regarding resignations, dismissals, redundancy, notice periods and final pay.

Employee resignation

An employee may resign at any time if they want to end their employment. This is a voluntary decision made by the employee. Often an employee will give written notice to their employer in the form of a letter or email. It's good practice for the employer to acknowledge that they have received the notice of resignation.

In most cases the employee will work through to the end of their notice period as detailed in their employment contract.

Dismissing an employee

If you need to dismiss an employee, it must be for valid reasons. A dismissal should not be harsh, unjust or unreasonable.

You may need to dismiss an employee immediately in circumstances relating to:

• theft
• fraud
• violence
• serious work health and safety breaches.

This is known as a summary dismissal.

Other dismissals may relate to an employee's behaviour or performance.

You may also need to dismiss an employee because their role has become redundant due to a downturn in business, or you no longer need someone to do their specific role.

Dismissal because of redundancy

You may need to dismiss an employee if their role becomes redundant. The redundancy may be necessary, for example, when:

• you no longer need that specific role
• your business has become bankrupt or insolvent
• new technology has eliminated the need for someone to do the job
• you are going through a business downturn, relocation, merger, takeover or restructure.

If you dismiss an employee because of a redundancy, it has to be genuine. A redundancy is not genuine if your operational needs have not changed, or you have not consulted with the employee. It may also not be considered genuine if you could reasonably employ the employee somewhere else in your business or an associated business. If the redundancy is not genuine, the employee may claim it as an unfair dismissal.

Learn more about redundancy from the Fair Work Ombudsman.

Unfair dismissal

If you're in a position where you think you have to dismiss an employee, make sure you have a valid reason. A dismissal may be deemed unfair if it is harsh, unjust or unreasonable, or not due to a genuine redundancy.

Unfair dismissal can result in penalties, such as prosecution, and can be damaging for your business's reputation.

Learn more about unfair dismissal from the Fair Work Ombudsman.

Notice periods

Notice given by the employer

The National Employment Standards (NES) sets out the minimum notice or redundancy periods that an employer needs to give their employees. In some cases, a modern award or enterprise agreement may require the employer to give their employees a more beneficial entitlement.

Not all employees will be entitled to a period of notice. These employees include:

• casuals
• serious misconduct dismissals
• fixed-term contracts.

Notice given by the employee

How much notice an employee is required to provide their employer generally depends on the terms of the relevant:

• modern award
• enterprise agreement
• employment agreement/contract.

If the above does not apply, the employee should provide their employer with 'reasonable notice'.

Read more about resignation, dismissal and notice periods from the Fair Work Ombudsman.

Notice period examples

Final pay

It is considered best practice for employers to pay employees their final pay within 7 days of their employment ending. This is reflected in most modern awards. Some awards or enterprise agreements may, however, state more or less time. Before finalising an employee's final pay, always check your modern award or employment agreement.

An employee's final pay should include:

• outstanding wages (including penalty rates and allowances)
• accumulated annual leave and annual leave loading (if applicable)
• accrued or pro-rata long service leave (if applicable)
• redundancy pay (if being made redundant)
• pay in lieu of notice (if being dismissed)

Read more about final pay from the Fair Work Ombudsman.

Find advice and support

The Workplace Advice Service is a free, independent legal assistance program for small businesses and employees. The program, offered by the Fair Work Commission, provides advice on topics including:

• dismissal
• general protections
• workplace bullying.

Read more about the Workplace Advice Service, including eligibility and how to request a consultation.

Alternatively, seek advice and support from a HR professional or an employment lawyer before you make any final decisions or take action to end an employee's employment.