18 November 2024
In the realm of employment law in Australia, terminations and warnings are critical components that both employers and employees must navigate carefully. It is essential to understand the legal framework surrounding these processes to ensure compliance, fairness, protect the rights of involved parties, and maintain workplace integrity.
The role of warnings
Warning letters are a vital component of the disciplinary process, often used as a stepping tool to terminate employees and mitigate the risk of unfair dismissal claims.
Under the Fair Work Act there is no legal obligation outlining the number of written warnings that an employer must provide prior to dismissing an employee. However, this can be stipulated in workplace policies or enterprise agreements.
The purpose of a warning letter is to advise an employee that their work performance or conduct is unsatisfactory and to put the employee on notice. It should contain a clear and sufficient description of the unsatisfactory issues, the required improvements, the timeframe for these improvements and should indicate that further disciplinary action may follow if the issue persists.
During this period employers will typically review the employees’ established expectations, engage in open discussions about performance concerns, coach the employee through steps to improvement, place employees on performance improvement plans and set goals to help motivate the employee. If the employee doesn’t improve or fails to meet goals, then the termination process will begin.
Terminations
Termination of employment refers to the end of an employee’s employment with an employer. Reasons for termination may include ongoing under/poor performance, misconduct or serious misconduct resulting in dismissal, redundancy or resignation.
As an employer ensuring you follow the correct termination process is critical, to handle the situation both responsibly and ethically, but to also reduce the risk of expensive legal fees associated with unfair dismissal claims (reinstatement, back pay and other penalties).
For this reason, many legally binding obligations must be considered before the termination of an employee including:
- Federal legislation
- State legislation
- Awards
- Enterprise Agreement
- Employment contracts
- Common Law
In communicating a termination of employment, it must always be followed by written notice to the employee outlining the reason for dismissal and termination date based on the notice period.
Notice periods
Generally, an employee must not terminate an employee’s employment unless they have given the employee written notice of the last day of employment. The required notice period depends on the age of the employee, their employment type and how long they have been employed on a continuous basis by the employer.
It is important to refer to the applicable modern awards, enterprise agreements, individual agreements or individuals’ employment contracts that may stipulate an employee’s notice period.
The National Employment Standards (NES) set out in the Fair Work Act establishes minimum notice period as follows:
| Period of continuous service | Minimum notice period |
| 1 year or less | 1 week |
| More than 1 year – 3 years | 2 weeks |
| More than 3 years – 5 years | 3 weeks |
| More than 5 years | 4 weeks |
| Employees over 45 years old who have completed at least 2 years of service when they receive notice are given an additional week of notice. | |
Notice Period Exemptions:
Under the NES an employer does not need to provide notice of termination (or payment in lieu of notice) to employees that are:
- casual
- employed for a set period of time or season
- dismissed for serious misconduct
- an on-training arrangement and are employed for a set period of time or for the length of the training arrangement (other than an apprentice)
- daily hire working in building and construction industry or meat industry in connection with the slaughter of livestock
- are weekly hired working in connection with the meat industry and whose termination depends on seasonal factors (but not where termination is due to other reasons)
Final Payment Entitlements:
Employees should receive the following entitlements in their final pay:
- any outstanding wages or other remuneration still owing
- any pay in lieu of notice of termination (if notice period was not worked)
- any accrued annual leave and long service leave entitlements
- the balance of any time in lieu instead of overtime that the employee has accrued but not yet taken
- any redundancy pay / entitlements if the employee has been made redundant and is eligible
Unfair dismissals
Unfair dismissal occurs when an employee is dismissed from their job in a harsh, unjust or unreasonable manner. An employee can lodge an unfair dismissal claim to the Fair Work Commission if they have been dismissed and believe it is unfair. By issuing warnings, establishing termination/warning procedures, maintaining documentation and applying procedural fairness employers can reduce the risk associated with termination.
To avoid unfair dismissal when employers must ensure:
- there was a valid reason for the dismissal related to the employee’s capacity or conduct (e.g. serious misconduct, repeated poor performance or redundancy);
- they follow a fair process when dismissing the employee:
- (if applicable) the employee was warned that performance is unsatisfactory
- notified the employee with the reason and provided them an opportunity to respond to the allegation
- allow a support person to be present at any discussion about the dismissal
- conduct any necessary investigations
- correct notice period as stimulated by the Fair Work Act or relevant enterprise agreement or Award.
These aspects will be considered by the Fair Work Commission in deciding if dismissal is harsh, unjust or unreasonable along with whether the size of the business or lack of dedicated human resource management expertise impacted on the procedures that the employer followed when they dismissed the employee.
If the Fair Work Commission finds that the termination of employment was “harsh, unjust or unreasonable” they may be liable and subject to litigation.
Advice for employers
- Establish clear company policies for terminations and warning procedures.
- Conduct regular performance reviews, provide training to managers in handling performance issues and conducting the termination process.
- Provide employee support and resources for improvement.
- Hold a valid reason for termination.
- Accurately document performance, conduct, warning notices and termination notices.
- Follow procedural fairness guidelines to ensure consistent processes.
- Accurately calculate final pay and entitlements.
- Refer to relevant awards and /or agreements and Fair Work resources.
For more information or advice on the processes, conditions and obligations surrounding terminations and warnings please contact use via the link below.
