The law surrounding employment dismissal

Sometimes staff just don't work out, or business conditions change, requiring you to restructure your workforce. In either case, you may have to terminate the employment of an under-performing staff member or go through the process of employee dismissal.

To protect your business against potential legal problems, it's important you go about it the right way.

Defer to the law

Employer and employee rights in relation to redundancy and employee dismissal are set out in the Fair Work Bill, which replaced WorkChoices in 2009.

For details on how employment law relates to your particular business, visit the Australian government's 'Workplace' website.

Employment law: dismissal

"Your right to terminate the employment of a staff member depends firstly on the terms of the employment contract," says Michael Solari, solicitor and principal of Solari & Stock Lawyers

The employment contract should establish your right to terminate employment. Having an understanding of your legal responsibilities will help you develop sound procedures within your business for managing this situation.

Employment law: redundancy

Employees are made redundant when the job they perform is no longer required. This could be due to:

• Workplace restructuring
• Bankruptcy or insolvency
• Change in business ownership

"You obviously only tell someone they are being terminated because of a redundancy if it is a genuine redundancy," says Michael.

"The last thing you ever want to is use the excuse of redundancy when in fact it is a termination, because that will come back to bite you later on."

Redundancy payments

Staff who are made redundant may be entitled to severance pay, which can vary depending on the length of time they have been employed. In some cases Michael says offering an alternative position is appropriate.

"If there is a lower position available in the company, you are supposed to offer it to the employee. You don't just throw them out on the street in the first instance."

Notice of termination

Under the Fair Work Bill, an employer must give written notice when terminating employment. The periods of notice as set out in the bill are:

• Employment of not more than one year - one week notice
• More than one year but not more than three years - two weeks notice
• More than three years but not more than five years - three weeks notice
• More than five years - four weeks notice

Must you give notice? No, not always. According to the Fair Work Bill, if written notice is not provided, the employer must pay the employee for the minimum period of notice.

The bottom line 

Before beginning the employee dismissal process, ask a solicitor for advice on the right way to manage it. It will save time and money and, perhaps most importantly, protect you from unwanted legal repercussions.