Before ending an employee’s employment, it is important for the employer to understand its obligations and the potential liability that might arise from the termination.

For employees who are “protected” from unfair dismissal, the employer must have a “valid reason” for dismissing an employee, based on the employee’s performance, capacity, or conduct. In addition to having a valid reason, the employer must also comply with procedural requirements, including allowing the employee to respond to the reason for termination, before the termination occurs.

Where the reason for dismissal is redundancy, the employer must satisfy the requirements for a “genuine redundancy” in the Fair Work Act 2009. These include identifying the changes to operational requirements that have caused the redundancy, considering any suitable alternative positions, and complying with any consultation obligations in an award or enterprise agreement.

Employers should also ensure that the reasons for termination are not unlawful. In particular, the “general protections” provisions in the Fair Work Act 2009 make it unlawful to take “adverse action” (including dismissal) because of a person’s right to exercise a “workplace right” (i.e. the ability to make a complaint or inquiry in relation to their employment). It is also unlawful to dismiss a person because of a characteristic of the person (i.e. physical or mental injury or illness), or because the person is a member of a union.

Employers must also comply with any obligation to provide notice of termination (or payment in lieu of notice), and other obligations, such as redundancy pay. The Building and Construction Industry On-Site Award 2010 establishes an “Industry specific redundancy scheme”, which means that employees covered by this Award are entitled to redundancy pay at a different rate to other employees. Some employers in the building and construction industry make redundancy pay contributions to the Building Industry Redundancy Scheme Trust (or “BIRST”), who will be responsible for processing redundancy payments.

We can assist employers to understand their obligations and to minimise the risk of a dismissal-related claim. Advice should always be sought before an employee is dismissed. We can also assist your business to understand its obligations in respect of payments that are due on termination, and any industry specific matters.