When can a business terminate a worker’s employment?
If you want to dismiss an employee who has been with you for more than 12 months you need to follow the Small Business Fair Dismissal Code. If an employee is terminated and you have complied with the Code, then the termination will be deemed to be fair.
The Code says that you need to have a “valid reason” to terminate a worker’s employment based either on their capacity to work or conduct.
If you are dismissing a worker for poor performance or conduct, you first need to let them know what the problem is as well as how they can rectify it. (If they lack a particular skill this could even include providing them with training.) You must also tell them that they risk being dismissed if there is no improvement.
You should always try to do this in writing, as well as verbally and you must always allow them to have a support person present at any meeting where you discuss the likelihood of termination if they request. You must provide the employee with the opportunity to respond to the warning.
If you are dismissing a worker because the operational requirements of your business have changed, you should first find out whether any modern awards or enterprise agreements cover the worker’s employment. If they do, it is likely they will have redundancy provisions you will need to follow, which could include the need to consult the worker before making them redundant.
You will also need to consider whether you could have redeployed the worker elsewhere in your business. If you fail to meet these tests, the employee may have 21 days to bring an unfair dismissal claim in the Fair Work Commission. Not all employees can bring an unfair dismissal claim (for more details see Know Your Rights: Unfair Dismissal).
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