Termination of employment is when an employee’s employment with an
employer ends. Employment can end for various reasons. An employee may
resign or can be dismissed.
Irrespective of how employment ends, it is important to follow the rules about
dismissal, notice and final pay. Different rights and obligations apply when a
job is made redundant or when a business is bankrupt.
Notice of Termination
Fair Work Act 2009 (Cth) provides for minimum notice periods depending on
length of service.
Number Period of Service Notice
1 Not more than 1 year 1 week
2 More than 1 year but
less than 3 years
2 weeks
3 More than 3 years but
less than 5 years
3 weeks
4 More than 5 years 4 weeks
An additional one week’s notice applies where the employee is over 45 years
old and has completed at least two years of continuous service with the
employer.
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To end employment, an employer must give the employee written notice of
the last date of employment or payment in lieu of notice. Longer notice
requirements may apply under an industrial award, contract or policy.
What Entitlements Should be Paid Upon Termination?
When an employment relationship ends, employees should receive the
following in their final pay:
• Any outstanding wages or other remuneration still owing;
• Any pay in lieu of notice of termination;
• Any accrued annual leave and long service leave entitlements;
• The balance of any time off instead of overtime that the employee has
accrued but not yet taken; and
• Any redundancy pay or entitlements if the employee has been made
redundant and is eligible.
An employer can be liable to a penalty of up to $66,600 per contravention if
they have not complied with their obligations under relevant Commonwealth
workplace laws.
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Circumstances in which an Employer may Dismiss an Employee Without
Notice or Payment in Lieu of Notice
Serious misconduct can warrant summary dismissal without notice or
payment, such as in case of dishonesty, fraud or other serious conduct that
impacts significantly on the employer’s interests, operations or reputation so
as to amount to a repudiatory breach of contract.
Summary termination in those circumstances arises as a matter of common
law, although many employment contracts also specify the circumstances
where summary dismissal may arise. The Fair Work Act sets out examples of
conduct that may constitute serious misconduct, such as being intoxicated at
work or refusing to follow lawful and reasonable instructions.
Procedural Requirements for Dismissing an Employee
Procedural factors are relevant in determining whether a dismissal is unfair,
including whether the employee was notified of the reason for termination
and given an opportunity to respond and, in the case of unsatisfactory
performance, whether the employee was made aware of performance
concerns and given an opportunity to improve.
Where an employee’s employment is being terminated on the ground of
redundancy, and the employee is eligible to make an unfair dismissal claim, the
redundancy must be “genuine”. For a redundancy to be considered genuine,
the employee’s job must no longer be required to be performed by anyone
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because of changes to operational requirements, and an employer must have
followed any consultation requirements contained in an applicable award or
enterprise agreement and considered reasonable redeployment opportunities.
Circumstances in Which Employees are Protected from Dismissal
In addition to the protections offered by the unfair dismissal regime,
employees are protected under the Fair Work Act from discriminatory
dismissals, dismissals relating to their union activities or the assertion of
workplace rights or where the dismissal is because of a temporary absence
from work owing to illness or injury.
What Happens if an Employer Goes Bankrupt or into Liquidation
Sometimes businesses shut down because they are not profitable or run out of
money. This can mean that employees lose their jobs, and in some cases, the
employer may not be able to pay them the wages and entitlements they are
owed.
When a business goes into liquidation or insolvency, employees can access
help through the Fair Entitlements Guarantee (FEG), which can include:
• Wages – up to 13 weeks of unpaid wages;
• Annual leave;
• Long service leave;
• Payment in lieu of notice of termination – maximum of 5 weeks; and
• Redundancy pay – up to 4 weeks per full year of service.
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Case Example:
Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407
Facts: Mr Roohizadegan was a senior employee of software company
TechnologyOne. Mr Roohizadegan made seven complaints to four people
between February 2016 and May 2016, including the CEO, that he was being
bullied at work by senior executives. On 18 May 2016, Mr Roohizadegan had
his employment summarily terminated by the CEO. This was despite the CEO
being advised by HR that dismissing Mr Roohizadegan due to his complaints
would constitute unfair dismissal. The CEO gave a myriad of reasons to Mr
Roohizadegan for the dismissal, including his inability to get along with some of
his previous managers, that revenue in Victoria (which was Mr Roohizadegan’s
responsibility) wasn’t increasing and that Mr Roohizadegan’s team had raised
concerns about him.
Issue: Mr Roohizadegan’s brought a general protections claim under sections
340 and 341 of the the Fair Work Act, claiming that he was dismissed for
reasons that were prohibited and that breached the general protection
provisions in the Fair Work Act.
Decision: The Court decided in favour of Mr Roohizadegan, finding that he was
protected from adverse action resulting from his complaints. Additionally, the
Court found that Mr Roohizadegan’s complaints constituted a ‘substantial and
operative factor’ in the CEO’s reasons to summarily terminate Mr
Roohizadegan’s employment.
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The Court awarded Mr Roohizadegan over $5.2 million in damages for his
adverse action and breach of contract claims, including
• $2,825,000 for future economic loss
• $1,590,000, plus interest, for breach of contract
• $756,410 plus interest for forgone share options
• $47,000 in penalties
• $10,000 for general damages
The CEO himself was ordered to pay Mr Roohizadegan $7,000, with this order
being made for the purposes of “effective deterrence” and to desuade CEOs in
analogous positions from standing “with the bullies rather than the bullied”.
The full judgment of the Federal Court of Australia can be accessed by clicking the following link:
https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca1407
RN LEGAL has assisted many clients with employment-related matters. RN
LEGAL has the experience, expertise, and resources to help you with your
employment-related matter. Contact us on (02) 9191 9293 or
mail@rnlegal.org if you, or someone you know, requires advice or assistance
in relation to any aspect of employment