SLC’s Top 5: Ending Employment – Sydney Legal Consulting

SLC’s Top Five Series: Ending Employment

Nobody wants a positive employment relationship to end, but sometimes it does at the initiative of the employee or the employer.
How does the employment relationship come to an end?
What do you need to think about as the employer when an employee resigns or you are looking to terminate an employee?

Here are our top 5 tips:

Is the resignation in writing? If not, ask the employee to send it in writing to you so there is no uncertainty – an email is sufficient;
Check their contract and/or minimum notice periods under the National Employment Standards: has the employee provided you with the right notice period?
Do you need the employee to work through their notice to finish off their work, or to provide a handover? Do you want to pay them out in lieu of notice so they finish immediately? Or do you want them to remain employed for the notice period but not generally be required to work (GARDEN LEAVE) – you will need to check the employment contract or seek advice to see whether you are able to place them on garden leave or pay them out
Do you know why the employee has resigned and where they are going? Do you have any concerns with the employee working for a competitor?

What is the basis for the decision? Performance? Conduct? Redundancy?
Even though the employment contract will usually state that either the Employer or Employee can terminate on providing written notice of a certain time period, employers need a reason to justify termination and to minimise risk of a claim arising (or at least to be able to assist with defending a claim);

have you followed a procedurally fair process: investigated or looked into the conduct, sought the employee’s response, considered all relevant material, and only then made a decision? Was the employee on notice of the performance concerns and given an opportunity and support to succeed? Did the employee receive appropriate feedback? Is that feedback documented so there is no doubt that the employee was aware of concerns?
Has the employee been warned previously about performance or conduct?
Did you inform the employee that the conduct was sufficiently serious that termination could be an outcome, and seek their input on that?
Were they given the opportunity to respond properly to the concerns, to bring a support person?
Is the outcome proportionate to the conduct and instep with other similar outcomes in similar circumstances in your organisation?

This is a topic of its own but a genuine redundancy is where an employer no longer has a need for a role to be done by anyone, the employer has followed any applicable consultation obligations in any relevant Award or Enterprise Agreement, the employee is unable to be redeployed, and the employment ends by way of redundancy.
Consultation can take some time so should always be factored in -and should commence as soon as practicable after a preliminary decision has been made. It needs to be genuine consultation for Award or Agreement covered staff – and it is best practice to consult even if the employee is not Award or Agreement covered. Sometimes consultation will involve third parties like relevant Unions;
The National Employment Standards provide for severance payments depending on length of service for most employees, but some employees will have additional entitlements based on employer specific policies or practices;
If it is a wide restructure with 15 or more employees being terminated, employer will need to notify Centrelink.

Does the employer have a valid reason?
Have any statutory, contractual or industrial instrument obligations been complied with?
How and what notice should be given: always suggest in writing and consider not only what is in the employment contract but also the minimum under National Employment Standards if the contractual notice is less? Note that there are often shorter notice periods for the first 3 to 6 months of employment in any probation period;
Can you pay the employee in lieu of notice? Check the contract.
Can you place the employee on garden leave? Check the contract and seek advice.
What directions do you need to make to the employee during any notice period? Check the contract but also consider returning equipment and property, need for handover, access to systems and premises.
Consider any ongoing obligations which may apply after the employment ends: confidential information, intellectual property, non solicitation, non compete: check the contract and send a letter reminding the employee of these obligations that survive the end of employment.

Remember if in doubt – seek advice.