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Ending employment 

An employment arrangement can end for a whole range of reasons – whether it is the employee or the employer terminating the employment relationship, make sure it is done the right way.

Resignation 

A resignation by an employee is a conscious decision that they no longer want to be part of the employment relationship.  If resigning, an employee must give their employer the appropriate amount of notice.

While an employee can resign from their job verbally, it is best for the employer to follow up by confirming the resignation in writing. This will help avoid any misunderstandings.

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An employee resigns, what are an employer's responsibilities? 

An employee has the right to resign at any time but to avoid any misunderstanding or dispute, notice should be given by the employee in writing or perhaps in front of a witness, even though this may not be a requirement of the relevant award. 

It may be deemed to be an unfair dismissal if the employer asks the employee to resign or creates a situation where the employee is given no other option but to resign.

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What notice is required from an employee? 

If an employee wants to quit, they are generally required to give notice. The period of notice that an employee has to give their employer is set out in their award (and may refer to the National Employment Standard or NES) and is usually the same as required by an employer – although there is no requirement for an employee to give additional notice based on their age.

If an employee fails to give the required notice, an employer may be able to withhold an equivalent amount from the employee’s final pay if this is allowed by the modern award. 

For example, if an employee who has worked for two and a half years decides to quit, then they must give two weeks’ notice. If there is no notice given by the employee,  the employer can withhold an amount equivalent to what they would ordinarily earn in a 2 week period from their final pay.

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Can an employee withdraw their notice? 

Generally no, unless the employer decides that they want to keep the employee on.  Hasty words can be spoken in moments of high stress or emotion.  To avoid confusion later on it is probably better to give the employee an opportunity to consider their decision to resign, to be really sure that the employee means to resign.

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What period of notice is required from an employer? 

An employer must give an employee the right amount of notice as outlined in the appropriate modern award or under the National Employment Standards (NES). The employer can pay employees instead of requiring them to work through their notice period – so if they are entitled to 1 week’s notice the employer can pay them 1 week’s pay instead. 

The NES exclude certain employees from notice of termination entitlements, including casual employees or an employee being terminated because of serious misconduct. Some modern awards also exclude daily hire employees. 

An employer is required to give an additional week’s notice if the employee is over 45 years of age and has at least two years of continuous service.

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Notice periods (National Employment Standards) 

Employee’s period of continuous service with Employer at the end of the day notice is given

Period of notice

Not more than 1 year

 1 week

More than 1 year but not more than 3 years

 2 weeks

More than 3 years but not more than 5 years

 3 weeks

More than 5 years  

 4 weeks

 

An employer is required to give an additional week’s notice if the employee is over 45 and has at least two years of continuous service.

 

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What entitlements should be paid on termination? 

This is not the time to make an employee wait for any money they are owed. An employer must pass on any entitlements they are required to pay. Again, any difficulties at this stage may increase any employee bitterness and could result in unnecessary legal expenses.

Except in special cases, an employer can't legitimately 'stand-down' an employee without pay and special termination provisions apply if the employer would like to introduce technological change.

It is best practice to make the final wage payment on the last day of work or within the pay run that includes that day.

Redundancy also needs to be paid under many awards even for employers with less than 15 employees. Please check the modern award for details.

An employee must receive the following entitlements in their final pay:

  • outstanding wages
  • any payments in lieu of notice
  • accrued annual leave and long service entitlements
  • redundancy or severance pay entitlements where applicable.

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Termination and employment records 

Under the Fair Work Act 2009, an employer must keep records of when an employee leaves the business, including the name of the person who terminated their employment and details of how the termination took place (by notice, summarily, or in some other manner).

It is important to keep in mind that employee records are private and confidential. Generally, no one can access them other than the employee, their employer, relevant payroll staff or Fair Work Inspectors. Employers must make copies of an employee’s records available at the request of an employee or former employee.

An employer should also provide the employee with a written statement indicating the period of his or her employment, job classification and the type of work involved. This will be needed by the employee if they need to apply for unemployment benefits or as proof of experience when applying for another job.

Employers are also required to provide a completed PAYG payment summary to the employee within 14 days of the ETP being paid to the employee. For further information, contact the ATO on 136-821.

Sample statement of employment history
(Date)
Employer's Address
To whom it may concern

This is to certify that (name of employee) worked as a (job classification) doing (a brief description of the work undertaken by the employee) from (date of employment) to (date of termination).

Yours sincerely
(Signed by employer)

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How to dismiss an employee 

A valid reason must exist for an employer to be able to dismiss an employee.  The reason or reasons must be based on the employee's poor performance, conduct or changes to the operational requirements of the business.

What is the best way for both the employer and the employee?

If an employee is being dismissed for financial reasons, provide information showing why the employer must take this action. If the employer does not provide this information, they run the risk of the employee thinking the employer is making up a reason just to get rid of him or her.

The employee will probably appreciate the business necessity, but he or she will need to be assured that this is the real reason.

If the employee is being dismissed because of poor performance, then their work history must justify the action. Please note, just because an employee has been through a system of counselling and warnings about their poor performance, the dismissal is still likely to be a shock. An employer must take the time to make sure the employee understands the reasons.

If the employee is being dismissed for misconduct, be sure of the grounds for that dismissal - get legal advice or contact an employer organisation for assistance. The employer should still try and ensure the employee understands the reasons they are being dismissed, as it can save problems later.

The employer must make sure that the employee is totally convinced that the decision is final. If the employee leaves the meeting thinking that there is still a chance then the employer may have failed. This may also created a situation where the employee's false expectations can turn into a belief that he or she has been wrongfully dismissed and a desire to punish the employer legally.

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