Navigating the termination of employment is one of the most complex and sensitive responsibilities Australian employers face. In Melbourne and across Australia, the Fair Work Act 2009 sets clear guidelines to ensure that endings of employment relationships are conducted fairly, legally, and respectfully. Understanding these rules is crucial not only to avoid costly legal consequences but also to foster a positive culture at the workplace based on respect and transparency.

HR Gurus, a trusted Melbourne-based HR consultancy, supports businesses by providing expert guidance on fair dismissal processes that comply with current legislation and best practice standards. This article highlights essential Fair Work rules every employer must follow when undertaking termination of employment.

Grounds for Termination Under the Fair Work Act

The Fair Work Act outlines several legitimate grounds for dismissal, including:

• Capacity or performance: When an employee cannot perform their job to the required standard despite feedback and support.
• Misconduct: Including serious breaches such as theft, fraud, or violence, which can justify summary dismissal.
• Redundancy: Where the employee’s role is no longer required due to operational changes.

Employers must demonstrate that the termination is not harsh, unjust, or unreasonable. The decision cannot be based on discriminatory reasons or retaliation linked to workplace rights.

What Is Fair Procedure?

Legal fairness in termination goes beyond having a valid reason. It requires a proper process. Australian employers should:

• Provide clear warnings: Give the employee a chance to respond to performance or conduct concerns.
• Hold a fair investigation: Ensure the facts are thoroughly examined before making decisions.
• Provide notice: Employees must receive written notice of termination or payment in lieu of notice, based on their tenure and contract terms.
• Consult: In redundancy cases, engage in genuine consultation regarding alternatives and support services.

Failure to implement steps can lead to claims of unfair dismissal under the Fair Work Act.

Notice Periods and Final Pay

Notice periods largely depend on the employee’s length of service and contract terms but generally range from one to five weeks. The notice must be in writing and state the last day of employment. Employers have an option to offer payment in lieu of notice if they prefer the employee not to continue working through the notice period.

After termination, employees are entitled to be paid outstanding wages, accrued annual leave, long service leave, and other applicable entitlements. If leave has been taken in advance, appropriate deductions from final pay may apply.

Unlawful Termination and Protections

The Fair Work Act protects employees from unlawful termination, which occurs when dismissals are due to:

• Attributes that are protected by law include race, gender, disability, and age.
• Union membership or activity.
• Temporary absences due to illness or parental leave.
• Exercising workplace rights, such as making complaints or participating in legal claims.

Employers found guilty of unlawful termination may face orders for reinstatement or compensation. Employees have a period of 21 days from dismissal to lodge complaints with the Fair Work Commission.

New Developments and Employer Obligations in 2025

Recent legislative changes as of 2025 include:

• Criminal penalties for wage theft: Employers who intentionally underpay wages or entitlements face criminal charges.
• Expanded employee protections: Road transport workers and gig economy workers now have additional unfair dismissal safeguards.
• Clarified casual employment definitions: Employers must carefully assess employment status to avoid misclassification.
• Right to disconnect: Employers in larger businesses must respect reasonable limits on out-of-hours work communications.

Employers are encouraged to review policies regularly, train management teams on lawful termination procedures, and conduct audits to ensure compliance.

Frequently Asked Questions

1. What are the differences between unfair and unlawful termination?

Unfair termination relates to how fair and reasonable the dismissal process was, while unlawful termination occurs when an employee is terminated from a job for an illegal reason under discrimination or general protections laws.

2. How much notice must an employer give?

Notice depends on service length; typically between one and five weeks. Payment in lieu of notice is an option.

3. Can employees appeal a termination decision?

Yes. Employees may lodge unfair dismissal claims with the Fair Work Commission in a period of 21 days of termination.

4. What happens if an employer pays wages late or underpays?

Intentional underpayment is a criminal offence from 2025. Employers risk severe penalties and must ensure all entitlements are paid promptly.

Conclusion

The termination of employment is a critical process governed by the Fair Work rules that every Melbourne employer must understand and respect. Proper adherence to lawful grounds, fair procedures, and recent legislative updates ensures businesses minimise risks while maintaining workplace dignity and compliance. With expert guidance from HR Gurus, organisations gain clarity and confidence in managing employee exits lawfully and ethically, ultimately safeguarding their reputation and future success.