Terminating employees is probably one of the hardest things you’ll ever have to do as a business owner. It’s also one of the most litigious.
Unfortunately, in unfair dismissal cases, it’s typically not the facts that matter but the termination process you follow.
So, it’s important you know how to notify an employee’s dismissal, so you don’t make the situation worse.
What’s in the termination of employment letter template?
This employee termination letter template contains guidance on performance and conduct management and the discipline and termination consequences that may follow.
It aims to provide employees and management with an understanding of the procedures that may be followed in certain circumstances.
These termination letters can be used to notify your employee about the termination of the employee’s employment due to due to poor performance or misconduct. You must follow all steps to lawfully terminate an employee, in line with the Fair Work Act.
The template outlines the important information regarding why the employment has been terminated, notice periods, accrued entitlements and final pay.
Please note: The employee termination letter template is strictly for general guidance purposes only.
You will be required to fill in the spaces in the template as per your individual circumstance.
Here, you’ll find:
- Employment termination letter template due to unsatisfactory performance
- Employment termination letter template due to workplace misconduct
Disclaimer: The information in this article is relevant as at 2 February 2022, and has been prepared by Employment Hero Pty Ltd ABN (11 160 047 709) (Employment Hero). The views expressed herein are general information only and are provided in good faith to assist employers and their employees. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article.
Download the termination of employment letter template now.
4 legal minefields to avoid when terminating employment
1. Termination of employment due to serious misconduct
Even if you catch an employee with their hand in the till or on camera taking company property from your office, you can’t fire anyone on the spot without legal consequences.
Without due process, you run the risk of claims for unfair dismissal, breach of employment contract and even defamation. So, no matter what the allegation, you must investigate it thoroughly and maintain records accordingly.
The process of termination due to misconduct
It’s wise to get early legal advice on how to collect and retain relevant evidence, whether to involve the police and how to ensure procedural fairness to the employee
- Explaining the allegation to the employee
- Providing them with an opportunity to respond
- Allowing them to bring along a support person
Remember, even where you have conclusive evidence of serious misconduct, you must not be tempted to abandon the employee termination process.
2. Termination of employment due to unsatisfactory performance
Likewise, when you’re handling cases of unsatisfactory performance, you must investigate the matter thoroughly and maintain records accordingly before terminating employees.
It’s important first to understand if there is a reason for their poor performance. A personal matter like financial stress could well be the culprit. And this may be something that you can manage as part of your employee wellness program.
The process of termination due to unsatisfactory performance
On the other hand, a poor attitude or poor behaviour may be a sign of a toxic employee. Left unchecked, just one toxic employee can infect the whole bunch.
While it pays to respect the employee, it’s also crucial to adhere to any termination process that is set out in the Award, workplace agreement or your own internal procedures.
The process involves:
- Documenting all aspects of the employee’s performance
- Providing appropriate verbal and written warnings
- Meeting with the employee to discuss the concerns
- Giving the employee adequate time to respond
- Developing a detailed performance improvement plan
The Fair Work Ombudsman has a checklist for employers to guide you through the process of identifying the problem, and figuring out how serious it is before you meet with the employee.
As a potential source of risk for accusations of bullying, this meeting should take place in a private and non-threatening location and you must allow the employee to bring along a support person.
Remember, with unsatisfactory performance, you must give the employee every opportunity to improve their performance before you consider dismissal.
All too often, businesses fail to follow their own processes. This typically delivers a fatal blow to any defence of an unfair dismissal claim.
3. Workplace policies as a basis for dismissal
Every business needs to have clear and easy-to-understand workplace policies. They set expectations regarding your employees’ conduct and detail what is considered unacceptable workplace behaviour for matters like:
- Anti-discrimination and unlawful sexual harassment
- Unlawful bullying
- WHS risks
- Social media use
The process of enforcing a workplace policy
But, it’s not enough to introduce workplace policies. You must ensure policies are applied consistently in your business. And you must enforce them. Without enforcement, your policies lack any legal authority.
Enforcing policies is a matter of:
- Formally communicating them to all employees, and providing training if required
- Ensuring your employees sign a statement of understanding, and
- Retaining the signed documents
Only with this level of documentation can you be sure your employees are bound by your workplace policies.
If policies are applied inconsistently, or you fail to adequately enforce them, you won’t be able to rely on the terms of the policy as the basis for firing employees.
4. Termination through genuine redundancy
Whether an employee’s job is no longer required, or you’re relocating the business, making employees redundant is another legal minefield.
If it’s a genuine redundancy, it’s never about an employee’s performance or conduct.
Whenever your business is undergoing major workplace change, it’s important to communicate regularly with all your employees.
In fact, most Awards and registered agreements actually require employers to consult with employees regarding the coming changes.
The process of termination due to redundancy
Even with genuine redundancies, you still need to exercise caution and this means acting in accordance with the legislation. This includes carefully following any obligations outlined in the Award or enterprise agreement.
Of course, even when you follow these steps, an employee may feel their redundancy is unfair.
In this case, you must be able to convince the Fair Work Commission that there has been a genuine redundancy.
The Fair Work Act says there’s a genuine redundancy if:
- You no longer required the person’s job to be performed by anyone because of changes in the operational requirements (importantly, if you hire someone else to do the job, there will be no genuine redundancy), and
- You have complied with any obligation in an Award or enterprise agreement that applied to the employment to consult about the redundancy.
Procedural fairness is critical
As you can see, in any matter concerning firing employees, whether it’s because of poor performance, a bad attitude, poor conduct or redundancy, procedural fairness and detailed records are always vital.
But ultimately, the best way to avoid liability for termination of employment, is not to have to terminate them in the first place, so start by managing your employees’ performance.
If you do have to dismiss an employee, check out these useful resources:
- Employee offboarding guide
- Template for exit interviews
- Announcement email template for employee resignation
- The benefits of an offboarding software
Employment Hero is an all-in-one HR system and payroll management software, built to facilitate HR management for small to medium sized businesses. Employment Hero makes rostering, onboarding, performance management, time tracking, payroll, and award interpretation a snap. Employment Hero’s HRIS also integrates with Xero, MYOB, KeyPay, and Accountright Live. Stop wasting time with spreadsheets, and request a demo today.
Download the Termination of Employment Template now.