In this article, we’re delving into a topic that might make some business leaders break into a cold sweat – employee terminations. But don’t worry, we’ve got your back. This is your go-to guide for understanding the ins and outs of employee exits. Grab a comfy seat, and let’s jump right in!
The Basics
Terminations can happen for various reasons, and it’s crucial to know the ropes. Here are some common types:
- By the Employee: When an employee decides it’s time to move on.
- By Mutual Consent: Rare but amicable, where both parties agree to part ways.
- Change to the Employment Contract: Changes in the business leading to substantial alterations in employee terms.
- Express Terms: Termination based on agreed-upon terms, such as the end of a Fixed or Maximum-Term contract.
- Death: A sombre scenario where the employment contract ends upon the death of the employee or employer.
- Resignation (Voluntary): When an employee voluntarily resigns, they relinquish access to unfair dismissal laws.
- Abandonment: A voluntary act by the employee, like abandoning their role, leading to potential legal consequences.
- Constructive Dismissal: Situations where the termination is legally viewed as a “forced resignation.”
Legal Obligations
If you need help with any of the employee termination scenarios above, call or message us to discuss your challenges and learn how we can help. Now, let’s look specifically at one scenario: what happens when employees decide to leave, the obligations on them and any that may fall on the employer:
- Providing Notice: Notice given by an employee must align with relevant contracts, agreements, awards or policies. In theory these can be enforced but often the employer will look at being compensated rather than forcing the employee to remain at work.
- Repaying Benefits: Certain benefits tied to employment, like tuition fees, may need to be repaid depending on your policy or contract terms.
- Fixed-Term Contracts: Resigning early without an early-termination clause might lead to potential damages for breach.
Be aware, what most of us think are Fixed-Term contracts are actually Maximum-Term contracts. Maximum-Term contracts have a termination clause built into them allowing for termination on notice.
Modern Award Clauses
Awards generally have a clause allowing Employers to withhold wages if sufficient notice isn’t given, but not more than the equivalent of the notice period. It is a good idea that employment contracts also contain a similar clause to ensure this right exists for all employees.
Special Situations
Garden Leave
A contractual clause which means the Employee gets paid but doesn’t work during a notice period, preserving the contract terms. This is often used for senior employees, especially those heading to a competitor.
Payment in Lieu of Notice
Much more common than Garden Leave, where the employee agrees to terminate immediately, with the employer paying out the notice period.
It is often possible, especially with a well written termination clause in the employment contract, for employers to enforce pay in lieu, if they wish the resigning employee to leave immediately.
Abandonment
Where the employee simply ceases turning up to work and does not communicate it can be said the employee has ‘abandoned’ their employment.
However, to avoid unfair dismissal claims, a proper process to establish abandonment is required. This includes:
- Attempting to contact the employee to establish a reason for the absence
- Notifying the employee of the potential for the employment to be deemed as abandoned unless they make contact
- Attempting to understand the situation
- Giving notice of termination if the employee does not make contact
- Terminating employment
- Documenting with notes and communications, every step of this process
Termination by Mutual Consent: The Odd One Out
Sometimes it can be in both parties’ interest to end the employment, when things are just not working out. Rather than argue in the courts, it is often easier to part ways on agreed terms which waves the employees right to take legal action. The two most important pieces of advice when going down this path are:
- Get advice – reach out to us for expert help, and if we’re unable to help with the matter, we’ll do our best to refer you to one of our expert legal partners
- Use a Deed of Release – a legally drawn up agreement on the terms of the separation including waiving the rights to take legal action
Conclusion
Navigating employee terminations is often a balancing act – understanding the nuances, obligations and special situations is crucial. Always communicate clearly, document everything, and proceed with empathy. After all, your employees really do matter.
In this article, we’ve only delved into what happens when employees decide – but as above, there’s a myriad of scenarios resulting in employee terminations. If you need help with any of the employee termination scenarios above, or any other aspect of your HR/Recruitment, call or message us to discuss your challenges and learn how we can help:
Phone: +61 2 8021 4206
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