Best practice guide to employment termination

Terminating an employee’s job is an unfortunate, but inevitable, task for every employer. Given the number of pitfalls an employer can fall into, it is incredibly valuable to have an effective employee termination procedure on hand.

Whilst the specific procedure you are to follow might be prescribed in detail by your company policy (in our experience, this is often a bad idea) or a relevant Enterprise Agreement, the following steps serve as a good general guide to termination procedure. However, these steps will not be relevant in the case of summary termination or redundancies, and you should have a look at our ‘Redundancy’ blogs for best practice guidance in these cases!

Step 1 – ‘Show Cause’ Letter and Meeting

If after a receiving a warning(s), an employee has still not changed his/her behaviour or improved their performance, the employee can be given a ‘show cause’ letter. The ‘show cause’ letter is an important step in the employee termination procedure. It ensures that you as the employer are complying with your obligations to allow the employee to respond to the allegations put to them, before you have made the decision to terminate. This letter will typically set out the employee’s alleged actions (or inaction as the case may be). It also states when the meeting is, where it will be held and what to expect. The letter also reinforces the point that termination is a real possibility if the employee cannot provide adequate answers.

The meeting will predominantly be a forum for you as the employer to reiterate your position on the employee’s conduct, and for the employee to explain themselves.

Step 2 – Consider What The Employee Has Said In The ‘Show Cause’ Meeting

Once the meeting has taken place, take the time to consider what the employee has revealed about their conduct or performance, and determine whether what employee has said is adequate to explain their inappropriate conduct or lacklustre performance. Have they told you, or shown you, that they want to stay on the team and are now going to play by the rules?

Step 3 – Termination Letter and Meeting

If you have taken the time to consider the employee’s explanation, but you consider termination to be the only viable option, you should draft a termination letter. The letter should set out:

  1. the fact that the employee has been terminated;
  2. when they should expect to receive their final pay (including any accrued entitlements); and
  3. any details regarding support programs that the employee may have access to.

Ideally this letter would be presented to the employee at a meeting, where you could verbally deliver the news before handing them the letter, thereby bringing an end to a short, sharp (but highly effective) three-step employee termination procedure.

Conclusion

Putting in place an effective employee termination procedure is a difficult workplace relations exercise, and having to put it into action is even more unpleasant and difficult. In developing an employee termination procedure, you need to understand all your obligations and the nuances of each situation as the process will be slightly different each time, which makes this area especially problematic to say the least!

Need Specialist Help?

At Workplace Wizards, we can assist you in setting up an employee termination procedure, and guide you through the termination process, minimising legal risks and stress along the way. To find out more, have a look at our other blogs in this series, which outline an employer’s legal rights and obligations under the Small Business Fair Dismissal Code, and the information you need to know before starting the dismissal process.

Furthermore, get in touch with us to receive a FREE ‘How To Guide’ on the best practice for conducting exit interviews, or find out more in our resource pack on ‘How to Fairly Dismiss an Employee’ (which includes all the letters and tools you will need in your next employee termination!).

Lastly, for specialist assistance tailored to your business needs, contact Mark, one of our experienced consultants, on 0458 644 469 or mark@workplacewizards.com.au.

Mark Ritchie

Mark Ritchie

Mark is passionate about helping Australian businesses efficiently resolve their industrial relations issues. Mark has demonstrated proficiency advising managers, executives and boards of small to medium-sized enterprises, as well as some of Australia’s best-known companies, on both litigious and non-litigious matters.

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