Managing and Ending Employment

If your business needs to manage or dismiss an employee, we can guide you through a process that complies with the Fair Work Act and minimises the risk of an unfair dismissal, general protections or discrimination claim.

Dismissing an Employee
Dismissing an Employee

Dismissing an employee, or managing an ill, injured or underperforming one, is challenging and carries legal risk.

If a dismissal is handled badly, the employee may bring an unfair dismissal claim, a general protections claim (which can also name individual managers), or a discrimination claim. We help you take the steps that reduce that risk, and put the business in a strong position if a claim is made.

Remember that most employees can lodge a claim within 21 days of the dismissal. The time to get the process right is before the decision, not after.

Procedural Fairness

If the employee is covered by the unfair dismissal laws, the Fair Work Commission will consider every matter in s 387 of the Fair Work Act 2009 (Cth): whether there was a valid reason related to capacity or conduct; whether the employee was told the reason and given a real opportunity to respond before the decision; whether a requested support person was unreasonably refused; for performance, whether the employee was warned first; the size of your business and your HR resources; and anything else relevant.

A fair process usually looks like this: investigate properly; put the specific allegations or concerns to the employee in writing with the material you rely on; give them reasonable time to respond, and allow a support person at meetings if they ask; genuinely consider the response; decide on a proportionate outcome; and confirm the decision and the date in writing, with the correct notice or pay in lieu (s 117).

Small businesses (fewer than 15 employees, counting associated entities and regular casuals) can rely on the Small Business Fair Dismissal Code. If you follow it, the dismissal is not unfair. The Code allows immediate dismissal where you believe on reasonable grounds that the conduct was serious enough, such as theft, fraud, violence or a serious safety breach. Otherwise it requires a valid reason, a warning that the job is at risk, a chance to respond and a reasonable chance to improve. Keep evidence that you followed it. See the Commission’s benchbook page on the Code.

Common reasons for dismissal we advise on include:

Serious misconduct

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Theft, fraud, assault or sexual harassment.

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Deliberately refusing to follow a lawful and reasonable instruction.

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Conduct that causes a serious and imminent risk to safety, or to the reputation or viability of the business.

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Being intoxicated at work.

Other forms of misconduct

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Consistently arriving late.

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Failing to follow policies and procedures.

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Behavioural issues.

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Conduct that brings the business into disrepute.

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Failing a drug and alcohol test.

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And many other reasons.

An employee may also be unable to do the essential parts of the job, whether because of health issues or other reasons such as losing a driver’s licence or a required ticket.

Make sure the real reason for any action is a lawful one. Dismissing or disciplining an employee because they made a complaint or inquiry, took leave, refused unreasonable after-hours contact under the right to disconnect, or because of a protected attribute, can breach the general protections, where the business must prove its reason (s 361).

Redundancy

If the business needs to restructure and no longer requires certain jobs to be done by anyone, we can help you carry out the redundancies lawfully. See also our page on business restructure and redundancy.

Consultation Requirements

Most modern awards and enterprise agreements require you to consult affected employees about major workplace changes, including redundancies, before the decision is final: telling them about the proposed change, giving them relevant information in writing, and genuinely considering their views.

Failing to consult as the award or agreement requires means the redundancy is not a genuine redundancy, so the employee can bring an unfair dismissal claim, and it can also expose the business to civil penalties.

Genuine Redundancy

A redundancy is genuine only if the business no longer requires the job to be done by anyone because of changes in its operational requirements, it complied with any consultation obligation, and it would not have been reasonable to redeploy the employee within the business or an associated entity (s 389). Abolishing a role, or spreading its duties among other staff, can qualify.

Redeployment is where businesses most often fall down. Consider every suitable vacancy across the business and related entities, discuss them with the employee, and document why any role was not suitable. In 2025 the High Court confirmed that this can extend, in some circumstances, to work the business has contractors or labour hire workers doing (Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29).

Procedural Requirements

Give the correct notice or pay in lieu, and pay redundancy pay under s 119 of the Fair Work Act (unless the business is a small business employer or another exclusion applies) or any more generous amount in the contract, award or agreement.

If you decide to dismiss 15 or more employees for economic, technological, structural or similar reasons, you must notify Services Australia in writing before any dismissals (s 530), and your award or agreement may require you to notify and consult any relevant union.

Managing Injured Employees

If an employee is injured at work, or has a health condition outside work, it needs to be managed carefully. If it is handled badly, the employee may bring an unfair dismissal claim, a general protections claim, or a disability discrimination claim.

The legal meaning of disability is broad and can include a temporary illness. It is unlawful to dismiss an employee because they are temporarily absent from work because of illness or injury (s 352). A business can dismiss an employee who cannot perform the inherent requirements of the job, now or in the foreseeable future, even with reasonable adjustments, but only on up-to-date medical evidence and after giving the employee a chance to respond.

In WA, if the employee has a workers’ compensation injury, the Workers Compensation and Injury Management Act 2023 (WA) applies. During the employment obligation period (12 months from the day the worker first has an incapacity for work because of the injury), you must not dismiss the worker solely or mainly because they are incapacitated, and you must give at least 28 days’ notice, in the approved form, of any intention to dismiss (s 168).

Managing Injured Employees
Other Scenarios

Other situations we advise on include abandonment of employment, where an employee simply stops coming to work. A clause deeming absence to be abandonment does not end the employment by itself: you need to try to contact the employee, find out why they are absent, and then make and communicate a decision. We also advise where an employee loses a qualification the job requires, such as a driver’s licence or a ticket that cannot be renewed.

Managing Underperforming Employees

If an employee is not working to the required standard, we can help you manage it lawfully. That usually means a performance improvement plan, formal or less formal depending on the size of the business, that identifies the specific concerns, sets clear and achievable standards, provides support, and gives a reasonable time to improve. Before any dismissal for performance, the employee should be warned that their job is at risk if the problem is not fixed (s 387(e)).

The same structured approach works for behavioural issues that are not serious misconduct: clear expectations, warnings and a record. We can help you document each step, so the business has a strong defence if a dismissal is needed later.

Managing Underperforming Employees
Conclusion

Managing employees or going through a dismissal is never easy. We can help you navigate the process so it is done correctly, and defend the business if a claim is made. If your business is outside the national system (for example a WA sole trader or partnership), different WA rules apply; see our WA state system guide.

Case studies

How the law played out in real cases

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Published decisions of courts and tribunals, summarised in plain English from the published decision. Every case turns on its own facts.