Employment Separation and Termination

The terms separation and termination describe how an organisation or business ends its relationship with workers, employees or contractors. The Human Resource (HR) department may manage this in a large organisation. In a smaller organisation, the responsibility may be part of the role of the business owner or a manager.

By the end of this topic, you will understand the following:

• key terms and definitions related to employment separation and termination
• the legal framework for employment separation and termination
• organisational requirements for employment
• employment types, methods and entitlements
• protections against termination for employees
• the role of stakeholders in employment and termination
• the skills required to carry out employee separation and termination.

The terms separation and termination are often used interchangeably or combined. How the terms are used may differ depending on the organisation.

The word employment may be included as part of a term to differentiate employment-related separation from other types of separations, for example, legal separation in divorce law. The term employment separation may be used to describe the process involved, and the term termination or terminated points to the state of someone’s employment.

Termination of Employment

The Fair Work Ombudsman is one of the agency bodies responsible for governing Australia’s national workplace relations system, Fair Work Australia. The Ombudsman defines termination of employment as:

Employment Separation

According to Employer Services Corporation (ESC), “Employee separation” or “separation of employment” refers to the process of managing the end of the employment cycle.

Employment can be ended either voluntarily by an employee or involuntarily by the employer.¹

Other Relevant Terms

Other relevant terms related to employment separation and termination include the following.

• Employment Contract: A written or verbal agreement between an employer and employee describes the terms and conditions of employment.
• Modern Award: A legal document describing minimum pay rates and conditions of employment within industries. There are over 100 modern awards in Australia
• Agreement: Agreements also describe minimum conditions but are for one business or group. Agreed conditions can replace an award but must not be less than that. Agreements are registered through the Fair Work Commission. Example: enterprise agreement, commonly referred to as EA.
• Lay-Off: Temporary separation from employment due to lack of work.
• Redundancy: When a position is no longer needed within a business, or the employer becomes insolvent.
• Redeployment: When a position has been made redundant, the employee is offered and accepts another position in the organisation.
• Retrenchment: An employee may be retrenched when a position has been made redundant, and redeployment is impossible. This is a form of employment termination.
• Voluntary Redundancy: Employees are invited to resign voluntarily in exchange for payment when one or more positions are no longer required and redeployment is impossible.
• Stakeholder: Anyone affected by separation or termination within an organisation or who can affect the process.
• Resignation: When an employee resigns from a position or job, they no longer want to do it. It is unlawful to force an employee to resign. This is called constructive dismissal.A genuine resignation is a form of voluntary termination.
• Retirement: When an employee resigns because they no longer wish to work, there are legal requirements for retiring. A retirement is a form of voluntary termination.
• Unlawful Dismissal: This involuntary termination is when an employee is dismissed for discriminatory reasons.
• Unfair Dismissal: When an employee is dismissed harshly, unjustly or unreasonably, this is a form of involuntary termination.

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In Australia, there are national (Commonwealth) and state laws regarding employment. These include requirements for separation and termination.

Commonwealth Legal Requirements

Fair Work Australia is Australia’s national workplace relations system. It was created under the Fair Work Act 2009 and cover most Australian workplaces. Laws created under this Act provide minimum requirements for employment, including separation and termination. Key organisations, also called agency bodies, govern compliance with the Act.²

The laws and agency bodies are together called the Fair Work System. The agency bodies include:

• The Fair Work Commission
• Fair Work Ombudsman
• Federal Court of Australia; Fair Work Division.

The following table provides a breakdown of some of the key responsibilities of these agency bodies in the legal framework³:

Watch the following video outlining the legal requirements of employee separation.

State and Commonwealth Legal Requirements

A mix of state laws and the Commonwealth Fair Work system applies in different states. The following table summarises the legal framework in each state and territory.

Australian businesses and organisations must develop policies and procedures for critical aspects of their operations, such as workplace health and safety, employment, employee conduct, purchasing and procurement etc.

These policies and procedures should describe how each business will comply with the legislation relevant to their geographic location and industry⁴. They should be reviewed, evaluated and updated routinely.

The number and type of policies vary depending on the business and industry. Below are examples that may be relevant for a small Australian business⁵.

Policies relating to employment terms and conditions

Policies describing employee obligations and behaviour

Reviewing policies and procedures

Under the Fair Work Act 2009 and State Legislation, employment terms and conditions have similar requirements for all employees and individual requirements depending on what has been negotiated with an employer. The three standard requirements relate to the following.

1. Type of employment - ways that people can provide their labour or services to people.
2. Method of employment - the basis under which an employee is employed.
3. Entitlements - the minimum requirements for payment and conditions.

Types of Employment

The Fair Work Act 2009 allows for several different types of employment in Australia, including:

• Full time
• Part-time
• Casual
• Fixed term
• contract Shift worker (Either permanent shifts or rostered shifts)
• Daily or weekly hire
• Probation
• Apprentice or Trainee
• Outworker (Someone hired to work permanently away from the business location, often at home)

Methods of Employment

The Fair Work Act 2009 provides several methods for employing people, including under:

• an award
• an enterprise agreement
• a registered agreement
• an employment contract (negotiated between an employer and one or more employees.

Example

Employees can be employed under more than one method, for example, a project coordinator hired under an employment contract and an award.

National Employment Standards (NES)

Under the Fair Work Act 2009, the National Employment Standards (NES) provides 11 minimum entitlements for employees based on their employment type and methods. These entitlements relate to the following:

• Maximum weekly hours
• Requests for flexible working arrangements
• Offers and requests to convert from casual to permanent employment
•  Parental leave and related entitlements
•  Annual leave
• Personal/carer’s leave, compassionate leave, unpaid family leave, unpaid domestic violence leave
• Community service leave
• Long service leave
•  Public holidays
• Notice of termination and redundancy pay
• Fair Work Information Statement and Casual Employment Information Statement.

These entitlements must be included in awards, enterprise agreements, registered agreements and employment contracts.

Additional State Requirements for Employees

States may have additional requirements for employment and entitlements in some industries based on local situations.

For example, WA has an employment type for commission and piece-rate employees. According to Fair Work Ombudsman, employees paid on piece rate or commission payments are paid based on results meaning their pay is directly linked to how much work they do.

The Fair Work Act 2009 includes protections against termination for employees, including:

The Fair Entitlements Guarantee Act 2012 (FEG) helps eligible employees to obtain unpaid entitlements.

Human Resource Functions and Compliance with Regulations

uman resources (HR) functions include ensuring compliance with relevant dismissal laws. It is expected that HR staff will have received the training needed for this work. The Small Business Fair Dismissal Code can help businesses comply when dedicated HR personnel are unavailable. Small companies must assign HR functions to a nominated job role or external HR consultant. Legal responsibility for compliance in all businesses rests with the business owner/employer.

A stakeholder in employment separation is anyone affected by separation or termination within an organisation or anyone who can impact the process⁶.

Two types of stakeholders are involved in this process: internal and external.

Internal stakeholders include:

External stakeholders may include:

Termination of employment can be complex and stressful for everyone involved. Having detailed policies and procedures and other supporting documents related to recruitment, employee conduct, performance management, discipline and termination can provide clarity when making decisions and reduce stress.

Consultation

Consulting with relevant stakeholders should be a priority as they will give input on policies, procedures and other workplace documentation. Policies, procedures and supporting documentation related to employment and termination should be communicated and explained to relevant stakeholders, and their support for them obtained.

Consultation with these experts should be planned as part of the development process and involve the following:

1. Engage with them as early as possible and gain their agreement to give input for the work.
2. Explain what will be asked of them and the process and timing for the work.
3. Confirm communication methods.
4. Invite their initial input on critical points to include.
5. Distribute draft documents for review and input.
6. Keep communication lines open for additional discussion or input.
7. Allow them to give their opinion and suggest alternatives.
8. Use their feedback to edit and refine documents.
9. Seek their confirmation of completed policies, procedures and supporting documents.
10. Distribute final copies for their records and thank them for their assistance.

Providing feedback on Organisational Operations

Gathering feedback about Organisational Operations is essential if the organisation wants to make genuine productive changes to its policies and procedures. We can gather feedback from the various stakeholders by:

• scheduling a meeting with a peer or leader
• providing pulse surveys
• submitting documentation and asking for consultation
• asking for feedback in one-on-one and team meetings

In summary, as the following diagram displays, there are four key steps to remember when you want to identify and suggest improvements to management on organisational operations.

A range of skills is needed to carry out processes for disciplinary action and employment separation and termination. These skills include:

• Emotional intelligence
• Negotiation skills
• Communication with employees and management
• Writing and developing plans, reports, policies and procedures
• Interpersonal skills
• Conflict resolution skills
• Payroll tasks
• Reviewing and evaluating procedures

In larger organisations, HR department staff should have these skills. In a smaller organisation, tasks related to disciplinary action, employment separation, and termination may be assigned to the business owner or a nominated role. Additional expertise may be provided when needed through part-time HR professionals or consultants.

It is wise for organisations to provide training for Managers and Leaders to ensure they have the necessary skills to implement separation and termination procedures. When changes to policies and procedures are made, all staff should receive training on the new skills required. Following is an example of a training plan devised for all staff.

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