How to Terminate an Employee Legally in Australia

19 September 2026

Running a business comes with many highs and lows. One of those challenging responsibilities is terminating an employee. Ending employment can be difficult and must be handled carefully, with both a lawful reason and a fair, compliant process.

When the termination process is not handled correctly, employers may be exposed to unfair dismissal claims, general protections claims, underpayment disputes or penalties under the Fair Work Act 2009 (Cth).

This guide explains when termination may be lawful, how employers can approach the termination process and common mistakes to avoid. Hentys Lawyers assists businesses with making informed and defensible decisions when ending employment.

When Can an Employer Terminate an Employee?

Employers may lawfully terminate employment for several reasons. However, the decision should be supported by evidence and comply with applicable workplace laws and obligations.

Common reasons for termination may include:

Poor Performance

Where an employee is not meeting reasonable performance expectations despite feedback, support and opportunities to improve, employers may need to undertake a structured performance management process before considering termination.

Misconduct

Behaviour that breaches workplace policies or expectations may include inappropriate behaviour, minor breaches or repeated workplace issues.

Serious Misconduct

Severe behaviour that undermines the employment relationship, such as theft, fraud, violence or serious safety breaches, may in some circumstances justify termination without notice.

Redundancy

Redundancy occurs when an employee’s role is no longer required due to operational changes. A redundancy and restructuring process needs to consider whether the redundancy is genuine and whether applicable consultation obligations have been met.

Other Legitimate Reasons

Other reasons may include an inability to perform the inherent requirements of a role, loss of required qualifications or the closure of a business or particular area of a business.

Employers should consider the employee’s contract, modern award, enterprise agreement and the Fair Work Act before making a termination decision.

How to Terminate an Employee Legally

There is no one-size-fits-all approach to termination. The appropriate process can depend on the reason for termination, the employee’s role and the applicable workplace instrument.

However, there are steps employers should generally consider when ending employment.

1. Establish the Reason

Identify the basis for the proposed termination, whether that relates to performance, misconduct, redundancy or another reason, and gather relevant evidence.

2. Check the Contract, Award and Legal Obligations

Review the:

These may impose additional requirements around consultation, warnings, investigations or notice periods.

3. Investigate Where Necessary

Where misconduct or behavioural concerns are involved, conducting an appropriate investigation before termination can be critical.

This may include interviews, witness statements and reviewing documents, CCTV or other relevant evidence. Employers dealing with more complex matters may also need to consider their broader employment law obligations before disciplinary action is taken.

4. Give the Employee an Opportunity to Respond

Procedural fairness requires employers to:

  • inform the employee of the concerns
  • provide relevant details
  • allow them to respond
  • consider their explanation before making a decision

This is particularly important where a dismissal could subsequently result in an unfair dismissal claim.

5. Consider Warnings Where Appropriate

There is no standard automatic “three warnings” rule. However, employees should generally receive clear and regular feedback, reasonable expectations, an opportunity to improve and appropriate support or training.

Where concerns relate to an employee’s ongoing performance, employers may consider implementing a Performance Improvement Plan (PIP) to clearly document expectations, areas requiring improvement and the process being followed.

6. Make and Document the Decision

Once the relevant steps have been completed, the employer should document the decision and the reasons supporting it.

Written documentation should record:

  • the reason for termination
  • the process followed before the decision
  • evidence considered and previous feedback provided
  • why the decision was considered appropriate

Good documentation can be particularly important if the termination is later challenged.

7. Communicate the Termination

Meet with the employee, explain the decision and provide appropriate written confirmation.

8. Provide Notice and Final Entitlements

Employers need to consider applicable notice requirements and final entitlements under the National Employment Standards and any other applicable workplace instruments.

Depending on the circumstances, final pay may include outstanding wages, accrued annual leave, applicable long service leave and redundancy pay.

Termination for Poor Performance

Performance-based termination requires a structured and fair process.

Employers should consider:

  • setting clear and concise expectations
  • providing feedback and support where appropriate
  • allowing reasonable time for improvement
  • documenting discussions
  • warning the employee where their employment may be at risk

A formal Performance Improvement Plan for employers can provide a structured way to document performance expectations, measurable improvements, support and review periods.

Hentys also provides employers with advice on broader employee performance management processes.

If performance does not improve after an appropriate process, termination may be considered depending on the circumstances.

Termination for Misconduct or Serious Misconduct

Ending employment based on misconduct requires careful handling. Employers should generally:

  • investigate the allegations
  • provide the employee with relevant details
  • allow them an opportunity to respond
  • consider the available evidence
  • make a properly documented decision

Serious misconduct may in some circumstances justify termination without notice, commonly referred to as summary dismissal. Employers should exercise particular care when determining whether conduct meets the relevant threshold.

Procedural fairness and an appropriate investigation may still be important before the employer makes its final decision.

Can an Employee Be Terminated Without Notice?

In some circumstances, an employee may be terminated without notice where serious misconduct is established.

Conduct potentially relevant to serious misconduct may include:

  • theft
  • fraud
  • assault
  • serious safety breaches
  • wilful refusal to follow lawful and reasonable instructions

Incorrectly relying on serious misconduct can expose an employer to significant risk. Employers should therefore investigate the circumstances and consider procedural fairness before making a decision.

Terminating an Employee During Probation

An employee being within a probationary period does not remove an employer’s workplace obligations.

Employees on probation may still have workplace rights, entitlements under the NES and protections against adverse action and unlawful discrimination.

Employers should therefore consider their obligations before terminating an employee during probation rather than assuming that probation automatically permits immediate dismissal.

Common Mistakes Employers Make When Terminating Employees

Every termination is different, but common problems can include:

  • failing to follow procedural fairness
  • not giving the employee an opportunity to respond
  • poor documentation
  • relying on informal complaints without an appropriate investigation
  • incorrectly claiming serious misconduct
  • mishandling redundancy consultation
  • failing to check applicable award or agreement requirements
  • providing incorrect notice or final pay
  • terminating employment for reasons connected with workplace rights

These issues can increase the likelihood of an unfair dismissal, adverse action or other employment-related claim.

What Happens if an Employee Challenges Their Dismissal?

Employees may have several avenues available to challenge a termination.

Unfair Dismissal

An employee may make an unfair dismissal claim. The Fair Work Commission considers matters relevant to whether a dismissal was harsh, unjust or unreasonable.

General Protections and Adverse Action

Employees may also make a general protections claim where they allege adverse action was taken because they exercised a workplace right.

Hentys also advises employers specifically on responding to adverse action claims.

Other Claims

Depending on the circumstances, an employee may also raise issues involving discrimination, breach of contract, underpayments or redundancy.

Employees generally have 21 days from the date of dismissal to lodge unfair dismissal or general protections dismissal applications.

Getting Employment Law Advice Before Terminating an Employee

Ending employment can be one of the higher-risk decisions an employer makes. Seeking advice before making a dismissal decision can help employers understand their obligations under the Fair Work Act, NES, applicable awards and other workplace requirements.

Hentys Lawyers’ employment lawyers for employers assist businesses with:

  • performance management
  • misconduct investigations
  • redundancy processes
  • termination advice
  • responding to unfair dismissal claims
  • responding to general protections claims

Employers facing a Fair Work dispute can also obtain advice and representation from our Fair Work lawyers.

Talk to Hentys Lawyers

If you’re an employer considering terminating an employee or you need guidance on the appropriate process, contact Hentys Lawyers for advice specific to your circumstances.