Should you summarily dismiss an employee — or terminate with notice instead

An incident has just occurred at your workplace. A manager has come to you with footage of a warehouse employee pocketing stock. Or a customer has complained about threatening behaviour from a sales rep. Or you have discovered a bookkeeper has been falsifying invoices. You need to make a decision quickly — but the wrong call carries real legal and financial consequences. The question most employers face in that moment is not simply "can I dismiss this person?" but "should I dismiss them without notice right now, or is a notice termination (or something else entirely) the safer and fairer path?"

The two paths and where the false options hide

Broadly, your options when serious wrongdoing is alleged are: summarily dismiss the employee (no notice, effective immediately or after a short investigation), terminate with notice or payment in lieu of notice, or take lesser action such as a final warning, demotion, or reassignment.

Summary dismissal is not a faster or more decisive version of ordinary termination — it is a separate legal category reserved for conduct that meets the threshold of "serious misconduct" as defined in reg 1.07 of the Fair Work Regulations 2009 (Cth). Using it outside that threshold exposes you to unfair dismissal claims, even if the employee genuinely did something wrong.

The option many employers assume is available but usually is not: terminating without any process at all, on the spot, with no written allegations and no chance for the employee to respond. Even lawful summary dismissal requires a fair process — the two are not mutually exclusive.

Factors that genuinely shift the decision

Whether the conduct actually meets the serious misconduct threshold

This is the first and most consequential factor. Regulation 1.07 of the Fair Work Regulations 2009 (Cth) sets out what constitutes serious misconduct for national system employees. The regulation captures two broad categories:

• Wilful or deliberate behaviour inconsistent with the continuation of the employment contract
• Conduct causing serious and imminent risk to the health or safety of a person, or to the reputation, viability or profitability of the employer's business

It also specifically lists: theft, fraud, assault, and sexual harassment in the course of employment, and being intoxicated at work.

Conduct that does not fit this description — persistent lateness, poor performance, a heated argument without threats, repeated policy breaches that have gone unaddressed — sits below the threshold. For those situations, a notice termination supported by a performance or disciplinary process is the appropriate path. Attempting summary dismissal for sub-threshold conduct is one of the most common and avoidable reasons employers lose unfair dismissal claims.

How solid the evidence is right now

Summary dismissal is defensible where the employer held a genuine and reasonable belief, on reasonable grounds, that serious misconduct occurred. That means the strength of your evidence at the time of the decision matters — not just what you later discover.

Consider the difference between these two situations:

• High-confidence scenario: CCTV footage clearly shows the employee taking goods from a locked storeroom without authorisation, a manager witnessed it, and stock records confirm the shortfall.
• Lower-confidence scenario: A colleague reports that the employee "probably" removed stock; no footage is available; the employee says the items were authorised samples.

In the first case, the factual foundation for summary dismissal is strong. In the second, it is thin. Proceeding to summary dismissal on thin evidence, without further investigation, risks a finding that there was no valid reason for the dismissal — one of the central criteria under s 387 of the Fair Work Act 2009 (Cth). Where evidence is incomplete, a short paid stand-down while you investigate is a more defensible interim step.

Whether procedural fairness is achievable quickly

Under s 387 of the Fair Work Act 2009 (Cth), the Fair Work Commission assesses whether a dismissal was harsh, unjust or unreasonable by reference to eight criteria. Those criteria include:

• Whether there was a valid reason for dismissal related to the employee's conduct
• Whether the employee was notified of that reason
• Whether the employee was given an opportunity to respond
• Whether the employee was unreasonably refused a support person

A dismissal can be unfair even where the underlying conduct was serious — if the process was inadequate. This means the question is not just "is the conduct bad enough?" but also "can I give this person a genuine chance to respond before I decide?"

In almost all cases, the answer to the second question is yes. Even in urgent circumstances, you can temporarily restrict access or move the employee off-site, then issue a written statement of allegations, allow a reasonable response time, and hold a meeting before you finalise your decision. The compressed version of procedural fairness — done in days rather than weeks — still counts. Skipping it entirely carries significant risk.

The size of your business and which rules apply

Your headcount affects your obligations. Under s 23 of the Fair Work Act 2009 (Cth), a small business employer is one that employs fewer than 15 employees at the relevant time (counting the employee being dismissed). Small business employers:

• Can rely on the Small Business Fair Dismissal Code as a framework
• Face a higher minimum employment period: employees need at least 12 months of continuous service before they can bring an unfair dismissal claim (compared to 6 months for larger employers)
• Have less dedicated HR infrastructure, which the Commission takes into account when assessing procedural compliance under s 387(g)

The Code does not remove the obligation to act on reasonable grounds and to give the employee an opportunity to respond — but it does provide a simpler, more proportionate benchmark for how that obligation is met in a small business context.

The employee's role and the nature of the trust at stake

The significance of particular conduct can vary with the employee's responsibilities. Dishonesty by a person in a position of financial trust — a bookkeeper, an accounts manager, a director — carries more weight than the same conduct by someone with no access to financial systems. Unsafe conduct by a safety officer or a licensed tradesperson is assessed differently than by an administrative employee.

This does not lower the legal threshold, but it does inform how the Commission weighs whether dismissal was proportionate. Consider:

• Does the role place the employee in a position where the specific conduct strikes at the heart of the employment relationship?
• Is continued employment — even on modified duties — genuinely untenable given the conduct and the role?
• Are there objective safety, reputational or operational reasons why the employee cannot remain in the workplace while matters are resolved?

If the answer to these questions is yes, the case for summary dismissal is stronger. If you are reaching to justify the connection between the conduct and the role, a notice termination may be more appropriate.

What entitlements are owed regardless of which path you take

This factor does not shift the decision between summary dismissal and notice termination — but it catches employers out because they assume summary dismissal eliminates all financial obligations. It does not.

Even after lawful summary dismissal, the Fair Work Ombudsman's guidance on final pay confirms that employees remain entitled to:

• Outstanding wages to the date of termination
• Accrued but untaken annual leave (and any applicable leave loading) — this cannot be withheld, even if an award or contract purports to exclude it on dismissal
• Other accrued entitlements under the relevant modern award, enterprise agreement or contract

Notice is the only statutory entitlement that falls away on summary dismissal for genuine serious misconduct. Withholding anything else exposes you to an underpayment claim and potential penalties — a separate problem layered on top of any dismissal dispute.

Common misconduct scenarios and responses

The table below maps the most common scenarios to the more defensible outcome.

The pattern is straightforward: the further the conduct is from the statutory categories in reg 1.07, and the thinner the evidence, the more an employer should lean toward notice termination with a proper process rather than summary dismissal. The most contested cases — where employers most often get things wrong — sit in the middle column: credible but disputed allegations, conduct that partially but not clearly meets the serious misconduct definition, and situations where emotion is running high and the instinct is to act immediately.

How Artificer Legal can help you make and act on this call

Employment decisions at this end of the spectrum are high-stakes and time-sensitive, and the legal risk sits in both directions. Artificer Legal practitioners work with employers at the point the decision arises — before the outcome letter goes out, not after a claim has been filed.

In practice, that typically means: assessing whether the evidence and the conduct actually support the path you are considering; stress-testing the process you have run or are about to run; drafting a legally sound show-cause letter or termination letter that documents the decision and reasoning; and confirming the final pay calculation so you are not exposed to an underpayment claim alongside any dismissal dispute.

For small business operators without in-house HR support, early legal input on a serious misconduct situation is often the most cost-effective decision you can make — a short conversation can prevent a months-long Commission proceeding that costs far more in time, fees and management distraction.

Evidence of serious misconduct and a chance to respond

The question that cuts through most of these situations is: can you point to conduct within the categories of serious misconduct in reg 1.07, supported by evidence that would withstand scrutiny, and have you genuinely given the employee an opportunity to explain themselves before deciding? If yes to all three, summary dismissal is defensible. If the answer to any one of them is uncertain, pause — the safer path is a notice termination with a proper process, or a short investigation before you decide.

The option employers most often regret is acting on the instinct to dismiss immediately, without documentation and without giving the employee a say, in a situation where the evidence was thinner than it seemed in the moment. A swift but documented process protects you; an undocumented snap decision does not, even when the underlying conduct was genuinely serious.

Key points:

• Summary dismissal is only available where conduct meets the serious misconduct threshold in reg 1.07 of the Fair Work Regulations 2009 (Cth) — it is not a faster version of ordinary termination.
• The Fair Work Commission assesses both the validity of the reason and the fairness of the process under s 387 of the Fair Work Act 2009 (Cth); a procedurally deficient dismissal can be unfair even where the conduct was serious.
• Small business employers (fewer than 15 employees under s 23 of the Fair Work Act 2009 (Cth)) can use the Small Business Fair Dismissal Code and face a 12-month minimum employment period before employees can bring unfair dismissal claims.
• Even after lawful summary dismissal, accrued annual leave and outstanding wages remain payable — notice is the only entitlement that falls away.
• Where evidence is incomplete or the conduct sits below the serious misconduct threshold, a notice termination with a documented process is the more defensible path.