Unlawful termination in Australia: a practical guide for employers

You have made the decision to end someone's employment. Perhaps performance has not improved despite clear feedback, or there has been serious misconduct, or the role is genuinely redundant. Whatever the reason, you are now standing at one of the highest-risk points in the employment relationship — and the steps you take over the next few days will determine whether the exit is clean or whether it becomes a claim.

If you follow a structured process — grounded in evidence, procedural fairness, and documented communication — you can significantly reduce your exposure to an unlawful termination or general protections claim. What you end up with is a defensible exit: a paper trail that shows a lawful reason, a fair process, and correct final entitlements.

What you need before you start

Before taking any step toward termination, make sure you have each of the following in hand:

• A clear, lawful reason — ongoing underperformance (after warnings and support), misconduct, serious misconduct, genuine redundancy, or capacity (inability to perform the inherent requirements of the role). If none of these applies, termination is not yet ready to proceed.
• A record of the relevant history — performance plans, written warnings, meeting notes, incident reports, or medical evidence, depending on the reason.
• Awareness of any protected attributes or recent workplace rights activity — if the employee has recently made a complaint, taken sick leave, requested flexible work, raised a safety issue, or disclosed a pregnancy or disability, you need to be especially careful before proceeding (see the section on high-risk situations below).
• A copy of the employee's contract and any applicable award or enterprise agreement — you will need these to calculate notice and final pay.
• At least one other manager or HR contact — someone to be present at the termination meeting and to witness the conversation.

The prerequisites that most often trip employers up are the last two. Final pay errors are a common flashpoint in post-termination disputes, and having no witness to the termination conversation leaves you exposed if an account of what was said is ever disputed.

Understand what you are actually exposed to

Not all termination claims are the same, and the distinctions matter before you decide how to proceed.

Unfair dismissal concerns whether a dismissal was harsh, unjust, or unreasonable — it focuses on proportionality and process. For small business employers (fewer than 15 employees), an employee must have served at least 12 months before they can bring an unfair dismissal claim; in larger businesses the threshold is 6 months. The Small Business Fair Dismissal Code provides guidance on what a fair dismissal process looks like for small businesses.

Unlawful termination under the Fair Work Act 2009 (Cth) addresses a separate question: whether employment was ended for a prohibited reason, such as temporary absence due to illness or injury, trade union membership, or participation in industrial activities. All employees — including those who have not yet reached the minimum employment period for unfair dismissal — are protected from unlawful termination.

General protections (also called adverse action) under Part 3-1 of the Act are broader still. Under s 340, an employer must not take adverse action — including dismissal — against an employee because they have a workplace right, have exercised a workplace right, or propose to exercise one. Workplace rights include things like making a complaint about pay or conditions, requesting flexible work arrangements, raising a safety concern, or taking protected leave.

The critical practical point for employers is this: even if you are confident an unfair dismissal claim would not succeed, you can still face a general protections claim. Under s 361 of the Act, where an employee alleges that a dismissal was taken for a prohibited reason, it is presumed to have been taken for that reason unless the employer proves otherwise. The onus is on you to demonstrate that the termination was for a lawful reason — not on the employee to prove it was for an unlawful one. A general protections dismissal application must be lodged within 21 calendar days of the dismissal taking effect.

Identify the high-risk situations before you proceed

Most unlawful termination claims do not arise because an employer deliberately broke the law. They arise because termination happened quickly after a trigger event, and the connection — however unintended — becomes the basis for a claim.

Recent complaint or exercise of a workplace right. If the employee has recently raised a pay dispute, made a complaint about rostering or bullying, requested flexible work, or reported a safety issue, a termination coming shortly after can look like retaliation even if your performance or conduct concerns are real and pre-existing. The risk is not about your intent — under s 361, the presumption runs against you unless your documented evidence makes the lawful reason clearly independent of the complaint.

Absence due to illness or injury. Ending employment while an employee is on sick leave, or shortly after they return, carries specific risk because temporary absence due to illness or injury is a protected reason under the Act. Where the issue is genuine incapacity — an inability to perform the inherent requirements of the role — a careful process is required: obtaining medical information, genuine consultation, and documented consideration of whether adjustments or alternative duties are available. This is a technical area; get advice before proceeding.

Pregnancy, parental leave, or carer responsibilities. The timing and circumstances of a termination become very important when an employee is pregnant, has recently taken parental leave, or has disclosed caring responsibilities. Even operational restructures can attract scrutiny if the timing appears connected to these circumstances. Keep all communications factual, documented, and anchored to business requirements.

Probationary employees. Probation simplifies some procedural steps, but it does not remove the general protections risk. You still cannot terminate for a prohibited reason, and a poor or hostile probation exit can still produce a claim.

Encouraged or pressured resignations. If an employee resigns because they genuinely had no reasonable alternative — because of pressure, threats, or an impossible working environment — that may be treated as a constructive dismissal and attract the same claims as a formal termination. If you are exploring a negotiated exit, keep it professional and consider a properly documented separation arrangement.

Step 1: Confirm the lawful reason and review your evidence

Before any communication with the employee, write down — in plain terms — the reason for the termination. Then ask two questions.

First, is the reason lawful? Common lawful reasons are: ongoing underperformance after documented feedback, warnings, and a reasonable opportunity to improve; misconduct or serious misconduct supported by investigation; a genuine redundancy (the role is no longer required, consultation obligations under any applicable award or agreement have been met, and there is no reasonable redeployment option under s 389 of the Act); or incapacity to perform the inherent requirements of the role, supported by medical evidence.

Second, could a reasonable person argue that the decision was connected — even partly — to a protected attribute or workplace right? If the answer is yes or maybe, gather additional contemporaneous evidence before proceeding, and consider getting legal advice first. The connection does not have to be the primary reason for a general protections claim to have merit; the question is whether the protected matter was a reason.

Keep all documents from this step. They are the foundation of your defence if a claim is lodged.

Step 2: Investigate and document (especially for misconduct)

If the termination is based on misconduct, take the time to investigate properly before making a final decision. A rushed termination based on an incomplete or one-sided investigation is one of the most common reasons claims succeed.

A basic investigation process should include:

• identifying the allegations clearly and in writing
• collecting relevant evidence (written statements, system logs, CCTV where lawfully available)
• speaking to relevant witnesses
• putting the allegations to the employee in clear terms and giving them a genuine opportunity to respond before any decision is made

For serious misconduct, you may be able to stand the employee down while you investigate — but whether that option is available and how it must be handled is governed by the Act and the applicable instrument. Get advice on this step rather than improvising.

The output of this step should be a written record that can be read by a third party — a Fair Work Commission member, for instance — and that shows a fair, evidence-based process.

Step 3: Provide procedural fairness appropriate to the circumstances

Procedural fairness does not mean the same process in every situation. What is required depends on the reason and the circumstances.

For performance-based terminations, you generally need to be able to show:

• the employee was told specifically what the performance concern was, with examples
• clear expectations were set and communicated
• a reasonable period and opportunity to improve was given
• support or training was offered where appropriate
• the employee was given a chance to respond before any final decision was made

For misconduct, the investigation process in Step 2 provides much of the procedural fairness. For serious misconduct, a faster process may be appropriate, but putting the allegations to the employee and giving them a chance to respond before dismissal remains important.

Consistency matters. If you have handled similar conduct differently for other employees, be ready to explain why this situation is treated differently. Unexplained inconsistency is a recurring issue in contested terminations.

Step 4: Calculate and confirm final entitlements

Even when the reason for termination is solid and the process has been fair, disputes often escalate because final pay is wrong. Before the termination takes effect, confirm:

• Notice period: the minimum notice entitlement under the National Employment Standards, the employee's contract, and any applicable award or enterprise agreement (whichever is more favourable to the employee). For serious misconduct, notice is generally not required, but this depends on the facts.
• Payment in lieu of notice: where the employer pays out the notice period rather than requiring the employee to work it, the amount must equal what the employee would have earned during that period. Confirm whether the contract or applicable instrument permits this.
• Accrued annual leave: all accrued but untaken annual leave must be paid out on termination at the ordinary rate (or the rate in the applicable instrument if higher).
• Redundancy pay: if the termination is a genuine redundancy, confirm whether redundancy pay is owed under the NES, the applicable award, or enterprise agreement. Small businesses (under 15 employees) are generally exempt from NES redundancy pay, but check the applicable instrument.
• Superannuation: confirm the superannuation treatment for each payment component, particularly for notice paid out rather than worked.

Getting these calculations wrong — even inadvertently — can trigger a separate underpayment claim on top of a dismissal dispute.

Step 5: Conduct the termination meeting and provide written confirmation

The termination meeting should be brief, calm, and factual. Its purpose is to communicate the decision and the key terms — not to relitigate history.

Recommended approach:

• Have a second manager or HR person present where possible; they can provide a witness account if the meeting is later disputed
• State the decision and the reason succinctly — one or two sentences is enough
• Confirm the notice arrangements (being worked, or paid out) and when the last day of employment will be
• Advise on return of property, system access removal, and any handover requirements
• Avoid debating the merits of the decision at length or making statements about the employee's character

Immediately after the meeting, prepare a written record of what was said and by whom. Send a written termination letter confirming the reason, the notice arrangements, and the final pay components. If the employee acknowledges receipt of the letter, keep a record of that too.

Your written records from Steps 1 through 5 are your strongest protection if a claim is lodged. The documentation does not just support your case — it often deters a claim from being made in the first place, because an employee who can see a documented, fair process has less to gain from a commission application.

Where Artificer Legal can assist

The steps above can be straightforward when the facts are clean. They become significantly more complex when there are red flags — a recent complaint, an employee on leave, discrimination risk factors, uncertainty about whether the reason is performance, misconduct, or capacity, or doubt about whether a redundancy is genuine.

If you bring a matter to Artificer Legal, we will:

• review the background and identify the specific legal risks before you take any step toward termination
• advise on whether the proposed reason is lawful and defensible, and whether the existing documentation supports it
• help you structure the investigation, drafting show cause letters or investigation frameworks where appropriate
• confirm the correct final pay calculations under the applicable instruments
• prepare a termination letter that accurately records the reason and the entitlements, and that does not inadvertently create additional exposure
• advise on separation arrangements where a negotiated exit is preferable to a contested termination

We can also help you build the foundations that prevent these situations from escalating in the first place — employment contracts, disciplinary and performance management policies, and manager training that converts good intentions into documented process.

The step that determines everything

The single factor that most often separates a clean exit from a contested one is not the reason for termination — it is how early the documentation starts. An employer who has been managing a performance concern for three months, with written records at each stage, is in a fundamentally different position from an employer who decides to terminate after a frustrating week and writes the termination letter the same day.

If you are already managing a performance or conduct issue, the time to start building your file is now, before any termination decision is made. If you are facing a situation with clear red flags — a protected attribute, a recent complaint, an absence — getting advice at that point costs far less than responding to a claim later.

To summarise: unlawful termination and general protections risk in Australia turns on whether you can demonstrate a lawful reason independent of any protected matter, a procedurally fair process, and correct final entitlements. The five-step process above — confirm the lawful reason, investigate and document, apply appropriate procedural fairness, calculate final entitlements correctly, and communicate professionally — gives you the best available defence. In situations with identifiable risk factors, early legal advice reduces cost, narrows the issues, and often enables a cleaner outcome than reactive management after a claim has been lodged.

This article is general information only and does not constitute legal advice. Employment law is highly fact-specific; you should obtain advice tailored to your circumstances before making any termination decision.