Australia: The dos and don'ts when terminating employees


How you terminate an employee can be a minefield, with many employers finding themselves before the Fair Work Commission because they got it wrong. A claim for unfair dismissal is an accessible and cheap process for many employees which can end up costing employers a lot of time and money. This article looks at some of the traps, and various risk minimisation measures available to employers.


The rapid spread of social media poses significant challenges in the workplace. If employers want to restrict potentially damaging comments by employees on social media about their organisation, they need to implement a suitable social media policy.

Glen Stutsel v Linfox Australia Pty Ltd [2011] FWA 8444
The employer terminated the employee for serious misconduct following the employee and friends making racially derogatory and sexually discriminatory comments about managers on his Facebook page.

The sexual comments about one manager were not made by the employee and the Commission considered it strange to hold the employee accountable for the comments of others. It was relevant that the employer did not have a social media policy and no other employees who made derogatory comments were the subject of any sanction by the employer. The Commission concluded the employee was not guilty of serious misconduct and there was no valid reason for termination, and therefore he had been unfairly dismissed. The Commission ordered he be reinstated and receive lost wages following termination. The case is currently the subject of appeal.

The Commissioner was critical of the employer for not having a social media policy.


Employers who fail to observe the Fair Work Act 2009 (Cth) (the Act) redundancy requirements can find themselves exposed to unfair dismissal claims. A recent decision before the Fair Work Commission highlights these legal requirements which include the need to consider alternative positions and to consult with the affected employee about the redundancy.

Horn v Mastermyne Engineering Pty Ltd [2012] FWA 10846
The employee claimed he was not genuinely redundant because:

  • there was no consultation or any demonstrated effort to identify alternative positions in the employer's business;
  • following the employee's termination, his duties were allocated to other employees not qualified to undertake the work; and
  • the employer subsequently advertised positions the employee was qualified for.

The employer claimed employee's role was no longer required to be undertaken by anyone due to changed operational requirements, in response to a downturn in the coal industry. Senior Deputy President Richards considered it did not matter whether the employer redistributed the employee's former duties to other employees, who were not qualified, as that was a matter for the employer.

The employer established it had investigated the availability of alternative positions in the employers group of companies; however, those investigations were unsuccessful. The positions advertised after the employee was terminated, were for fitters undertaking underground work – which the employee did not meet the regulatory requirements for. Richards SDP determined that there was no obligation on the company on this occasion to overcome the difference in skill and experience by retraining the employee.

The employer had held a "pre-start meeting" with employees at which the organisation review was explained, the memorandum of that meeting was publicly available and employees had been invited to proffer suggestions to offset, avert or mitigate the proposed changes. Thus the employer had complied with the consultation provisions of the relevant Award.

Richards SDP concluded that the employee had been made genuinely redundant and the employee's application was dismissed.

For further information on redundancy see our article on Redundancy and for the full case details see our article on Horn v Mastermyne Engineering.


A failure to document performance management procedures such as communicating expectations and issuing warnings properly, may expose an employer to an unfair dismissal claim if the employee is later terminated for poor performance.

Moumtzis v Dolina Fashion Group Pty Ltd [2013] FWC 501
The employee in this case was terminated on the basis she was unfit for her position as a designer of women's clothing. The employer had informed her that she had not achieved the required profit margins for the business and was purchasing expensive fabrics.

The employer did not put forward any evidence concerning performance discussions had prior to the termination and Vice President Watson was left to consider the uncontested evidence of the employee. She did not have any KPI's, budgets or annual reviews and therefore her employer's perception she was not performing, did not amount to a valid reason for termination.

The evidence did not establish that the employee had been warned of unsatisfactory performance prior to the termination. The fact there was no valid reason for termination, no chance for the employee to respond and no prior warnings, led to the conclusion the employee was dismissed unfairly. VP Watson ordered the employer pay the employee 22 weeks remuneration as compensation.


Employers must ensure careful documentation of all investigative processes particularly if they may have disciplinary consequences such as termination. It is also important to warn employees that their conduct may lead to dismissal. The below case demonstrates that following proper procedures in the investigative stage and during disciplinary action is important.

Read v Gordon Square Childcare Centre Inc T/A Gordon Square Early Learning Centre [2012] FWA 7680
In this case an employee at a childcare centre was the subject of a parental complaint. A parent complained that their child was left unattended when upset by the employee, was not given breakfast, and on another occasion had been allowed to play with electrical outlets. This complaint was investigated by the childcare centre management.

The investigation concluded that the employee had admitted she left the child unattended and that this was a failure to supervise and constituted a breach of childcare regulations. This was deemed misconduct which was not compatible with the employee's employment continuing with the employer. The employee was summarily dismissed on the basis this constituted serious misconduct.

It was significant that the employee was not warned that her conduct could result in termination. Commissioner Bissett concluded the employee did leave the child unattended and unsupervised. This was a breach of the National Law and the centres Supervision Policy. Comm. Bissett also accepted that the employee had previously allowed children to play under her reception desk where there were wires.

The evidence was that the employee was informed that her non supervision of a child was the reason for terminating her employment. The childcare centre afforded the employee procedural fairness in the process of investigation because they had presented the allegations, allowed her to respond and then made a finding which in turn was communicated to her. The employee was also allowed a support person at both meetings with the employer. While previous discussions about performance did not constitute warnings, ultimately Comm. Bissett concluded that summary dismissal was fair.


If a former employee brings an unfair dismissal claim before the Fair Work Commission, employers cannot afford to ignore such a claim. Regardless of size, time and resources, employers who ignore a claim run the risk of the Commission making adverse findings against them in their absence.

Bargmann v Stilnovo Pty Ltd T/AMurano and Gullotti [2013] FWC 1080
In this case the respondent employer did not attend the scheduled telephone conference or provide submissions upon request from the Commission. On that basis DP McCarthy accepted the applicant employee's evidence unchallenged and found that the employee had been unfairly dismissed.


The following points emerge from the above:

  • Implement a suitable social media policy- without it, you are deprived of a valuable tool in managing the social media behaviour of your workforce;
  • Redundancy may not mean redundancy under the Fair Work Act unless you stick to the rules;
  • Failure to implement and document a warning process will damage your ability to defend performance based terminations;
  • Appropriate investigation, and compliance with natural justice requirements, can significantly assist in the defence of unfair dismissal proceedings;
  • Ignore the Fair Work Commission at your peril.

For further information please contact:

Richard Ottley, Partner
Phone: +61 2 9233 5544

Laura Sowden, Solicitor
Phone: +61 2 9233 5544

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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