When Employment Needs to End, Start With the Reason — Not the Letter

There are occasions when an employer reaches the conclusion that an employment relationship can no longer continue.

Perhaps an employee has engaged in serious misconduct.

Perhaps their performance has not improved.

The business may be restructuring, or an employee may no longer be medically capable of performing the inherent requirements of their position.

These are difficult situations, and employers understandably want a practical solution.

However, one of the more important distinctions in Employment Relations is understanding that wanting employment to end and having a lawful basis to end it are two different things.

Different problems require different approaches

Consider an employee suspected of serious misconduct.

The employer may have strong evidence supporting the allegations.

But before terminating employment, the business should establish what occurred, put the relevant allegations to the employee, provide a genuine opportunity to respond and consider whether dismissal is justified.

Serious misconduct may justify dismissal without notice, but it does not remove the need to establish the facts or consider the fairness of the decision.

Now consider an employee who has been absent for an extended period because of illness or injury.

The issue is not necessarily misconduct.

It may concern the employee's medical capacity to perform the inherent requirements of the position.

That requires a different assessment, including reliable medical information, consideration of reasonable adjustments where applicable and the relevant protections against dismissal because of illness, injury or disability.

Using a disciplinary process to deal with what is fundamentally a medical-capacity issue may create unnecessary legal exposure.

Redundancy must be genuine

Redundancy is another area where the distinction matters.

A business may genuinely need to reduce staffing because of changing economic conditions or operational requirements.

However, redundancy is not simply an alternative method of terminating an employee whose performance or conduct has become a concern.

For a dismissal to qualify as genuine redundancy under the Fair Work Act, the employer must no longer require the employee's job to be performed by anyone because of operational changes, comply with any applicable Award or enterprise agreement consultation obligations, and address reasonable redeployment opportunities.

A redundancy label does not make the underlying circumstances a genuine redundancy.

What about a negotiated departure?

In some circumstances, an employer and employee may agree that a mutually negotiated separation is the most practical outcome.

This can provide certainty and allow both parties to move forward.

However, any agreement must be genuinely voluntary.

An employer should not pressure an employee to resign or use a negotiated separation to disguise an otherwise unlawful dismissal.

The terms should be clearly documented, with statutory entitlements properly addressed and the employee given a reasonable opportunity to obtain independent advice.

Identify the issue before deciding the outcome

Before preparing a termination letter, employers should establish the actual reason employment may need to end.

Is the concern misconduct, performance, medical capacity or genuine operational change?

What evidence supports that position?

What legal protections or obligations apply?

What alternatives need to be considered?

And has the employee been given the opportunity to respond where required?

These questions are important because the consequences of choosing the wrong pathway can extend beyond an unfair dismissal claim.

Depending on the circumstances, employers may also face general protections, discrimination, workers compensation or other legal proceedings.

The practical lesson

Employers are entitled to manage their businesses, address misconduct, require appropriate performance and make genuine operational changes.

But the reason for ending employment must be properly established.

The correct employment decision starts with identifying the problem, not choosing the outcome.

MTA NSW members considering termination, redundancy, medical-capacity action or a negotiated separation should contact the Employment Relations Team before making a final decision so the appropriate legal pathway and practical options can be assessed.