Knowledge There are a number of different ways an employment relationship can come to an end. In the final instalment of our Lifecycle of Employment Series, we discuss the various ways an employment relationship can come to an end.
An employee can end their employment by
- resignation; or
- abandoning their employment
An employee can end the employee’s employment by
- redundancy
- termination due to medical incapacity
- termination due to serious misconduct
- termination due to multiple instances of misconduct
- termination due to poor performance.
Each method has its own legal and procedural requirements, which employers must navigate carefully to ensure compliance with the law. Accordingly, having a clear understanding of these requirements is crucial.
Resignation
Termination of employment by way of resignation occurs at the initiative of the employee. This normally occurs by the employee providing notice. In most cases resignation occurs because the employee wishes to pursue alternative employee or to have a career break.
Resignation is a unilateral act, meaning the employer does not need to ‘accept’ the resignation. However, it is best practice for them to acknowledge the resignation.
Abandonment of employment
Abandonment of employment occurs when an employee fails to attend work for an extended period without notifying the employer or providing a valid reason, leading the employer to conclude that the employee has abandoned their position.
Before concluding that an employee has abandoned their position and terminating their employment on this basis, employers should:
- review the employee’s employment agreement to see if there is a clause which states that the employee’s employment may be terminated after a specific number of days of unauthorised absence.
- follow any procedures outlined in the employment agreement or company policies regarding abandonment; and
- attempt to contact the employee to determine why they are not at work and document all attempts to contact employee.
Redundancy
If an employee’s employment is disestablished as a result of a restructure process and there are no alternative roles that the employee can be redeployed to, the employer may end the employment by reason of redundancy.
Employers are required to follow a fair and proper process before an employee is made redundant. This includes:
- having a genuine business reason to restructure the business;
- presenting a proposal to disestablish the employee’s role, which includes the rationale for the proposal;
- giving the employee a reasonable opportunity to provide feedback on the proposal;
- considering feedback provided before making a decision on whether to disestablish the employee’s role;
- considering any redeployment opportunities; and
- if no redeployment opportunities are available, providing the employee with a notice of termination and making any redundancy payments required under the employment agreement.
Medical incapacity
When an employee is no longer able to do their job because of an ongoing illness or injury and will be unable to work for an extended or indefinite period of time, an employer may have grounds to terminate their employment.
Before considering termination for medical incapacity, an employer is required to:
- give the employee a reasonable opportunity to recover;
- fairly and reasonably inquire about the employee’s prognosis for a return to work;
- raise concerns in writing regarding the employee’s medical capacity with the employee;
- give the employee a reasonable opportunity to respond to the employer’s concerns and any proposal to dismiss for medical incapacity before making any final decisions; and
- genuinely consider any information or responses provided by the employee before making a decision to proceed with termination.
Multiple instances of misconduct
Misconduct can include things like:
- breaches of obligations prescribed in employment agreement or company policies; or
- behaviour which poses a risk to health and safety.
Although a single instance of conduct found to amount to misconduct would not usually justify a dismissal, ongoing misconduct can lead to termination. For example, when an employee first engages in misconduct, the employee might be issued with a first written warning and advised that if they engage in the same or similar behaviour again, further disciplinary action may be taken, which could ultimately result in the termination of their employment.
If the misconduct persists, the employer may escalate the disciplinary measures by issuing a final written warning. If the employee behaviour persists after the final warning, the employer may proceed with termination following a fair and proper investigation process.
Serious misconduct
Serious misconduct is often used to refer to conduct which undermines or destroys the trust and confidence in the employment relationship. It typically includes:
- A deliberate action or inaction by an employee that is adverse to the employer’s interests or inconsistent with the employee’s obligations to the employer.
- Conduct which raises a serious risk to health/safety, such as violence in the workplace, bullying and harassment, theft or fraud.
Serious misconduct in most cases can justify dismissal without notice. However, even in cases of serious misconduct, it is crucial for employers to follow a fair process.
Steps employers are required to take before terminating employee for ongoing similar misconduct or serious misconduct
Before dismissing an employee for ongoing similar misconduct or serious misconduct, employers are required to:
- formally notify the employee of the alleged conduct and the possible consequences if the allegations are confirmed;
- provide the employee with an opportunity to respond to the allegations; and
- consider all relevant evidence before making any decisions regarding disciplinary action.
It is important to check relevant company policies and your employee’s employment agreement for clauses outlining an investigation or disciplinary process to ensure adherence to prescribed company procedures.
Poor performance
Poor performance refers to an employee’s consistent failure to meet the required performance standards despite being given opportunities to improve.
Before terminating an employee’s employment for poor performance, an employer must have:
- notified the employee of the performance concerns;
- communicated expectations;
- offered support and training to help the employee improve;
- provided the employee with a reasonable opportunity to improve their performance;
- if performance concerns persist, implemented a performance improvement plan in consultation with the employee, which:
- sets out clear, measurable targets and relevant training and supports to help achieve these targets;
- outlines how progress towards the required level of performance will be measured over the review period;
- sets out a timeframe for meeting the set targets, along with regular meetings to assess progress;
- sets out dates for a formal review of progress; and
- sets out what will happen if the employee fails to meet set targets by the specified review date for example a first written warning.
- Followed a fair process, including issuing warnings and allowing the employee to respond, before considering termination if employee performance still does not improve to the required standard.
Legal implications of failing to follow a fair and proper process before dismissing an employee
Failure to follow a fair and proper process before dismissing an employee on any of the grounds outlined above could give rise to a claim for unjustified dismissal. Employers found to have dismissed an employee unjustifiably may be required to:
- Reinstate the employee to their former position;
- Pay compensation for lost wages and hurt and humiliation; and
- Cover legal costs incurred by the employee.
To avoid these outcomes, it is essential for employers to adhere to fair and proper processes when considering termination. If you are considering termination and would like some advice regarding whether you have valid grounds to terminate or the steps you need to take, please get in contact with the Black Door Law team. It is always better to get advice early.
Disclaimer: This information is intended as general legal information and does not constitute legal advice.