26 February 2025
Employee and employer obligations before and after termination
Employee and employer obligations before and after termination
Termination of employment is one of the most sensitive and complex areas of workplace management. For dental practices, where close-knit teams work in demanding environments, navigating terminations with professionalism and fairness is crucial. Whether it’s managing the exit of an underperforming employee or addressing redundancy, understanding your obligations under Australian workplace laws ensures compliance and protects your practice's reputation.
Termination reasons
Employment can end for several reasons, including:
- Resignation: When an employee voluntarily ends the relationship.
- Dismissal: Initiated by the employer, often due to misconduct, underperformance, or operational needs.
- Redundancy: When the role is no longer required, such as during practice restructures or technological changes, provided they meet the Fair Work Act criteria.
Each scenario has distinct legal requirements, and mishandling the process can lead to costly disputes and claims, including unfair dismissal or breach of workplace rights.
Employer obligations
The Fair Work Act 2009 establishes the foundation for fair and lawful termination. Here’s what every employer needs to know:
1. Valid reason for termination
You cannot terminate an employee arbitrarily. There must be a valid, demonstrable reason including:
- Performance issues: Consistent underperformance or failure to meet practice standards.
- Misconduct / serious misconduct: Serious breaches such as theft, harassment, or breaching patient confidentiality.
- Operational requirements: Redundancy due to the role no longer being required.
2. Procedural fairness
Terminations must follow procedural fairness, meaning that rather than the outcome, the procedures follower by an employer must be fair. Put simply, affording an employee procedural fairness means an employer must give an employee a far and reasonable opportunity to respond to matters or evidence that you believe may justify their employment.
Examples:
- Allowing the employee to respond to allegations or issues raised in an investigation.
- Conducting a thorough and fair investigation.
- Ensuring that a decision-maker is not biased
- Allowing the employee to bring a support person at any meetings concerning their potential dismissal.
- Notifying the employee of the reason for termination.
For example, if a dental receptionist has repeatedly failed to attend shifts, you should first document these absences, then meet with the employee to discuss the issue and provide an opportunity for them to explain. Only after following this process should termination be considered.
It’s important to note that employers could still be exposed to an unfair dismissal claim if procedural fairness is not followed even if there is a valid reason for termination, and the reason for dismissal is a fair and proportionate response to the problem.
3. Notice of termination
The National Employment Standards provides for minimum notice periods based on the employee's length of service:
- Less than 1 year: 1 week.
- 1–3 years: 2 weeks.
- 3–5 years: 3 weeks.
- More than 5 years: 4 weeks.
Employees over 45 years old with at least two years of service are entitled to an additional week of notice. If you’d prefer the employee not to work through the notice period, you can pay them in lieu of notice.
If an employee is terminated on the grounds of serious misconduct, an employer does not have to provide any notice of termination.
4. Managing redundancy
If a dental assistant’s role, for example, is no longer required due to a practice restructure, the termination is considered a redundancy. There are three important considerations for genuine redundancy:
- The role is genuinely no longer required;
- Affected employees are consulted throughout the redundancy process; and
- Opportunities for redeployment have been explored.
Depending on their length of service, employees may be entitled to severance pay of up to 16 weeks. Failure to meet these requirements can result in claims for unfair dismissal, even when the redundancy itself was legitimate.
5. Final pay and entitlements
At termination, employees must receive their final pay, including:
- Unused annual leave.
- Long service leave (if applicable).
- Redundancy entitlements (if applicable).
- Any outstanding wages or allowances.
- Pay these entitlements promptly to avoid disputes.
Employee obligations
Employees also have obligations upon termination which include:
- Providing Notice: Employees must give notice in line with their contract or national employment standards. If no notice is given, employers may be able to deduct notice pay from final wages, provided the deduction is lawful.
- Working During the Notice Period: Unless agreed otherwise, employees should work as usual during their notice period.
- Respecting Post-Employment Restrictions: Confidentiality clauses or non-compete agreements should be honoured.
For instance, if a departing dentist’s contract prohibited them from conducting work within 10 km of your clinic for 12 months following termination, they are legally bound to adhere to this clause (provided it is reasonable).
Avoiding claims
One of the most common issues employers face is an unfair dismissal claim. An employee may lodge such a claim if they believe the termination was:
- Harsh: the decision to terminate was disproportionate to the alleged misconduct.
- Unreasonable: There was no evidence nor valid reason to terminate.
- Unjust: Lacking a fair process i.e. procedural fairness not followed.
- Constructive Dismissal: The employee’s resignation was because of undue force because the employer created poor conditions (e.g. withheld pay, working in an unsafe environment).
Employees must have worked for at least 6 months (or 12 months for small businesses) to lodge an unfair dismissal claim.
Employees who believe that their employment rights have been violated may make a general protections application. Such claims typically involve allegations of adverse action due to personal attributes such as race, religion, or even caregiver responsibilities.
Best practices for dental practices
- Document Everything: Keep detailed records of performance reviews, warnings, and disciplinary actions. This documentation is invaluable in defending against claims.
- Communicate Clearly: Whether it’s performance conduct issues or redundancy, be transparent and empathetic in discussion and always provide an employee the opportunity to respond
- Seek Professional Advice: When in doubt, consult with your employment relations experts.
The termination of employment is a necessary component of effectively managing a successful practice. By comprehensively understanding your obligations under the Fair Work Act 2009 and relevant awards, you can navigate this process with both confidence and fairness.
A meticulously managed termination not only ensures compliance with legal requirements but also upholds the integrity of your practice. To learn more about how to manage your obligations and the obligations of others prior to and after termination, please contact your employment relations experts using the ADA HR Advisory Line on 1300 232 462.
