Why Getting Staff Terminations Right is Critical for Every Business
Terminating an employee is never simple. Whether the reason is poor performance, redundancy, or serious misconduct, the way an employer manages the process can significantly impact legal risk, workplace culture, and business reputation. A poorly handled termination isn’t just unpleasant—it can expose the business to expensive claims, government penalties, and long-lasting damage.
A structured, fair and legally compliant approach protects both the organisation and its people.
Key Risks if Termination Is Mishandled
1. Unfair Dismissal Claims
Employees who believe they’ve been dismissed harshly, unjustly, or without valid reason can lodge an Unfair Dismissal claim with the Fair Work Commission. The Commission considers:
- Whether a valid reason for the termination existed
- Whether the employee was given a chance to respond
- Whether procedural fairness was applied
Risk to employers: reinstatement orders, compensation, legal costs, negative publicity, and time spent defending the claim. Many employers lose claims not because the decision to terminate was wrong, but because they failed to follow a fair process.
2. General Protections Claims
A General Protections claim (also called an adverse action claim) is more serious than Unfair Dismissal. It arises if an employee is terminated because of a protected right, such as:
- Exercising a workplace right (e.g., making a complaint about safety or pay)
- Taking personal/carer’s leave
- Participating in union activity
- Discrimination based on attributes such as age, gender, race, disability or family responsibilities
Unlike Unfair Dismissal, the burden of proof often shifts to the employer to prove they did not dismiss the employee unlawfully. These claims can lead to significant penalties, compensation, and potential civil court action.
3. Penalties Under Work Health & Safety (WHS) Legislation
Many organisations fail to recognise that termination can intersect with WHS laws. If a worker has been terminated after raising safety concerns, bullying complaints, or workplace risks, the termination could be viewed as victimisation or a failure to provide a psychologically safe workplace.
Businesses have a responsibility to ensure decisions do not:
- Punish workers for reporting hazards
- Deter others from raising safety concerns
- Create psychological harm or retaliation risks
Potential consequences include:
- Heavy fines for the business and officers personally
- WHS prosecution for reckless or discriminatory conduct
- Reputational damage as a business that silences concerns
What Good Termination Practice Looks Like
To minimise risks, businesses should implement clear and consistent processes that include:
- Documenting performance or conduct issues early
- Providing coaching, warnings, and opportunities to improve (unless serious misconduct applies)
- Ensuring procedural fairness—allowing the employee to respond
- Allowing a support person to be present in meetings
- Conducting objective investigations where allegations exist
- Making decisions based on evidence, not emotion
- Issuing clear documentation of the termination outcome
- Conducting a safe and respectful exit meeting
Good processes don’t prevent termination—they enable it to be lawful, fair and defensible.
The Business Benefits of Doing It Right
A well-handled termination:
- Reduces legal exposure and regulatory risk
- Supports workplace culture and morale
- Reinforces procedural fairness and consistency
- Demonstrates compliance with Fair Work and WHS laws
- Protects the employer’s reputation with customers, staff and future recruits
Terminations may be unavoidable, but liability isn’t. A legally sound process is a critical part of responsible employment management.