5 reasons for termination of employment in Australia

Letting someone go is one of the hardest calls a leader makes. It's harder still if you're an SME hiring in Australia for the first time or building an offshore team. The risk goes beyond your reputation. An employee terminated from work may claim unfair dismissal if the decision or process seems harsh, unjust or unreasonable.

Offshore staff add another layer. Some staff may work for your Australian entity, while others work through an Employer of Record (EOR). Different rules may then apply to notice, final pay and redundancy.

This guide covers five lawful reasons to terminate employment in Australia. It also sets out an employee termination procedure Australian employers can follow to reduce risk.

General information only, not legal advice. For your situation, check the Fair Work Ombudsman or speak to a lawyer.

Termination of employment is when the employment relationship ends. The employee may resign, or the employer may end it through dismissal or redundancy.

In Australia, the Fair Work Act sets legal requirements for ending employment, including notice and final pay where applicable. A valid reason and fair process are important when assessing whether a dismissal is unfair. The Fair Work Ombudsman provides guidance to employers. The Fair Work Commission hears unfair dismissal claims.(India's Industrial Relations)

For employers, it’s important to separate the “reason” for termination from the “process” of termination. A business may believe it has a legitimate reason to end employment, but still face risk if it fails to warn the employee appropriately, give them an opportunity to respond, consult where required, or pay out final entitlements correctly. In practice, many unfair dismissal disputes come down as much to process as to the underlying reason itself.

Five common potential grounds for dismissal are poor performance, misconduct, serious misconduct, genuine redundancy and inability to do the role. None automatically makes a dismissal lawful: the facts, applicable protections and process matter.

Poor performance is a common reason, and one of the easiest to get wrong. A performance-based termination should never come out of the blue. You need clear expectations, documented feedback and a real chance to improve.

Raise the gap early. Explain the impact, set measurable goals and give reasonable time and support. A performance improvement plan (PIP) can help, but only if it's genuine. It shouldn't be paperwork for a decision you've already made.

Misconduct is behaviour that breaks workplace policies or reasonable directions. Examples include repeated lateness, refusing lawful instructions, unprofessional behaviour or misusing company systems.

Not all misconduct justifies dismissal. Investigate first, explain your concerns and consider a warning. How serious it was, the employee's history and whether they knew the policy all matter.

Serious misconduct can justify summary dismissal, which means ending employment without notice. The Fair Work Regulations list examples such as theft, fraud, assault, sexual harassment and being drunk at work. It also covers conduct that causes serious and imminent risk to people or the business.

Summary dismissal in Australia is not a shortcut. Investigate quickly, record the evidence and let the employee respond before you decide. A rushed serious misconduct termination is easier to challenge.

A genuine redundancy in Australia means the business no longer needs anyone to do the job. Replacing someone with a cheaper hire is not a redundancy. You must also:

• Consult the employee if an award or enterprise agreement requires it
• Check whether you can reasonably redeploy them in the business or a related entity

If the role still exists in another form, the redundancy may not be genuine. The same applies if you skipped consultation or could have redeployed them. Redundancy pay under the NES starts at 4 weeks after one year of service, rises to 16 weeks at 9–10 years, then drops to 12 weeks at 10+ years. Employees with less than 12 months' service usually get none. Small businesses with fewer than 15 employees are generally exempt.

An employee may no longer be able to do the core parts of the job, for example because of ongoing illness or injury. This area carries discrimination risk, so proceed with caution. You can't dismiss an employee because of a temporary absence due to illness or injury. This protection generally applies if they provide evidence and are away for less than 3 consecutive months (or 3 months in total over 12 months), or are still on paid sick leave. Protection does not automatically end after three months: anti-discrimination, workers compensation and other laws may still apply. Get advice before making a decision.

Before you decide, get medical information. Ask whether the employee will recover within a reasonable time. Check whether reasonable adjustments would let them keep working. Don't move from frustration straight to dismissal. Follow a documented, evidence-based process.

Pair a valid reason with a fair, written process. Follow these seven steps.

Link the decision to a clear basis: performance, misconduct, serious misconduct, incapacity or genuine redundancy. Gather the evidence, such as meeting notes, warnings, medical information or investigation findings.

Confirm whether the National Employment Standards (NES), a modern award, an enterprise agreement or the contract of employment applies. These set notice, consultation, discipline and redundancy rules.

Tell the employee your concerns and the possible outcome in writing. Hold a formal meeting and give them an opportunity to respond before you decide. Let them bring a support person to the meeting.

Warnings are given for underperformance and repeated or minor misconduct. State the issue, the improvement needed, the timeframe and what happens next.

Give written notice, or pay in lieu of notice. Notice of termination in Australia under the NES depends on length of service:

Add one week if the employee is over 45 and has at least 2 years of service. An award, agreement or contract may require more.

Final pay can include outstanding wages, unused annual leave, pay in lieu of notice, redundancy pay and sometimes long service leave. Many awards require final pay within 7 days of termination, so check yours.(India's Code Wages)

Keep warnings, meeting notes, investigation files, termination letters and pay records. If someone challenges the dismissal, these records show your process was fair.

Small business note: If your business employs fewer than 15 people, follow the Small Business Fair Dismissal Code. It won't remove all risk, but it can strengthen your position if a claim arises.(Industrial Relations Code)

Eligible employees may be able to claim unfair dismissal after completing 6 months' employment, or 12 months if the employer is a small business with fewer than 15 employees. Other eligibility requirements also apply. Employees not covered by an award or enterprise agreement can only claim if they earn below the high income threshold, which is $190,100 for dismissals on or after 1 July 2026.

The employee must lodge the claim with the Fair Work Commission within 21 days of the dismissal taking effect. The Commission then decides whether the dismissal was harsh, unjust or unreasonable.

Unlawful termination is different. It covers dismissal for reasons such as discrimination, temporary illness or injury, or union membership.

Most claims come from a rushed or inconsistent process. Common mistakes include:

• Skipping warnings and going straight to dismissal
• Calling conduct "serious misconduct" without investigating
• Calling a role redundant when it still exists
• Not consulting when an award or agreement requires it
• Giving notice verbally, not in writing
• Missing final pay items such as leave or redundancy pay
• Using one process for local and offshore staff without checking who the legal employer is

It depends on who the legal employer is. If your Australian entity employs the worker, Australian rules and unfair dismissal risk may apply. If an Employer of Record (EOR) employs them, the worker's local laws usually apply.

Rules differ by country. Notice, consultation, severance and paperwork in the Philippines, India or Sri Lanka won't match Australian rules.

General employee-law comparison

The table summarises selected rules for employees in the Philippines, India and Sri Lanka. It does not describe every Teamified engagement or establish a single exit process for all workers.

Rules depend on the employee's role, service, company size, contract and applicable law. India's retrenchment rules apply to "workers," which excludes some supervisory staff. Sri Lanka's TEWA has establishment-size and service requirements; it does not cover every employee. This is a high-level comparison, not a termination checklist.

Teamified's contractual arrangements

The following describes Teamified's contractual approach and administrative practice, not a replacement for the employee-law comparison above.

• Notice: The standard contractual approach is 30 days' notice or pay in lieu, where the contract and applicable law permit. For employees, this refers to post-probation or regular status; probationary notice terms differ. Statutory protections do not necessarily depend on completing probation. In the Philippines, advance written notice to the employee and DOLE remains required for applicable authorized-cause terminations; do not assume notice pay replaces that process.
• Final settlement: Teamified's current administrative target is to complete final settlement within 30 days of exit across the three countries. This does not extend any earlier statutory or contractual deadline for wages or other amounts due. Pay each component by its applicable deadline.
• Severance: Giving 30 days' notice or notice pay does not itself remove statutory severance or retrenchment entitlements. For eligible Indian workers, retrenchment compensation remains separate from notice or notice pay.
• Sri Lanka: Teamified currently engages its Sri Lankan personnel as consultants. The table describes covered employees, not the terms of those consultancy engagements. Check the consultancy agreement's notice and exit provisions. A consultant label alone does not determine legal status or exclude employment protections; obtain advice on the actual arrangement.

A sound EOR termination process looks like this:

• Keep one internal workflow for approvals, records and escalation
• Follow local law for notice, documentation and final pay
• Work with the EOR, as the legal employer, on the formal steps

When you build an offshore team with Teamified, we support contracts and local administration appropriate to the engagement. Employee and consultancy arrangements are different; our current Sri Lankan engagements are consultants. That means:

• Support for local employment setup. We coordinate contracts, payroll and leave administration in line with applicable local requirements.
• You get local HR support. We coordinate local employment steps with you, so your managers know which process applies to which worker.
• You keep one way of working. You manage day-to-day performance. We handle the local employment admin.

Better-informed hiring can help reduce avoidable mismatches. Teamified’s AI hiring platform supports applicant screening, verification checks and recorded, scored interviews, depending on the workflow enabled. Your team reviews the evidence and makes the hiring decision.

For teams split across Australia and offshore, the right foundations matter most. Confirm whether the arrangement is employment or consultancy, identify the employer or contracting party, and follow the rules that apply. That’s where Teamified can help: supporting your hiring decisions and coordinating local employment processes.