Ending someone’s employment is the highest-risk thing a small business does, and it is usually done under time pressure by someone who has never done it before. The process below will not make the conversation pleasant. It will make it defensible, and it will stop the avoidable mistakes that turn a difficult decision into a claim.

1. Be clear on the reason

Every later step depends on this. The three broad categories are performance or conduct, redundancy, and the end of a fixed term or contract. They have different processes and they are not interchangeable — dressing a performance exit up as a redundancy is one of the fastest routes to a successful claim, because a redundancy that is not genuine is not a valid reason for dismissal.

If it is performance or conduct, you should already have followed a process. See managing underperformance fairly. If it is redundancy, see what makes a redundancy genuine.

2. Check the risk before the meeting, not after

  • How long have they been employed? A small business employer has a twelve-month minimum employment period for unfair dismissal.
  • Has the employee recently exercised a workplace right — raised a pay query, taken leave, made a complaint, reported a safety concern? If so, the timing needs careful thought, because a general protections claim has no qualifying period.
  • Is there any personal attribute in play — pregnancy, disability, age, carer’s responsibilities, race, religion? Discrimination claims also have no qualifying period.
  • Does an award or contract require anything specific?

3. Get the notice right

Notice comes from the National Employment Standards as a minimum, and the contract or award may require more — whichever is greater applies. NES notice runs from one week up to four, based on continuous service, with an additional week for employees over 45 with at least two years’ service. You can require the employee to work the notice, or pay it out in lieu, unless the contract says otherwise. Notice must be given in writing.

Summary dismissal without notice is only available for serious misconduct, and “serious” is a high bar. Even then, a process is still expected: put the allegation to the person, let them respond, and consider the response before deciding.

4. Hold the meeting properly

  • Give notice of the meeting and its purpose, and offer a support person.
  • Have a second person present to take notes.
  • Say the decision clearly and early. Do not open with fifteen minutes of context.
  • Explain the reason, the notice arrangements and the final pay.
  • Keep it short. This is not the meeting for a detailed debate about the merits.
  • Follow up in writing the same day.

5. Final pay

Final pay is generally due on the last day, or as soon as practicable after — check your award, which may set a specific timeframe. It includes:

  • Outstanding ordinary wages and any overtime, penalties or allowances.
  • Accrued but untaken annual leave, plus leave loading if the award requires it on termination.
  • Payment in lieu of notice, if applicable.
  • Redundancy pay, if applicable — note that small business employers are generally exempt under the NES.
  • Accrued long service leave, if the relevant state or territory threshold is met.
  • Superannuation on the relevant components.

Accrued personal/carer’s leave is not paid out unless an award, agreement or contract says otherwise.

6. The paperwork afterwards

  • A written termination letter stating the reason, the last day and the notice arrangements.
  • An employment separation certificate if the employee requests one.
  • Final pay slip and updated STP reporting.
  • Records retained for seven years, including how and by whom the employment was ended.
  • Return of property and removal of system access.

The clock

An unfair dismissal or general protections application must generally be lodged within 21 days of the dismissal taking effect. If something is going to arrive, it will arrive quickly. Having the file complete before the meeting rather than after it is the single most useful preparation you can do.

If you are unsure about any element of a particular exit, an hour of advice beforehand is dramatically cheaper than a Commission matter afterwards.