Employment Separation and Termination

Submitted by major on Tue, 10/05/2021 - 19:59

 

    Sub Topics

    The terms separation and termination describe how an organisation or business ends its relationship with workers, employees or contractors. The Human Resource (HR) department may manage this in a large organisation. In a smaller organisation, the responsibility may be part of the role of the business owner or a manager.

    By the end of this topic, you will understand the following:

    • key terms and definitions related to employment separation and termination
    • the legal framework for employment separation and termination
    • organisational requirements for employment
    • employment types, methods and entitlements
    • protections against termination for employees
    • the role of stakeholders in employment and termination
    • the skills required to carry out employee separation and termination.

      The terms separation and termination are often used interchangeably or combined. How the terms are used may differ depending on the organisation.

      The word employment may be included as part of a term to differentiate employment-related separation from other types of separations, for example, legal separation in divorce law. The term employment separation may be used to describe the process involved, and the term termination or terminated points to the state of someone’s employment.

      Termination of Employment

      The Fair Work Ombudsman is one of the agency bodies responsible for governing Australia’s national workplace relations system, Fair Work Australia. The Ombudsman defines termination of employment as:

      when an employee’s employment with an employer ends. Employment can end for many different reasons. An employee may resign or can be dismissed (fired).

      Employment Separation

      According to Employer Services Corporation (ESC), “Employee separation” or “separation of employment” refers to the process of managing the end of the employment cycle.

      Employment can be ended either voluntarily by an employee or involuntarily by the employer.1

      Other Relevant Terms

      Other relevant terms related to employment separation and termination include the following.

      • Employment Contract: A written or verbal agreement between an employer and employee describes the terms and conditions of employment.
      • Modern Award: A legal document describing minimum pay rates and conditions of employment within industries. There are over 100 modern awards in Australia
      • Agreement: Agreements also describe minimum conditions but are for one business or group. Agreed conditions can replace an award but must not be less than that. Agreements are registered through the Fair Work Commission. Example: enterprise agreement, commonly referred to as EA.
      • Lay-Off: Temporary separation from employment due to lack of work.
      • Redundancy: When a position is no longer needed within a business, or the employer becomes insolvent.
      • Redeployment: When a position has been made redundant, the employee is offered and accepts another position in the organisation.
      • Retrenchment: An employee may be retrenched when a position has been made redundant, and redeployment is impossible. This is a form of employment termination.
      • Voluntary Redundancy: Employees are invited to resign voluntarily in exchange for payment when one or more positions are no longer required and redeployment is impossible.
      • Stakeholder: Anyone affected by separation or termination within an organisation or who can affect the process.
      • Resignation: When an employee resigns from a position or job, they no longer want to do it. It is unlawful to force an employee to resign. This is called constructive dismissal.A genuine resignation is a form of voluntary termination.
      • Retirement: When an employee resigns because they no longer wish to work, there are legal requirements for retiring. A retirement is a form of voluntary termination.
      • Unlawful Dismissal: This involuntary termination is when an employee is dismissed for discriminatory reasons.
      • Unfair Dismissal: When an employee is dismissed harshly, unjustly or unreasonably, this is a form of involuntary termination.
      Learn more

      Read more about ending employment through this Factsheet provided by Fair Work Ombudsman.

      To learn more about enterprise agreements and other registered agreements, click here

      Read more on National Employment Standards here

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      In Australia, there are national (Commonwealth) and state laws regarding employment. These include requirements for separation and termination.

      Commonwealth Legal Requirements

      Fair Work Australia is Australia’s national workplace relations system. It was created under the Fair Work Act 2009 and cover most Australian workplaces. Laws created under this Act provide minimum requirements for employment, including separation and termination. Key organisations, also called agency bodies, govern compliance with the Act.2

      The laws and agency bodies are together called the Fair Work System. The agency bodies include:

      • The Fair Work Commission
      • Fair Work Ombudsman
      • Federal Court of Australia; Fair Work Division.
      Note

      Fair Work Inspectors monitor compliance with the Commonwealth laws

      The following table provides a breakdown of some of the key responsibilities of these agency bodies in the legal framework3:

      Fair Work Commission

      Sets the safety net related to wages and conditions in line with the National Employment Standards

      Makes changes to awards and agreements

      Deals with claims of harassment and bullying

      Makes decisions about industrial action

      Resolves work-related disputes using public hearings, mediation and conciliation

      Fair Work Ombudsman

      The office and staff of the Fair Work Ombudsman provides free advice, information and education about:

      The Australian national workplace relations system called The Fair Work system

      Pay, conditions, entitlements, discrimination, workplace culture, policies and procedures etc.

      Oversees compliance with the Fair Work Act, related legislation, awards and registered Agreements

      Investigates problems related to wages and conditions in workplaces

      Appoints Fair Work Inspectors

      Fair Work Inspectors

      The Fair Work Ombudsman appoints Fair Work Inspectors under the Fair Work Act. As well as monitoring compliance with Commonwealth workplace laws, they:

      Deliver education across industries

      Conduct compliance audits

       Investigate and assist with workplace complaints, for example, with wages, discrimination, contracting arrangements and more

      Enforce Commonwealth workplace laws

      Key Point

      Fair Work Inspectors can enter workplaces if required. Each inspector must carry an identity card; business owners can ask to see this. There are penalties under the Fair Work Act if business owners do not cooperate with an inspector.

      For example, providing false information or not making records available.

      Watch the following video outlining the legal requirements of employee separation.

      LEARN MORE

      The National workplace relations system is explained here

      To understand the Powers of Fair Work Inspectors, Fair Work Ombudsman has provided some helpful information in this Factsheet

      The article titled “What’s the Difference Between the Fair Work Commission& Ombudsman?” by the Australian Employee Manual offers some good points that explain the differences.

      State and Commonwealth Legal Requirements

      A mix of state laws and the Commonwealth Fair Work system applies in different states. The following table summarises the legal framework in each state and territory.

      State Commonwealth legal requirements
      New South Wales

      NSW Industrial Relations Act 1996 (IR Act) covers employees in the State public service and local councils

      Other state laws apply for areas of employment such as health and safety, workers’ compensation, and some types of leave

      Victoria State laws cover workers’ compensation and health and safety
      Tasmania

      The Fair Work Australia system covers private-sector employees

      State law covers unfair dismissal for public sector employees

      Queensland State laws cover employees in the public sector and local government for industrial relations, anti-discrimination, health and safety and workers’ compensation

      Western Australia

      Fair Work Australia covers employees in private limited businesses, corporations, incorporated partnerships, trusts and associations

      The State system covers employees in businesses that are sole traders and unincorporated partnerships, with additional requirements for trusts and associations

      Northern Territory Fair Work Australia's national system covers all employees
      South Australia The South Australian system covers employees in the police, state and local government
      Queensland State laws cover employees in the public sector and local government for industrial relations, anti-discrimination, health and safety and workers’ compensation
      Australian Capital Territory Fair Work Australia’s national system covers all employees

      Australian businesses and organisations must develop policies and procedures for critical aspects of their operations, such as workplace health and safety, employment, employee conduct, purchasing and procurement etc.

      These policies and procedures should describe how each business will comply with the legislation relevant to their geographic location and industry4. They should be reviewed, evaluated and updated routinely.

      The number and type of policies vary depending on the business and industry. Below are examples that may be relevant for a small Australian business5.

      Policies relating to employment terms and conditions

      • Recruitment
      • Employment Contracts
      • Performance Management
      • Flexible Work Arrangements
      • Working From Home
      • Leave
      • Grievance Handling
      • Discipline, Dismissal, Suspension, Termination, Retirement and Redundancy

      Policies describing employee obligations and behaviour

      • Code of Conduct Health and Safety Discrimination
      • Bullying and Harassment
      • Alcohol and Drugs
      • Non-Smoking
      • Use of Digital Equipment
      • Use of Mobile Phones
      • Staff Social Functions

      Reviewing policies and procedures

      A diagram depicting policy reviews
      Learn more

      Read the following helpful article titled “Workplace Policies: 15 Must-Haves for Small Australian Businesses”

      The Employment Hero blog provides some handy information for an Employee Termination Procedure Guide.

      Explore the University of Southern Queensland’s Termination and Separation Policy

      Under the Fair Work Act 2009 and State Legislation, employment terms and conditions have similar requirements for all employees and individual requirements depending on what has been negotiated with an employer. The three standard requirements relate to the following.

      1. Type of employment - ways that people can provide their labour or services to people.
      2. Method of employment - the basis under which an employee is employed.
      3. Entitlements - the minimum requirements for payment and conditions.

      Types of Employment

      The Fair Work Act 2009 allows for several different types of employment in Australia, including:

      • Full time
      • Part-time
      • Casual
      • Fixed term
      • contract Shift worker (Either permanent shifts or rostered shifts)
      • Daily or weekly hire
      • Probation
      • Apprentice or Trainee
      • Outworker (Someone hired to work permanently away from the business location, often at home)

      Methods of Employment

      The Fair Work Act 2009 provides several methods for employing people, including under:

      • an award
      • an enterprise agreement
      • a registered agreement
      • an employment contract (negotiated between an employer and one or more employees.

      Example

      Employees can be employed under more than one method, for example, a project coordinator hired under an employment contract and an award.

      National Employment Standards (NES)

      workers in office

      Under the Fair Work Act 2009, the National Employment Standards (NES) provides 11 minimum entitlements for employees based on their employment type and methods. These entitlements relate to the following:

      • Maximum weekly hours
      • Requests for flexible working arrangements
      • Offers and requests to convert from casual to permanent employment
      •  Parental leave and related entitlements
      •  Annual leave
      • Personal/carer’s leave, compassionate leave, unpaid family leave, unpaid domestic violence leave
      • Community service leave
      • Long service leave
      •  Public holidays
      • Notice of termination and redundancy pay
      • Fair Work Information Statement and Casual Employment Information Statement.

      These entitlements must be included in awards, enterprise agreements, registered agreements and employment contracts.

      LEARN MORE

      For further information about types of employment visit “Types of employees” by Fair Work Ombudsman.

      Additional State Requirements for Employees

      States may have additional requirements for employment and entitlements in some industries based on local situations.

      For example, WA has an employment type for commission and piece-rate employees. According to Fair Work Ombudsman, employees paid on piece rate or commission payments are paid based on results meaning their pay is directly linked to how much work they do.

      Learn more

      Access the following resources provided by the Fair Work Ombudsman: A link to employment contract information and a downloadable Employment Contract Tool

      Read more on National Employment Standards

      For details on terminating employment, visit “When can a business terminate a worker’s employment?”

      The Fair Work Act 2009 includes protections against termination for employees, including:

      General protections

      General protections were introduced to:

      • Protect employees from dismissal
      • Protect workplace rights
      • Protect freedom of association
      • Protect from workplace discrimination
      • Provide effective relief for people who have been discriminated against, victimised or treated unfairly
      • Under these protections, an employer must not take any adverse action against an employee.

      Adverse actions can include:

      • Dismissal
      • Withholding legal entitlements
      • Disadvantaging an employee by changing their job
      • Treating an employee differently than others
      • Offering someone different and unfair terms and conditions to other employees
      • These laws apply to employers, employees, contractors and members or officers of an industrial association in all Australian states and territories.
      Prevention of unlawful termination

      According to Fair Work Australia, unlawful termination occurs when an employee is terminated because they have experienced discrimination. Discrimination can be for several reasons, including the person's race, sex, age, physical or mental disability, marital status, nationality etc.

      Small business fair dismissal code

      The Small Business Fair Dismissal code includes provisions against unfair dismissal by businesses with less than 15 employees. In summary, this code:

      • Allows dismissal without notice or warning when serious misconduct occurs, for example, theft, fraud, violence, or serious health and safety breaches
      • Requires the employer to warn an employee if their behaviour or job performance needs to improve, explain what improvement is required, provide further training where applicable and give time for the improvement to be applied
      • Allows an employee to have someone else present during a discussion about possible dismissal, but not a lawyer who is representing them
      • Requires an employer to prove compliance with the code if the employee claims unfair dismissal to the Fair Work Commission.

      The Fair Entitlements Guarantee Act 2012 (FEG) helps eligible employees to obtain unpaid entitlements.

      Human Resource Functions and Compliance with Regulations

      female colleague happy talking with computer

      uman resources (HR) functions include ensuring compliance with relevant dismissal laws. It is expected that HR staff will have received the training needed for this work. The Small Business Fair Dismissal Code can help businesses comply when dedicated HR personnel are unavailable. Small companies must assign HR functions to a nominated job role or external HR consultant. Legal responsibility for compliance in all businesses rests with the business owner/employer.

      LEARN MORE

      Find out more about General Protections (unlawful actions), access the Fair Work Commission website

      Read a bit more about “What is unlawful termination?

      A stakeholder in employment separation is anyone affected by separation or termination within an organisation or anyone who can impact the process6.

      Two types of stakeholders are involved in this process: internal and external.

      Internal stakeholders include:

      • Employees
      • Employee relations representatives
      • Owners/Executive Boards
      • Senior management
      • Team leaders and supervisors
      • The HR department

      External stakeholders may include:

      • Industry associations
      • Unions and other labour organisations
      • Commission bodies
      • Fair Work Ombudsman representatives
      • Employer groups
      • Tribunals and courts

      Termination of employment can be complex and stressful for everyone involved. Having detailed policies and procedures and other supporting documents related to recruitment, employee conduct, performance management, discipline and termination can provide clarity when making decisions and reduce stress.

      Consultation

      African woman leading the team consultation

      Consulting with relevant stakeholders should be a priority as they will give input on policies, procedures and other workplace documentation. Policies, procedures and supporting documentation related to employment and termination should be communicated and explained to relevant stakeholders, and their support for them obtained.

      Note

      Stakeholders with subject matter expertise for developing policies and procedures include:

      • Internal HR staff and external HR consultants
      • Representatives of the Fair Work Ombudsman

      Consultation with these experts should be planned as part of the development process and involve the following:

      1. Engage with them as early as possible and gain their agreement to give input for the work.
      2. Explain what will be asked of them and the process and timing for the work.
      3. Confirm communication methods.
      4. Invite their initial input on critical points to include.
      5. Distribute draft documents for review and input.
      6. Keep communication lines open for additional discussion or input.
      7. Allow them to give their opinion and suggest alternatives.
      8. Use their feedback to edit and refine documents.
      9. Seek their confirmation of completed policies, procedures and supporting documents.
      10. Distribute final copies for their records and thank them for their assistance.

      Providing feedback on Organisational Operations

      Gathering feedback about Organisational Operations is essential if the organisation wants to make genuine productive changes to its policies and procedures. We can gather feedback from the various stakeholders by:

      • scheduling a meeting with a peer or leader
      • providing pulse surveys
      • submitting documentation and asking for consultation
      • asking for feedback in one-on-one and team meetings

      In summary, as the following diagram displays, there are four key steps to remember when you want to identify and suggest improvements to management on organisational operations.

      A diagram depicting management improvement

      A range of skills is needed to carry out processes for disciplinary action and employment separation and termination. These skills include:

      • Emotional intelligence
      • Negotiation skills
      • Communication with employees and management
      • Writing and developing plans, reports, policies and procedures
      • Interpersonal skills
      • Conflict resolution skills
      • Payroll tasks
      • Reviewing and evaluating procedures

      In larger organisations, HR department staff should have these skills. In a smaller organisation, tasks related to disciplinary action, employment separation, and termination may be assigned to the business owner or a nominated role. Additional expertise may be provided when needed through part-time HR professionals or consultants.

      It is wise for organisations to provide training for Managers and Leaders to ensure they have the necessary skills to implement separation and termination procedures. When changes to policies and procedures are made, all staff should receive training on the new skills required. Following is an example of a training plan devised for all staff.

      Attendants Type of training Description Delivery
      All staff Survey Survey to assess what they do know and need help with Via Confidential Survey
      All staff Handbook / user guide Each staff member will receive a handbook Handbook provided to all staff
      All staff Intranet access All staff to have intranet access to the policies, procedures and related documents Via Intranet
      Managers and Supervisors In-house training sessions

      Legal and moral responsibilities

      Privacy requirements and discretion

      Small classroom session with handouts/discussion
      Managers and Supervisors On-the-job coaching

      Record-keeping requirements

      Using the process and procedure

      Assign an internal coach to demonstrate to Managers with discussions
      Managers and Supervisors External trainers Communication skills for separation and termination processes

      Seminars and sessions with role plays

      online webinars

      Key Points

      If you are responsible for overseeing aspects of managing voluntary and involuntary employee termination in your organisation, it is essential for you to:

      • Have sufficient overall knowledge of the tasks and skills involved
      • Understand how these tasks are assigned and planned for
      • Have good communication and interpersonal skills
      • Educate yourself and enhance your emotional intelligence
      • Be clear about expectations for your role in carrying out these tasks. You will then be confident about knowing when additional expertise is needed and asking for it, along with overseeing the tasks.

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