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HOW-TO GUIDE

How to terminate an employee fairly

Terminating an employee is one of the most difficult tasks any manager faces. Done properly, it protects your business legally and preserves the departing employee's dignity. Done poorly, it can result in unfair dismissal claims, damaged morale, and reputational harm.

15 min read
Steve Harris

Written by

Steve Harris

Important Legal Notice

This guide provides general process information only. Termination matters carry significant legal risk. Seek legal advice before taking action on any specific case.

What is fair termination?

Fair termination means ending someone's employment for a valid reason, following proper procedures, and meeting all legal obligations. Under Australian law, employees have strong protections against unfair dismissal, and employers must demonstrate both a valid reason for termination and a fair process.

According to the Fair Work Ombudsman , termination can occur for various reasons including poor performance, misconduct, redundancy, or the end of a fixed-term contract. Whatever the reason, following the correct process is essential.

Before you proceed - mandatory checklist

Before using this guide to terminate an employee, confirm you have addressed each of these items:

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Have you consulted a lawyer or HR professional about this specific case?
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Have you documented the circumstances and reasons thoroughly?
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Have you checked for any protected attributes or workplace rights that may apply?
?
Have you given the employee an opportunity to respond to concerns?

If you cannot answer "yes" to all of these questions, stop and seek professional advice before proceeding.

EXAMPLE

Sample termination letter structure

Here's what a typical termination letter includes. Always seek legal advice before finalising.

Termination_Letter.docx

A termination letter typically includes:

  • Date — When the letter is issued
  • Last day — Final date of employment
  • Reason — Valid reason for termination
  • Notice — Period and whether worked or paid
  • Entitlements — Final pay breakdown
THREE PHASES

Before, during, and after termination

Fair termination requires careful preparation, respectful execution, and proper follow-through.

High-risk moment ahead

The termination meeting is when most legal claims originate. Every word can be scrutinized by the Fair Work Commission . If you have ANY doubt, seek legal advice before proceeding.

Before

Ensure you have valid reasons, proper documentation, and have met all legal requirements.

Documented performance issues or misconduct
Warnings issued and acknowledged
Legal obligations checked

Critical: Get legal advice if unsure

During

Conduct the meeting professionally, directly, and with respect for the employee's dignity.

Have a witness present
Be direct and clear about the decision
Allow them to respond

Keep it brief: 15-20 minutes max

After

Process final pay, handle logistics professionally, and communicate appropriately with the team.

Pay all entitlements promptly
Collect company property respectfully
Inform team without private details

Offer support: Reference letter, outplacement

CHOOSE YOUR METHOD

Three ways to manage terminations

Each method has trade-offs. Here's how they compare.

Manual process

Paper records, manual calculations, and memory-based processes. Risky for compliance.

No software cost
High error risk
Poor documentation
Compliance gaps likely

Risk level: High

Pre-made policies and checklists. Better structure but still manual tracking.

Consistent structure
Professional format
Manual calculations
No audit trail

Risk level: Medium

Recommended

Automated workflows, centralised records, and built-in compliance. Professional and defensible.

Complete audit trail
Award calculations
Offboarding workflows
Defensible records

Risk level: Low

STEP-BY-STEP

How to terminate an employee fairly

Follow these steps to conduct a fair, legal, and respectful termination.

This is the highest-risk moment

Anything you say during the termination meeting can be used in an unfair dismissal claim. If you are unsure about any aspect of this meeting, seek legal advice first.

1

Establish a valid reason and documentation

Ensure you have a legitimate, documented reason for termination that would be considered fair under Australian workplace law.

Key actions:

  • Review all <a href="/guides/how-to/conduct-a-performance-review" class="text-primary-700 hover:text-primary-800 underline">performance review records</a>, <a href="/guides/how-to/write-a-warning-letter" class="text-primary-700 hover:text-primary-800 underline">warning letters</a>, and <a href="/guides/how-to/create-a-pip" class="text-primary-700 hover:text-primary-800 underline">improvement plans</a>
  • Ensure the reason relates to conduct, capacity, or genuine redundancy
  • Check that any performance management process was followed correctly
  • Gather all relevant documentation to support your decision
2

Review legal obligations

Check the Fair Work Act, relevant award or enterprise agreement, and employment contract for specific requirements.

Key actions:

  • Calculate the correct notice period based on length of service
  • Determine all final entitlements owed (leave, wages, redundancy pay)
  • If a small business (under 15 employees), review the Small Business Fair Dismissal Code
  • Consider whether unfair dismissal protections apply to this employee
3

Prepare for the meeting

Plan exactly what you will say and gather all necessary documents. Arrange for a witness to be present.

Key actions:

  • Book a private meeting room away from other employees
  • Prepare written notice of termination with last day of employment
  • Have a witness (ideally HR or another manager) present
  • Prepare final pay calculations and any other documents needed
4

Conduct the meeting with respect

This is the highest-risk moment. Anything you say can be used in an unfair dismissal claim. If you are unsure about any aspect of this meeting, seek legal advice first.

Deliver the news directly and professionally. Allow the employee to respond and maintain their dignity throughout.

Key actions:

  • Be direct and clear — state the decision early in the meeting
  • Explain the valid reasons using documented evidence
  • Give the employee an opportunity to respond and listen to their perspective
  • Keep the meeting brief and factual — it is not a negotiation
5

Handle logistics with dignity

Manage the practical aspects of departure professionally, respecting the employee's privacy and dignity.

Key actions:

  • Provide written termination letter detailing last day, notice period, and final pay
  • Discuss return of company property (keys, laptop, uniforms)
  • Offer to let them collect belongings outside of busy hours if preferred
  • Arrange security access changes in a way that is not humiliating
6

Process final pay and follow up

Pay all entitlements promptly, inform the team appropriately, and offer support where possible.

Key actions:

  • Process final pay including outstanding wages, accrued leave, and any notice payout
  • Provide a separation certificate if requested
  • Communicate the departure to the team without disclosing private details
  • Consider offering outplacement support or a reference letter

The 6 phases of a termination meeting

A typical termination meeting should last 15-20 minutes. Here's the detailed timeline with sample language.

1

Phase 1: Opening (0-2 minutes)

Set the tone and get straight to the point

✓ What to say:

"Thank you for meeting with me today. I need to discuss something important regarding your employment."

✗ What NOT to say:

  • • "How are you doing today?" (Don't make small talk)
  • • "Let's talk about your future here" (Too vague)
  • • "I have some bad news" (Creates unnecessary anxiety)

Body language: Maintain eye contact, sit across from the employee (not behind a desk), speak calmly and clearly.

2

Phase 2: Deliver the decision (2-4 minutes)

Be direct and unambiguous about the outcome

✓ What to say:

"I need to inform you that we have decided to terminate your employment with [Company], effective [date]."

Be clear and direct. Avoid softening language that creates ambiguity.

✗ What NOT to say:

  • • "We're going to have to let you go" (Too informal)
  • • "It's not working out" (Too vague)
  • • "I'm really sorry about this" (Implies you made a mistake)
3

Phase 3: Explain the reason (4-7 minutes)

Reference documented evidence

Tailor your explanation to the termination type:

For performance issues:

"Despite the performance improvement plan we put in place on [date], and the additional support provided, the required performance standards have not been met."

For misconduct:

"Following our investigation into [specific incident], we have determined that your actions constitute serious misconduct under our workplace policies."

For redundancy:

"Due to business restructuring, your position is being made redundant. This decision is about the role, not your performance."

Key principle: Be factual, not emotional. Reference specific dates and documented incidents.

4

Phase 4: Allow response (7-15 minutes)

Listen actively but don't negotiate

✓ What to say:

"I understand this is difficult news. Would you like to share your thoughts or ask any questions?"

Handling emotional reactions:

If they cry:

Offer tissues, pause to let them compose themselves, show empathy: "I understand this is upsetting. Take your time."

If they become angry:

Stay calm, don't escalate. "I understand you're upset. This decision is final." Have your witness ready to intervene if needed.

If they deny wrongdoing:

Restate the facts calmly: "I understand you see it differently. However, based on our investigation and documented evidence, this is our decision."

Remember: Don't argue, negotiate, or discuss other employees. The decision is final.

5

Phase 5: Cover logistics (15-18 minutes)

Explain practical next steps

Notice period: "Your notice period is [X] weeks. You can work the notice or we'll pay it out."
Final pay: "Your final pay will include all outstanding wages, annual leave, and [other entitlements]. You'll receive this on [date]."
Company property: "Please return [laptop, keys, uniform, etc.] by [date]."
Access: "Your system access will be deactivated as of [time today/tomorrow]."
References: "We can provide employment confirmation. Please contact HR for reference requests."
6

Phase 6: Close the meeting (18-20 minutes)

End professionally and compassionately

✓ Closing statement:

"I know this is difficult. Here's a written summary of everything we discussed. If you have questions later, please contact [HR contact]. Is there anything else you need right now?"

Provide them with:

After they leave: Escort them professionally if collecting belongings. Avoid making them feel like a criminal.

Free termination letter template

Download our free termination letter template with all required elements for performance, redundancy, and misconduct dismissals. Includes guidance on proper wording and legal requirements under the Fair Work Act .

Customize for your situation: This template provides structure only. Seek legal advice to ensure your specific termination reason, wording, and entitlements comply with applicable laws and the employee's award or contract.

Download template

Calculate final pay entitlements

Use our free payroll calculator to estimate final pay including wages, annual leave, leave loading, and notice pay. Ensure you comply with the Fair Work Act requirements for final entitlements.

Open payroll calculator
TOP TIPS

Termination tips

Follow these principles to handle terminations professionally and minimise risk.

Document everything

Maintain detailed records of performance issues, warnings, and the termination process.

Be direct but kind

State the decision clearly and early. Avoid beating around the bush or giving false hope.

Respect their dignity

Handle the departure in a way that preserves the employee's self-respect and privacy.

Follow the law

Support compliance with Fair Work Act, applicable awards, and contractual obligations.

Pay what is owed

Calculate and pay all entitlements accurately and on time. Never withhold final pay.

Learn and improve

After the termination, reflect on what led to this point and how to prevent similar situations.

Conducting the termination meeting

The meeting should be brief, direct, and respectful. Here's how to approach it:

Get to the point quickly — don't make small talk
State the decision clearly: "Your employment is being terminated"
Explain the reason briefly, referencing documentation
Allow them to respond but don't debate or negotiate
Have tissues and water available — expect emotions
Provide the termination letter and explain next steps
SOFTWARE METHOD

Manage terminations with RosterElf HR hub

Reduce risk and support compliance with proper documentation and workflows.

1

Document performance history

Track performance issues, warnings, and improvement plans in one centralised location.

2

Calculate entitlements accurately

Award interpretation ensures correct notice periods and final pay calculations.

3

Run offboarding workflows

Automated checklists ensure nothing is missed during the exit process.

4

Maintain audit-ready records

Complete documentation trail to defend against any potential claims.

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DETAILED COMPARISON

Feature comparison

See exactly how each termination management method stacks up across key features.

Documentation

Manual Paper files
Templates Shared drive

Warning tracking

Manual Manual notes
Templates Spreadsheet

Notice calculation

Manual Manual lookup
Templates Checklist

Final pay

Manual Manual calculation
Templates Calculator

Compliance trail

Manual Filing cabinet
Templates Document folder
HR software Audit-ready records

Offboarding tasks

Manual Memory-based
Templates Checklist

Policy access

Manual Paper manual
Templates Shared drive
HR software Digital policies

Legal updates

Manual Manual research
Templates Manual
HR software Built-in compliance
AVOID THESE

Common termination mistakes

These mistakes lead to unfair dismissal claims, underpayment penalties, and reputational damage.

No documented warnings or performance management

Consequence: Risk of unfair dismissal claim due to lack of procedural fairness

Solution: Always follow a documented performance improvement process before termination using performance tracking

Not giving the employee a chance to respond

Consequence: The Fair Work Commission may find the dismissal was procedurally unfair

Solution: Always notify the employee of the reason and give them an opportunity to respond before making a final decision using proper procedures

Terminating without calculating correct entitlements

Consequence: Underpayment can lead to penalties, back-pay claims, and reputational damage

Solution: Calculate all entitlements accurately including notice, leave, and any redundancy pay with award interpretation tools

Public or humiliating dismissal

Consequence: Damages employee dignity, morale of remaining staff, and increases legal risk

Solution: Always conduct the meeting privately with a witness and handle logistics with respect workplace policies

Not following the Small Business Fair Dismissal Code

Consequence: Small businesses lose protection against unfair dismissal claims

Solution: Follow the Code exactly, including providing a written warning for performance issues, documented using compliant templates

Manage terminations properly

RosterElf HR Hub helps you document terminations and calculate final entitlements accurately. Built for Australian small businesses.

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FAQs

Frequently asked questions about terminating employees

  • Unfair dismissal occurs when an employee is dismissed in a harsh, unjust, or unreasonable manner. The Fair Work Commission considers whether there was a valid reason, whether the employee was notified and given a chance to respond, whether they were allowed a support person, whether they had been warned about performance issues, and whether the employer's size affected their HR capabilities.
  • The minimum notice period under the National Employment Standards depends on length of service: 1 week for less than 1 year, 2 weeks for 1-3 years, 3 weeks for 3-5 years, and 4 weeks for more than 5 years. Employees over 45 with at least 2 years' service get an extra week. You can pay out the notice period instead of having them work it.
  • Final pay must include: outstanding wages and any overtime or penalties owed, accrued annual leave, accrued long service leave (if applicable), payment in lieu of notice (if notice not worked), and redundancy pay (if applicable and business has 15+ employees). Any leave taken in advance can be deducted.
  • The Small Business Fair Dismissal Code applies to businesses with fewer than 15 employees. If followed, it protects the employer from unfair dismissal claims. Key requirements include: a valid reason for dismissal, a genuine belief the employee is guilty of misconduct (for misconduct cases), a warning about performance issues (for performance cases), and giving the employee an opportunity to respond.
  • Summary dismissal (immediate termination without notice) is only permitted for serious misconduct such as theft, fraud, violence, serious safety breaches, or being intoxicated at work. Even then, you should still conduct an investigation and give the employee a chance to respond to the allegations before making a final decision.

Regulatory sources

This guide is aligned with official Australian workplace regulations on ending employment.

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