Termination

Make sure you know what you’re entitled to:

1. How much notice should I get?

Your employer has to give you notice if they let you go. Check the table below to find out how much notice you are entitled to. You may be entitled to more notice if you are covered by an agreement or modern award.

Check which agreement  or modern award  you are covered by. 

Minimum notice periods:

*These periods are increased by 1 week if the employee is over 45 years old and has completed at least 2 years of service.

Exceptions

You are not entitled to notice if you are:engaged for a specific period of time

• terminated because of serious misconduct
• employed as a casual employee
• engaged on a training arrangement (other than an apprentice).

Still unsure how much notice you should get? Read more about notice periods.

2. What if I resign? How much notice should I give?

You generally have to give your employer notice you’re resigning from your job. Check your modern award or agreement to find out the minimum notice you must provide.

Check which modern award you are covered by.

3. Can my employer pay me instead of giving me notice? How much?

Yes, you employer may choose to pay you in exchange for not giving you the required period of notice.

They have to pay you at least the amount you would have been entitled to if you had of worked the period of notice. For example, if you were entitled to two weeks of notice you would receive two weeks pay instead. Check the table above or your modern award to determine how much notice you are entitled to.

4. Am I entitled to redundancy pay?

You may be entitled to redundancy pay if your employment is terminated because:

• your employer genuinely does not need the job to be performed any longer
• your employer is insolvent or bankrupt.

You are not entitled to redundancy pay if you:

• have worked for your employer for less than 12 months  
• are engaged for a specific period of time
• are terminated because of serious misconduct
• are a casual employee
• are an apprentice or trainee
• are employed by a small business employer.

The National Employment Standards provide for redundancy pay as follows:

5. What happens with my annual leave?

However your employment ends, if you have unused annual leave you are entitled to take this as pay, and have it paid to you at your usual pay rate. Find your pay rate with PayCheck Plus.

You might also be entitled to additional money called ‘annual leave loading’ if your modern award includes this. Check which award you are covered by here.

Still unsure about what happens with your annual leave? Find out more about termination of employment, or complete our online checklist and let us help you figure out what you’re entitled to.

Final pay is what the employer owes and must pay an employee, when the employer ends their employment.

What's included in final pay?

Employees should get the following entitlements in their final pay:

• outstanding wages, including penalty rates and allowances
• accrued annual leave and annual leave loading entitlements
• accrued or pro-rata long-service leave (if applicable)
• redundancy pay entitlements (if applicable).

Annual leave loading payable on termination

If an employee is entitled to annual leave and annual leave loading, then they must be paid out for both entitlements if their employment is terminated. This applies even if a clause in a modern award, agreement or contract expressly states that either entitlement is not payable.

This entitlement is based on the annual leave on termination provision in s.90 (2) of the Fair Work Act 2009 which provides that a terminated employee with a period of untaken annual leave must be paid what they would have been paid if they had taken that period of leave. This section is part of the National Employment Standards so it cannot be excluded by any term in a modern award, agreement or other instrument that may provide for a lesser benefit.

When entitlements aren’t paid out

If an employee believes they haven’t been paid out for all of their entitlements in their final pay, the Fair Work Ombudsman can investigate. The Fair Work Ombudsman can take action to make sure the employer pays out all the legal entitlements.

Under the National Employment Standards (NES), if an employer terminates the employment of a permanent employee, the employer must provide that employee with a minimum period of notice. This notice is based on the employee’s period of continuous service with the employer.

The required notice periods under the NES are as follows:

• not more than 1 year continuous service (1 week)
• more than 1 year but not more than 3 years continuous service (2 weeks)
• more than 3 years but not more than 5 years continuous service (3 weeks)
• more than 5 years continuous service (4 weeks).

The relevant notice period also increases by 1 week if the employee is over 45 years old and has completed at least 2 years’ continuous service with the employer.

Exemptions

Section 123 of the Fair Work Act 2009 also specifies that the notice periods prescribed above don’t apply to:

• an employee employed for a specified period of time, for a specified task, or for the duration of a specified season
• an employee whose employment is terminated because of serious misconduct
• a casual employee
• an employee (other than an apprentice) to whom a training arrangement applies and whose employment is for a specified period of time or is, for any reason, limited to the duration of the training arrangement
• a daily hire employee working in the building and construction industry (including working in connection with the erection, repair, renovation, maintenance, ornamentation or demolition of buildings or structures)
• a daily hire employee working in the meat industry in connection with the slaughter of livestock
• a weekly hire employer working in connection with the meat industry and whose termination of employment is determined solely by seasonal factors.

Notice of termination under awards and agreements

In addition to the NES, notice of termination entitlements may be found in a registered agreement or award. It is essential that the notice of termination provisions in a relevant registered agreement or award are also checked as this may impact an employee’s entitlement. For instance, a modern award may include terms that specify in more detail how an NES entitlement works under that modern award.

It is important to note that any term in a registered agreement or award that is detrimental to an employee when compared to an entitlement under the NES will have no effect.

Under the National Employment Standards (NES), redundancy occurs when an employer decides they no longer want an employee’s job done by anyone and terminates the employee’s employment (except in cases of ordinary and customary turnover of labour), or where an employer becomes insolvent or bankrupt.

An employee may be entitled to receive a redundancy payment under the NES in accordance with their period of continuous service provided the employee doesn’t fall into an excluded category. Generally speaking, redundancy is not payable under the NES to any of the following:

• an employee whose period of continuous service with the employer is less than 12 months
• an employee of a small business employer
• an employee employed for a specified period of time, for a specified task, or for the duration of a specified season
• an employee whose employment is terminated because of serious misconduct
• a casual employee
• an employee (other than an apprentice) to whom a training arrangement applies and those employment is for a specified period of time or is, for any reason, limited to the duration of the training arrangement
• an apprentice
• an employee to whom a industry-specific redundancy scheme in a modern award applies
• an employee to whom a redundancy scheme in an enterprise agreement applies if the scheme is an industry-specific redundancy scheme that is incorporated by reference (and as in force from time to time) into the enterprise agreement from a modern award that is in operation and the employee is covered by the industry-specific redundancy scheme in the modern award.

Alternatively, an employee may be entitled to receive a redundancy payment in accordance with the terms and conditions of a registered agreement or award that applies to their employment; therefore it is essential that the provisions of the relevant instrument are checked. It is important to note that any term of a registered agreement has no effect where that term is detrimental to an employee when compared to an entitlement under the NES.

The National Employment Standard (NES) does not refer to periods of probation, therefore whether an employee is on a period of probation or not does not impact the notice of termination that they would otherwise be entitled to under the NES.

In addition to the NES, notice of termination entitlements may be found in a registered agreement or award, therefore it is essential that the provisions of the instrument that applies to an employee are also checked.

However, any term of a registered agreement has no effect where that term is detrimental to an employee when compared to an entitlement under the NES. Further, a modern award may include terms that specify in more detail how an entitlement under the NES works under that modern award.

Conduct that is serious misconduct includes both of the following:

• wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
• conduct that causes serious and imminent risk to:
  • the health or safety of a person, or
  • the reputation, viability or profitability of the employer’s business.

Serious misconduct also includes:

• the employee, in the course of the employee’s employment, engaging in:
  • theft
  • fraud
  • assault
• the employee being intoxicated at work
• the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

These circumstances do not apply if the employee is able to show that, in the circumstances, the conduct they engaged in was not conduct that made employment in the period of notice unreasonable.

An employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that they may be called upon to perform.

A small business employer for the purpose of determining redundancy pay is an employer who, at a particular time, employs fewer than 15 employees.

When calculating the number of employees employed at a particular time, the following factors are to be taken into account: 

• all employees employed by the employer at that time are to be counted
• a casual employee is not be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis
• associated entities are taken to be one entity
• the employee being terminated and any other employees being terminated at that time are counted.

Please Note the Fair Work Act 2009 has different requirements for determining whether a business is a ‘small business employer’ for the purposes of unfair dismissal. For more information, please contact Fair Work Australia on 1300 799 675.