Relationships with your Personnel - Finalisation of the Employment Relationship (& why it pays to get it right)

Posted by Luke Mitchell on 29 June 2016
Relationships with your Personnel - Finalisation of the Employment Relationship (&  why it pays to get it right)

As anyone in business knows, employees – both good and bad – move on from time to time. While businesses often spend a substantial amount of time and money looking for the right people to employ in their business, typically only a fraction of that time and money is dedicated to managing the exit of an employee.

It goes without saying that where an employment relationship comes to an end it does so for one of two reasons – the employee decides it is time to move on, or the employer decides that it is time for the employee to move on.

Where the termination is at the initiative of the employee, care must be taken to ensure that the employee's engagement is properly "shut down" before they leave. This might involve the changing or disabling of passwords and logons, restricting access to data and, in the event that the employee intends to work for a competitor, discussions held as to the effect of any non-compete, non-disclosure or non-disparagement clauses that form part of the employee’s employment contract.

Where termination is at the initiative of the employer, no action should be taken until such time as the employer is comfortable that there is a legitimate reason(s) for the termination and that a fair process has been followed. For example, if the reason for termination is performance, has the employee been advised of the relevant performance issues and have they been given a legitimate opportunity to address those issues. Where the termination is related to the employee's conduct, has the employee been made aware of that conduct and been given an opportunity to respond and to address that conduct?

Often employers will form the view that they have a valid reason to terminate the employment relationship and will take action immediately. However, even where there are strong grounds to terminate the employment relationship, failure to provide procedural fairness to the employee can have significant consequences for an employer.

In a 2015 decision, the Fair Work Commission found that an employee who circulated a “highly offensive"  email that the Commission found to have vilified people of the Muslim faith, sought to incite readers to take political action against them, and had significant potential to damage the employer's reputation, had nonetheless been unfairly dismissed.

Notwithstanding, the Commission’s findings in respect of the content of the email itself, as well as finding that the applicant had adopted “a belligerent and intransigent attitude about the email and its impact", the employer’s failure to follow a proper process in terminating the applicant’s employment resulted in him being awarded $28,578 in compensation. This was despite the Commission’s finding that the act of sending the email provided a valid basis upon which to terminate the applicant’s employment.

In addition to unfair dismissal, there are also General Protections and Discrimination claims available to employees who have had their employment terminated for prohibited reasons (such as in response to the employee enforcing a workplace right, or because of some personal characteristic of the employee).

There are far reaching consequences when a business gets the exit of an employee wrong – time, stress and financial costs as well as the loss of valuable human capital.  We have years of experience in helping businesses manage the termination processes. It is unquestionably better to get the right advice before the employment relationship comes to an end rather than trying to deal with the fallout after the relationship has ended. If you have a potential termination situation on your hands, speak to us before you take any action and we can guide you through the process so you can move forward with clarity and confidence.