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The Lawful Termination of Employment

Termination of employment is the voluntary or involuntary cessation of a contract of employment:

  • by giving proper notice (i.e. resignation of employee, dismissal or retrenchment);
  • summarily due to the employee’s misconduct; or
  • by frustration, repudiation or abandonment of employment by an employee.

Termination of employment can be effected by either the employer or the employee, but is subject to minimum obligations imposed by the Fair Work Act and, where relevant, any applicable industrial instrument. Employers should take care to ensure that any dismissal is not ‘harsh, unjust or unreasonable’.

A contract of employment can be lawfully terminated in a number of ways, specifically:

  • Termination by operation of law 

For example, if an employee dies.

  • Completion of the contract 

An employment contract for a fixed-term, or for a specific task, ends automatically at the end of that term or task.

  • Termination by notice 

Either party may terminate a contract of employment by giving the proper period of notice of termination, pursuant to contract, Award, industrial instrument or NES, or by otherwise making an appropriate payment in lieu of notice.

  • Termination by breach of contract 

A party may terminate a contract of employment if the other party breaches that contract; but be careful, not every breach of contract will justify termination and is dependant on the particular circumstances of each case.


Beware of Repudiation

Repudiation occurs when one party refuses to continue under the terms of the contract. It may also involve behaviour that whilst stopping short of a major breach of the employment contract, attempts to make the work environment so difficult or unpleasant for the employee that he or she either resigns or accepts substantially different (and less favourable) terms of employment.

In this case, the employer may be regarded as having breached an implied duty not to attempt to destroy or seriously damage the relationship of trust and confidence necessary for the employment relationship to continue, and so the termination would be deemed unlawful.

To ensure that your company is operating lawfully, or to discuss any aspect of business or personal law, contact Julia Adlem or Alisha Thompson at Pace lawyers on (08) 8410 9494.


Julia Adlem

Associate Lawyer