Performance and exits

Ending employment: lawful termination steps

To end employment lawfully you need a valid reason, a fair process, written notice (or payment in lieu) of at least the National Employment Standards minimum, correct final pay including unused annual leave, and redundancy pay where the job is made redundant. An eligible employee has 21 days to lodge an unfair dismissal or general protections claim.

Updated 5 November 2026. General information, not legal advice.

What makes a dismissal lawful?

The dismissal must be for a valid reason related to the employee’s capacity or conduct (or a genuine redundancy), the employee must be told the reason and allowed to respond, and it must not be for a prohibited reason such as the employee exercising a workplace right.

The Fair Work Commission tests unfair dismissal claims against the criteria in s 387 of the Fair Work Act 2009: valid reason, notification of the reason, opportunity to respond, any unreasonable refusal of a support person, and warnings for unsatisfactory performance. Separately, the general protections make it unlawful to dismiss someone because they made a complaint about their employment, took leave they were entitled to, or have a protected attribute (Fair Work Ombudsman).

Performance: clear expectations, documented meetings, written warnings and a genuine chance to improve before dismissal.
Conduct: investigate, put the allegations to the employee, consider their response, then decide.
Redundancy: the job is no longer needed, you have consulted as your award or agreement requires, and redeployment is not reasonable.

How much notice do I have to give?

Under s 117 you must give written notice of the last day of employment and at least 1 week’s notice for up to 1 year of service, 2 weeks for 1 to 3 years, 3 weeks for 3 to 5 years and 4 weeks for more than 5 years, plus 1 week if the employee is over 45 with at least 2 years’ service.

NES minimum notice of termination (s 117(3))
Continuous service	Minimum notice
1 year or less	1 week
More than 1 year to 3 years	2 weeks
More than 3 years to 5 years	3 weeks
More than 5 years	4 weeks
Over 45 with at least 2 years’ service	Add 1 week

Notice can be delivered in person, left at or posted to the employee’s last known address, or sent electronically if the employee agrees. You can pay in lieu of some or all of the notice at the employee’s full rate of pay (see garden leave and payment in lieu). An award, agreement or contract may require more notice, and notice still applies during probation (Fair Work Ombudsman: dismissal).

Which employees don’t get notice or redundancy pay?

Casual employees, employees engaged for a set period, task or season, and employees dismissed for serious misconduct are not entitled to NES notice. Redundancy pay also excludes employees with less than 12 months’ service, most casuals and most employees of a small business with fewer than 15 employees.

Serious misconduct is defined in regulation 1.07 of the Fair Work Regulations 2009. It covers deliberate behaviour inconsistent with continuing employment, conduct causing serious and imminent risk to health and safety or to the business’s reputation or profits, and examples such as theft, fraud, assault, sexual harassment and refusing a lawful and reasonable instruction that is part of the job.

Even where the NES gives no notice, confirm the end of a casual engagement in writing. The Ombudsman describes this as best practice for all employees, so there is a clear record of the last day.

What goes in final pay, and when is it due?

Final pay includes wages owing (with penalty rates and allowances), all unused annual leave with loading if it would have been paid during employment (s 90(2)), and, where they apply, payment in lieu of notice, redundancy pay and long service leave. Most awards require it within 7 days after the last day of employment.

Follow the timing in the award or enterprise agreement. If neither sets a time, the Fair Work Act requires pay at least monthly.
Annual leave loading is paid out on termination even where the award, agreement or contract says it isn’t, if the employee would have received it on leave.
Sick and carer’s leave is not paid out.
Accrued or pro rata long service leave is included where the employee has an entitlement to it.

See the Fair Work Ombudsman’s final pay page for award-specific rules.

How much redundancy pay is owed?

Redundancy pay under s 119 ranges from 4 weeks for at least 1 year of service to 16 weeks for 9 to 10 years, falling to 12 weeks at 10 years or more, paid at the employee’s base rate of pay for ordinary hours.

NES redundancy pay (s 119)
Continuous service	Redundancy pay
At least 1 year but less than 2	4 weeks
At least 2 but less than 3	6 weeks
At least 3 but less than 4	7 weeks
At least 4 but less than 5	8 weeks
At least 5 but less than 6	10 weeks
At least 6 but less than 7	11 weeks
At least 7 but less than 8	13 weeks
At least 8 but less than 9	14 weeks
At least 9 but less than 10	16 weeks
At least 10 years	12 weeks

A small business employer (fewer than 15 employees when notice is given, counting associated entities, regular casuals and the employees being dismissed) is generally exempt under s 121 (Fair Work Ombudsman fact sheet). For unfair dismissal, a dismissal is a genuine redundancy under s 389 only if the job is no longer required because of operational changes, you met any award or agreement consultation obligation, and redeployment within the business or an associated entity was not reasonable (Fair Work Commission).

What claims can a dismissed employee make, and how fast?

Unfair dismissal and general protections dismissal applications must both be lodged with the Fair Work Commission within 21 days after the dismissal takes effect. Unfair dismissal is available after 6 months’ service, or 12 months with a small business.

High income threshold: for dismissals on or after 1 July 2026 it is $190,100; employees above it can claim unfair dismissal only if an award or enterprise agreement covers them. The compensation cap is $95,050 (Fair Work Commission).
Small Business Fair Dismissal Code: a dismissal by an employer with fewer than 15 employees that complies with the Code is not unfair. Keep the completed checklist and your records.
Casuals are protected from unfair dismissal if they worked on a regular and systematic basis and reasonably expected it to continue.

What paperwork and tax steps come after termination?

Complete an Employment Separation Certificate within 14 days of a request, and apply the employment termination payment (ETP) tax rules to termination payments. For 2026–27 the tax-free part of a genuine redundancy payment is $13,598 plus $6,801 for each complete year of service.

Services Australia uses the certificate to pay the former employee the right amount from the correct date. You need to complete it within 14 days of the request, and the easiest way is online through Business Hub (Services Australia).

Payment in lieu of notice and the part of a redundancy payment above the tax-free limit are employment termination payments. Unused annual leave and long service leave are not ETPs and are taxed separately. The ETP cap for 2026–27 is $270,000 (ATO). Super guarantee is payable on payment in lieu of notice but not on redundancy pay or unused leave paid out (ATO qualifying earnings).

Questions

Do I have to give notice in writing?

Yes. If the employee is entitled to NES notice, you must give written notice of the day the employment ends. It can be given in person, posted or left at their last known address, or sent electronically if they agree.

When is final pay due?

Follow the award or enterprise agreement; most awards require final pay within 7 days after the last day of employment. If neither sets a time, the Fair Work Act requires pay at least monthly.

What is the tax-free amount for a genuine redundancy in 2026–27?

$13,598 plus $6,801 for each complete year of service. Any amount above the limit is taxed as an employment termination payment.

Does a small business have to pay redundancy pay?

Generally no. An employer with fewer than 15 employees when notice is given is exempt from NES redundancy pay, though an award, agreement or contract may still require it.

Sources

Checked against these sources on 5 November 2026. Spotted something out of date? Tell us.