A business owner once said to us:
“I think I need to fire someone… but I’m not sure how to do it without getting sued.”
They weren’t joking.
They’d been avoiding the conversation for months. Performance had slipped. The team was frustrated. Every week the tension got a little worse.
Eventually they reached breaking point.
“Right. That’s it.”
If you run a business, you’ve probably been there.
Termination and redundancy are two of the toughest parts of leadership. They’re uncomfortable, emotional, and when handled poorly they can expose your business to serious legal risk.
And unfortunately, employment law doesn’t care that the situation feels awkward.
Under Australia’s Fair Work Act, employers must follow clear processes around dismissal, notice and redundancy pay through the National Employment Standards (NES).
So let’s cut through the noise and talk about how this actually works in the real world.
Because this is one area of HR where winging it can get expensive fast.
Termination vs Redundancy: What’s the difference?
This is where many businesses get confused.
The distinction is simple.
Termination is about the person.
Redundancy is about the position.
Termination of Employment
Termination occurs when employment ends because of issues such as:
- poor performance
- misconduct
- repeated breaches of policy
- behaviour that disrupts the team or workplace
Redundancy
Redundancy occurs when a role is no longer required because of:
- restructuring
- economic pressure
- automation or technology changes
- reduced demand for services
If the role disappears, it’s redundancy.
If the role remains but the person isn’t meeting expectations, it’s termination.
That difference matters because the legal process is completely different.
The mistake most business owners make
Here’s the pattern we see constantly.
A leader notices a performance issue.
They think:
“Let’s just see if it improves.”
Weeks turn into months.
The team gets frustrated. Productivity drops. Culture takes a hit.
Eventually the decision becomes emotional instead of strategic.
“Enough is enough.”
The problem is that employment law prefers something slightly more structured than a moment of frustration.
What fair termination actually looks like
Most unfair dismissal cases aren’t about whether the employee was amazing.
They’re about whether the process was fair.
A defensible performance process usually includes:
- clear expectations
- regular feedback
- documented discussions
- warnings when problems continue
- time for improvement
Yes, it requires effort.
But it’s still far easier and cheaper than defending your decision in front of the Fair Work Commission.
The practical termination process (that actually holds up)
If performance doesn’t improve, a fair process typically looks like this.
- raise the issue early
Address the problem when it first appears.
Ignoring behaviour doesn’t solve it. It usually reinforces it.
- document conversations
Write things down.
Notes from meetings, performance discussions and warnings create a clear timeline if issues escalate.
- provide formal warnings
Warnings make it clear the issue is serious and improvement is required.
- give time and support to improve
Employees must have a genuine opportunity to fix the problem.
- confirm termination in writing
If improvement doesn’t happen, a termination letter should clearly outline:
- the reason for termination
- notice period or pay in lieu
- final pay entitlements
Simple. Transparent. Defensible.
Redundancy: where many businesses get caught out
Redundancy isn’t about performance.
It’s about the business changing.
But there’s one step employers regularly overlook.
Consultation.
Consultation: the step businesses often miss
Before confirming a redundancy, employers usually need to consult with affected employees.
That means:
- explaining the proposed change
- outlining the business reasons
- giving the employee an opportunity to respond
And it must be genuine consultation.
Not the “we’ve already decided but we’re having a meeting anyway” kind.
Fair Work tends to see through that pretty quickly.
Skipping consultation is one of the fastest ways to turn a redundancy into an unfair dismissal claim.
Redundancy pay in Australia
For businesses with 15 or more employees, redundancy pay depends on length of service.
| years of service | redundancy pay |
| 1–2 years | 4 weeks |
| 3–4 years | 7 weeks |
| 5–6 years | 10 weeks |
| 9+ years | up to 12 weeks |
Final payments may include:
- notice of termination or pay in lieu
- unused annual leave
- outstanding wages
Small businesses with fewer than 15 employees are generally exempt from redundancy pay, but they still need to follow fair dismissal principles.
Psychosocial risk: The hidden impact of poor termination
There’s another angle many businesses overlook.
Poorly handled termination processes can create psychosocial hazards inside the workplace.
When leaders avoid difficult conversations:
- team frustration builds
- resentment grows
- accountability disappears
- strong performers disengage
In other words, the cost of avoiding the problem spreads across the whole business.
One difficult conversation can protect the performance of an entire team.
Common termination and redundancy mistakes
Across Australian SMEs, most disputes start with the same handful of mistakes.
Things like:
- failing to document performance concerns
- delaying difficult conversations
- rushing termination decisions
- skipping redundancy consultation
- inconsistent redundancy selection criteria
- errors in final pay calculations
None of these problems are complicated.
But left unchecked, they can become expensive ones.
Why many Australian businesses work with HR Gurus
Termination and redundancy decisions sit right at the intersection of legal risk and human emotion.
That’s why many growing businesses bring in external HR support when things get complicated.
HR Gurus has spent more than a decade helping Australian SMEs manage situations like:
- performance management
- termination processes
- redundancy consultations
- HR compliance reviews
- contracts and employment documentation
Our approach is simple.
No HR jargon. No overcomplication.
Just practical advice that protects the business and treats people fairly.
Quick Answers: termination and redundancy in Australia
Can an employer terminate someone without warning?
Only in cases of serious misconduct. Performance issues usually require warnings and an opportunity to improve.
What is the difference between termination and redundancy?
Termination occurs when employment ends due to performance or behaviour.
Redundancy occurs when a role is no longer required by the business.
Do small businesses have to pay redundancy?
Businesses with fewer than 15 employees are generally exempt from redundancy pay but must still follow fair dismissal rules.
What happens if a termination is unfair?
Employees can lodge a claim with the Fair Work Commission, which may lead to compensation or reinstatement.
Protecting your business when tough decisions need to happen
Termination and redundancy are part of running a business.
But they don’t need to turn into legal nightmares.
With the right processes, documentation and advice, these decisions can be handled confidently, fairly and professionally.
And when in doubt, getting the right HR guidance early can save a lot of stress later.
- About the Author
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Jessy brings over 15 years of real-world HR experience and a no-nonsense approach to even the trickiest people problems. She’s calm in a crisis, sharp on compliance, and brilliant at guiding leaders through the tough stuff.
We call her the calmer of storms for a reason. When things get messy, Jessy gets it sorted.
Get a personal consultation.
Call us today at 1300 959 560.
Here in HR Gurus. We make HR simple because it should be.
