Describe key concepts in

separation/termination

Overview
Understanding the separation/termination process is an essential part of being
an effective HR manager. This resource provides an introduction to the
separation/termination process and types of separations / terminations.

Key terms

Australian Workplace Agreements

AWAs; individual agreements made between an employer and a single
employee. An alternative to common rule Awards, able to tailor terms and
conditions for workers to link them to productivity gains for the particular
workplace or industry
Certified Agreements
Collective agreements made directly between an employer and employees or
between an employer and a union(s). An alternative to common rule Awards,
able to tailor terms and conditions for workers to link them to productivity
gains for the particular workplace or industry
HRMIS
Human Resource Management Information System; computer system to
collect and analyse information to assist in the making of timely HR
management decisions, examples are databases, spreadsheets, information
networks.
Industrial awards
Historically in Australia, the main mechanism for confirming minimum terms
and conditions for workers in a particular occupational group or industry
Redeployment

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The finishing of one contract of employment and replacement with a new

contract for a different position.
Redundancy
When employees are laid off on a permanent basis because their work is no
longer required by the company due to economic and technological reasons
as well as other reasons.
Voluntary redundancy
When an organisation intends to lay off workers, it can ask whether any
employees are interested in resigning voluntarily and taking a lump-sum
payment.

Separation or termination?
Look in any good dictionary and the meanings of these two words are easily
recognised. To separate is to part company; to terminate suggests causing
something to end or stop. However in the world of HR management, things
may not always be that simple. There are many grey areas that can sometimes
lead to disputes.
These disputes can lead to legal action being taken, resulting in heavy costs not just in terms of time and money, but also to the organisations reputation.
Although HR staff arent expected to be lawyers, it is essential for them to
understand how a tribunal might interpret awards and contracts and to
understand the legal obligations that they must uphold.

Legal obligations
There are various legal requirements affecting separation and termination,
including:

Commonwealth law

State law

decisions or laws relating to tribunals or commissions.

To ensure that your processes meet the necessary requirements, you need to
know which laws apply to your organisation and how they impinge on the
way it operates.
When an employee leaves or their job is terminated, employers have to meet
various obligations set out by:

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the Workplace Relations Act 1996, or state workplace relations

legislation

anti-discrimination legislation

superannuation legislation

long service leave legislation

occupational health and safety legislation

workers compensation legislation

taxation legislation

annual leave legislation.

This is not a full list of the laws that apply, but it is indicative of the range of
detailed information you must have access to.
Of course, an organisation can agree to give employees more than the
minimum set under the law. An employees entitlements on the termination of
their employment will depend on a number of factors, including:

the reasons for the termination

the applicable sources of law

the terms of any contract of the employment and/or

company policy.

Understanding who the law applies to

Employees are protected from unfair treatment by legislation which governs
separation and termination. However, some employees are excluded from
some of the legislation and therefore might have limited avenues of appeal if
they leave or are fired.
Examples of these excluded employees are:

employees serving a reasonable probationary period

short-term casual employees

employees engaged for a fixed term of less than six months.

Various issues can arise at the end of an employment contract, so its

important to understand both the law and its application. For example, a
Sydney-based contractor may be excluded from some of the legislation but
still have remedies under NSW unfair contracts legislation.

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Other considerations
Legislation is only one consideration when it comes to determining an
employees legal rights. Awards, workplace agreements and employment
contracts are also factors that should be taken into account.

Awards
There are Commonwealth and State awards, administered by separate
bodies. These awards are legal documents that set out minimum wages,
terms and conditions. They can operate in conjunction with agreements, such
as Australian workplace agreements.

Identifying current practices

Before you can develop new processes for separation/termination, you will
need to audit existing conditions to determine exactly what your organisation
does now, and why. This should include reviewing current policies and
benchmarks, as well as identifying potential changes in conditions.
Start by gathering information about your organisations current processes,
and the rules and regulations you must comply with. Once you have
established the boundaries, you can set your goals for change as high as
circumstances will allow.

Research
What current practices exist within your organisation? Try to document
both official and unoffical HR separation/termination policies an procedures
that exist in your workplace.

Types of separation/termination
Retirement
The issues surrounding retirement today can be complex. The HR team
needs to anticipate retirement rates so that they can plan to maintain the skill

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level within the organisation. When long-term workers retire, they take with
them a wealth of knowledge, which may be costly or difficult to replace. As
HR manager your aim is to achieve an orderly handover of knowledge and
skills, with older workers mentoring younger staff to help prepare them as a
replacement.
Of course, not everyone wants to retire at a given age. Some will choose
early retirement if they can. Others will choose to postpone retiring and
continue working for as long as they can. This makes predicting retirement
more of a challenge.
Management should have a written retirement policy which has been
distributed to all employees. A policy that takes into account retirement
incentives could potentially reduce the need for redundancies or a frantic
scramble to recruit new staff.

Redundancy
Redundancy occurs when a position is no longer required by the
organisation. This can happen at all levels of the company hierarchy and
describes a situation where employees are retrenched, or laid off, through no
fault of their own. In such cases, the job may be terminated, rather than the
employee. In fact, the employee could be offered alternative work and
redeployed.
While a redundancy can also involve a termination of employment for
individuals it is different from other terminations as the employer decides that
the work currently being performed by the employee is no longer required.
Redundancy can come from a number of conditions:

changes flowing from the introduction of new systems and

technologyor modifications to existing systems and technology

restructuring, relocation or reorganisation

changing economic or market conditions.

Voluntary redundancy
Offering workers the opportunity to choose redundancy is one way to reduce
disruption within the organisation when cutbacks are inevitable. Staff are
advised of the organisations intentions and this leaves the option open for
some to volunteer for redundancy.
One drawback is that longer-serving staff often take advantage of generous
redundancy paymentsand this can deplete the companys knowledge base.
However, on the plus side, voluntary redundancy may lessen the likelihood of
morale collapsing amongst remaining staff and prevent possible disputes.

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Voluntary redundancy offers need to be carefully worded, so that they are in

fact an offer from the employee to accept a redundancy package which the
employer is under no legal obligation to accept. The eventual outcome will
depend on the employers assessment of workforce needs and resources.

Redeployment
When faced with inevitable redundancies in one part of the organisation, it
makes sound business sense to redeploy employees wherever possible, as
both time and money will have been invested in training those employees.
This course of action might also save on redundancy costs. If there are
suitable positions elsewhere in the group, the HR team should be able to
identify and recommend employees to fill those positions.
An offer of suitable alternative work must:

have similar status

be within the employees capability

not cause unreasonable additional inconvenience

provide similar earnings.

Preparation
Proper planning is the key to effectiveness. Use the following checklist to
ensure youre on the right track in developing your processes.
Table 1: Steps in developing separation/termination processes (1 col)
Steps in developing separation/termination processes

Research the elements of best practice in separation/termination

systems.
Research the legal requirements for separation/termination practice
in your organisation.
Identify problems and potential improvements in the
separation/termination process.
Consult with appropriate managers in the organisation. Ask for,
and use, feedback from existing employees and their managers
about the value and efficiency of processes.
Develop policies, procedures and documents for
separation/termination events, and test them in the HRIS.
Establish procedures that meet all legal requirements, as well as the

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objectives of the organisation.

Prepare and develop policies and procedures for use in the event of
either voluntary or involuntary redundancies, retirement,
resignation and other types of departures.
Develop redeployment procedures that take into account the
situation, performance and personal qualifications of employees
affected.
Allow enough time for employees to make appropriate decisions
about separation/termination events that affect them.
Protect confidentiality and ensure respect for individuals involved.

Tip
Once changes are approved, documents updated and relevant staff
notified, what do you do? Its a good idea to have management and
staff (or their representatives) sign off on the revised policies, as
evidence that they have been read and understood them.

Case History
A full-time employee voluntarily resigned on 2 October 2000 with effect
from 20 October 2000. The applicants last working day was 16 October
2000.
An incident had occurred at the office Christmas party in December 1999,
between the applicant and two other employees. She later claimed she had
resigned out of frustration. Forced to leave because of inaction by her
employer regarding what she claimed was a harassment issue, as well as
occupational health and safety matters.
An unfair dismissal claim was signed by the ASU, on the applicants
behalf, on 4 January 2001 and was lodged with the Industrial Relations
Commission on 5 January 2001.
The application was lodged under section 170CE(1) of the Workplace
Relations Act 1996 claiming that the employee was dismissed by her
employer and that her termination was harsh, unjust and unreasonable.
During the hearing it was contended that the applicants dismissal was a
constructive dismissal. (See Glossary for constructive dismissal)

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The employers counsel submitted that the applicant resigned voluntarily

and that this was not a case of constructive dismissal. It was contended that
the applicants letter of resignation did not include any complaints about
the fact that she was resigning.
The employers counsel contended that the application should not be
accepted as it was lodged out of time. The effective date of the applicants
termination was 20 October 2000, however and the application was lodged
on 5 January 200155 days out of time.
The application to the Commission was dismissed. The case report stated
there were a number of complex legal issues, including the alleged
constructive dismissal of the applicant. On this, the Commission was
referred to a number of earlier court rulings on similar subjects, including
Mohazib v Dick Smith Electronics Pty Ltd (1995, 62 IR 200).
While counsel for the employee, referred to a decision in Kornicki v Telstra
Network Technology Group [Print P3168] as the guiding principles for
extension of time applications.

Find the decision for the court case:

Australian Industrial Relations Commission
Workplace Relations Act 1996
s.170CE application for relief in respect of termination of employment
P Levey and Brimbank City Council
Commissioner Cribb
Melbourne, 19 October 2001
You can download this decision from the Internet. Go to
www.wagenet.gov.au and search for results of decision PR910523. Then
click on first hit link. Print and save the transcript. You will also need to
find a copy of the Workplace Relations Act 1996 and refer to the sections
mentioned in the Commissioners decision.

Think
Read the decision that you have just downloaded from the web and
answer the questions below.

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1. Take the time to reflect on the outcome of this case. Do you agree or
disagree with the Commissioners ruling? Give reasons why.
2. Was the resignation voluntarydid the employee resign out of her
own choice, or was she pressured into leaving? Also, considering the
Christmas incident, was it unreasonable for the employer to accept
the resignation?
3. From the detailed report of the decision, work out how many days
the applicant had to lodge her complaint under the Workplace
Relations Act 1996.
4. What mitigating circumstances might have allowed her to delay her
application?

Adapted from Open Training and Education Network (2003) Learner's

Guide BSBHR507A TAFE NSW; used with permission

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