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Termination: risk indicators before you act

Before a termination conversation, run through these five risk indicators. Each one is a place where a defensible decision can become an indefensible one.

Termination is the single highest-risk decision an employer makes about an individual employee. The decision can be sound but the execution can still expose the business to an unfair dismissal claim. This framework walks through the five risk indicators every manager should test before initiating the conversation.

Is there a valid reason connected to the employee's capacity or conduct?

Whether a reason is 'valid' depends on the employee's role, the evidence available, the time over which the issue has been observed, and how it has been raised with the employee. The Fair Work Commission looks at all of this together, not at any single element in isolation.

Where it goes wrong: leaning on a reason that feels obvious internally but has never been clearly named to the employee or supported with evidence. Once it gets to the FWC, that gap is hard to close.

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Has the employee been notified of the reason and given a chance to respond?

Procedural fairness varies with the circumstances. The Award or EA, the employer's policies, the seriousness of the issue, and the prior conversation history all shape what 'a fair process' looks like in a particular case.

Where it goes wrong: when the employee is provided vague or fragmented information to respond to, not provided adequate time to prepare or respond, or where the investigation is rushed or incomplete.

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Could the employee have had a support person?

The right to a support person applies in any meeting that may lead to dismissal. How that is offered and managed varies with the format of the meeting, the urgency, and the employee's preferences.

Where it goes wrong: the offer is implicit or last-minute, the employee feels unsupported, and the procedural concern shows up in any later challenge.

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Have you weighed the seriousness of the reason against the consequence?

Proportionality is in the eye of the Fair Work Commission. Whether dismissal was reasonable depends on the seriousness of the conduct, the employee's history, prior warnings or chances to improve, and how comparable matters have been handled before.

Where it goes wrong: when the outcome is not appropriate or proportionate taking into consideration the employee's individual circumstances, the individual's employment history, or the organisational context.

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Have you considered the size and resources of your business?

Business size and structure influence what 'reasonable' looks like. Small businesses operate under a specific Code; larger employers are held to broader standards informed by their resources and policies.

Where it goes wrong: relying on size as a defence without actually following the steps the Code requires, or holding a larger business to small-business expectations.

Three things to watch for

1. Performance management not done

If the file does not show prior conversations, warnings, expectation-setting, and chances to improve, a performance-based termination is hard to defend.

2. Inconsistent treatment

If another employee did the same thing and was not dismissed, the FWC will ask why. Have a clear answer or expect the decision to be reviewed.

3. Termination during protected leave

Terminating during personal leave, parental leave, or an active workers' compensation claim creates additional Fair Work and discrimination law exposure. Get advice first.

Before a termination conversation, run through these five risk indicators. Each one is a place where a defensible decision can become an indefensible one.

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