How to Avoid Legal Issues When Firing Employees
Why process, clarity, and fairness matter — legally and practically.
Letting someone go is one of the toughest parts of running a business. It’s rarely personal, but it’s always high-stakes — emotionally, financially, and legally. And there are clear rules around how to do it properly.
If you don’t follow those rules, you open the door to unfair dismissal claims, reputational damage, and unnecessary stress for everyone involved.
Here’s what every business owner or manager should know before making that call.
#1:
Understand What Counts as a “Fair” Dismissal
In most cases, an employee can’t be dismissed without a valid reason and a fair process. The Fair Work Act 2009 outlines this clearly.
Valid reasons might include:
Poor performance (after warnings and support)
Misconduct
Redundancy (if it’s genuine and based on business needs)
But even with a valid reason, the process matters just as much.
#2:
Follow a Proper Performance Management Process
You can’t just terminate someone because things aren’t working out. You need to:
Communicate concerns clearly
Give the employee a chance to improve
Offer support (e.g., training, feedback, a performance plan)
Document everything
Without this paper trail, it becomes very hard to prove the dismissal was fair if challenged.
#3:
Redundancy?
Make Sure It’s Genuine
Redundancy must relate to the role, not the person. If a business restructure makes a role unnecessary, and:
The role won’t be filled again
You’ve explored redeployment options
You’ve followed award or enterprise agreement obligations
…then it’s likely to be a genuine redundancy.
But firing someone under the label of “redundancy” — when really it’s a performance or personality issue — can lead to legal trouble.
#4:
Know the Notice Period
and
Final Pay Rules
Employees must receive:
Proper notice (or payment in lieu)
Accrued leave entitlements
Redundancy pay, if eligible
Missing these steps can lead to a claim — even if the termination was otherwise valid.
#5:
Allow a Support Person
In any formal meeting about potential termination, employees are entitled to bring a support person — especially if you’re discussing warnings or dismissal. Denying this can be used as evidence of an unfair process.
#6:
Keep It Private and Professional
How you communicate matters. Terminations should happen:
In person (or over video if remote)
In a private setting
Without blaming, venting, or emotional outbursts
Avoid public discussions or messaging that could be seen as humiliating. It’s not just about kindness — it’s also about protecting your business from defamation or harassment claim
Final Thought: Get Advice Early
Most legal issues around termination happen not because someone broke the rules — but because they didn’t know them.
If you’re unsure, it’s worth getting legal advice before taking action. At Connected Legal + Commercial, we help businesses manage employee exits with empathy, clarity, and compliance so you can move forward with confidence.
DISCLAIMER
The content given herein is provided for information purposes only. It is general in nature and does not constitute legal advice and should not be used as such. Formal legal advice should be sought in particular matters.
Connected Legal + Commercial does not accept any liability to any person for the information (or use of such information) which is provided herein or incorporated into it by reference.
The information is provided in good faith on the basis that all persons accessing the content undertake responsibility for assessing its relevance and accuracy and will seek appropriate formal legal advice accordingly.