Australia — Termination & Severance

The Fair Work Act 2009 defines the statutory framework for unfair dismissal protection, adjudicated by the Fair Work Commission (FWC). An employee is only protected against unfair dismissal if (a) they have completed the required minimum employment period, (b) are not excluded by the high-income threshold (unless covered by a modern award or enterprise agreement), and (c) the employer is not covered by a small business carveout.

Minimum employment period:

• Employees must complete a minimum period to qualify. As per s.383:
• 6 months for employees of standard (non-small) businesses; or
• 12 months for employees of a small business employer.
• A small business employer is one with fewer than 15 employees at the time of dismissal or notice. The count includes the dismissed employee, other current employees, regular and systematic casuals, and those of associated entities (including overseas), excluding irregular casuals.
• Correct classification of the employer as "small business" is critical, as it determines the qualifying period: 12 months for small business, 6 months otherwise. (Fair Work Act 2009, s.23, s.383)

High-income threshold exclusion:

• Protection is not available to employees whose annual earnings exceed the high-income threshold (unless covered by a modern award or enterprise agreement), per s.382(b)(iii).
• The high-income threshold updates annually. For dismissals on or after 1 July 2026, the threshold is AU $190,100. (Prior threshold: AU $183,100 from 1 July 2025–30 June 2026.)
• "Earnings" includes base pay plus benefits as calculated in accordance with regulation 3.05. Superannuation contributions, certain allowances, and some fringe benefits are included. (Fair Work Act 2009 s.332; Fair Work Regulations 2009 reg.3.05)
• Employees covered by a modern award or registered enterprise agreement are not subject to this exclusion, regardless of their total income.

Small Business Fair Dismissal Code:

• For small business employers, compliance with the Small Business Fair Dismissal Code (a legislative instrument under s.388) can provide a defense to a claim if followed, even when the employment period is complete.

Genuine redundancy carve-out:

• Unfair dismissal protection does not apply to dismissals deemed "genuine redundancy" under s.389, where the position is no longer required and the employer met consultation and redeployment obligations.

Application deadline:

• Applications for unfair dismissal must be filed with the FWC within 21 calendar days of termination taking effect (Fair Work Act 2009 s.394), with extensions in only exceptional cases.

Update note:

• This section was updated to reflect the increased high-income threshold to AU $190,100, effective 1 July 2026. All other coverage thresholds remain unchanged as of this review.

Source: Fair Work Act 2009, sections 23, 332, 382–389, 394 Source: Fair Work Regulations 2009, reg. 3.05 Source: Fair Work Commission — Compensation cap and high income threshold notices Source: Fair Work Ombudsman — Unfair dismissal

Section 117 of the Fair Work Act 2009 establishes the statutory minimum notice entitlement when an employer terminates an employee's employment. The National Employment Standards (NES) notice requirements apply to all employees covered by the national workplace relations system, regardless of any modern award, enterprise agreement, or employment contract—though those instruments may provide for longer notice periods.

## Written notice requirement An employer must give the employee written notice specifying the day of termination before ending their employment (section 117(1)). The notice may be delivered personally, left at the employee's last known address, or sent by pre-paid post to the employee's last known address. The termination date specified in the notice cannot be before the day the notice is given—an employer cannot backdate notice.

## Minimum notice period tied to continuous service The minimum period of notice is calculated under section 117(3) and depends on the employee's period of continuous service with the employer at the time notice is given:

• 1 year or less: 1 week
• More than 1 year but not more than 3 years: 2 weeks
• More than 3 years but not more than 5 years: 3 weeks
• More than 5 years: 4 weeks

Continuous service includes most periods of absence on paid or unpaid leave (including unpaid parental leave), but time spent as a casual employee usually does not count toward the notice entitlement unless the employee was a regular and systematic casual and meets the statutory definition of continuous service under the Fair Work Act.

## Additional week for employees 45 and over If the employee is over 45 years of age at the time the employer gives notice and the employee has completed at least 2 years of continuous service with the employer, the employer must provide one additional week of notice beyond the minimum periods listed above (section 117(3), note 2). For example, an employee aged 47 with 4 years of continuous service is entitled to 3 weeks (the base period for over-3-years service) plus 1 additional week, for a total of 4 weeks' notice.

## Payment in lieu of notice An employer may choose to pay the employee in lieu of notice rather than requiring the employee to work through the notice period. Payment in lieu must equal at least the amount the employer would have been liable to pay the employee at the employee's full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum notice period (section 117(2)(b)). When an employer pays in lieu, the employment ends immediately on the stated termination date, but the employer must still confirm the termination date in writing and make the correct payment. The full rate of pay for payment-in-lieu purposes includes the employee's ordinary hourly rate plus applicable allowances and loadings the employee would have received during that period.

## Exceptions: when notice is not required Section 123 of the Fair Work Act carves out specific situations in which the employer is not required to provide notice (or payment in lieu):

• The employee is dismissed for serious misconduct (deliberate conduct inconsistent with continuing employment, such as theft, fraud, assault, sexual harassment, or creating serious and imminent risk to health, safety, or the employer's reputation);
• The employee was engaged for a specific period of time or task (a fixed-term contract that expires at the end of the agreed period or completion of the task);
• The employee is a casual employee;
• The employee has a training arrangement and is employed for a set period or for the length of the training arrangement (apprentices are generally entitled to notice unless employed for a specific period or task);
• The employee is a daily hire or weekly hire worker in specified industries (building and construction, meat processing) whose termination depends on seasonal factors.

When an employer dismisses an employee for serious misconduct, the employer is not required to give written notice of termination under section 117, but the employer must still pay the employee all outstanding entitlements (wages, accrued annual leave, long service leave if applicable).

## Interaction with awards, agreements, and contracts Modern awards, enterprise agreements, and employment contracts may provide for longer minimum notice periods than the NES (for example, one month instead of one week for short-service employees, or additional notice for senior roles). Where an applicable industrial instrument or contract sets a longer notice period, the longer period applies. However, no award, agreement, or contract can lawfully provide for a notice period shorter than the NES minimum.

If an employer provides more notice than required under the relevant award, agreement, or contract, the employee is only obliged to work the minimum notice period; the employee may choose to work the additional period, but if they work only the statutory minimum, the employer is not obliged to pay the extra period.

## Civil penalty provision Section 117 is a civil remedy provision under Part 4-1 of the Fair Work Act. An employer who fails to give the correct notice (or payment in lieu) may be subject to civil penalties imposed by a court. Compliance failures can also affect the validity of the dismissal for other purposes—for example, an employee may gain access to the unfair dismissal jurisdiction if the employer's failure to give proper written notice means the dismissal took effect outside the minimum employment period.

Source: Fair Work Act 2009, sections 117, 123 Source: Fair Work Ombudsman — Notice of termination and redundancy pay Source: Fair Work Ombudsman — Dismissal

Section 119 of the Fair Work Act 2009 establishes the statutory right to redundancy pay when an employee's employment is terminated at the employer's initiative because the employer no longer requires the job to be done by anyone (except where this is due to ordinary and customary turnover of labour) or because of the insolvency or bankruptcy of the employer. The redundancy pay entitlement is part of the National Employment Standards (NES) and applies to all employees covered by the national workplace relations system, unless an exclusion under sections 121 or 123 applies or a modern award or enterprise agreement provides for a more generous industry-specific redundancy scheme.

## Minimum 12-month qualifying period

An employee must have completed at least 12 months of continuous service with the employer to be entitled to redundancy pay under the NES. Periods of employment as a casual employee generally do not count toward continuous service for redundancy pay purposes, except where a casual employee has been employed on a regular and systematic basis and later becomes a permanent employee—in which case, continuous service starts from when they became permanent. Employees with less than 12 months of continuous service receive no redundancy pay under the NES (though they remain entitled to statutory notice or payment in lieu under section 117).

## The statutory redundancy pay scale

The amount of redundancy pay is calculated using a service-based scale under section 119(2) and is measured by the employee's period of continuous service at the time notice of termination is given (or, if payment in lieu of notice is made, at the time notice would have been given):

• At least 1 year but less than 2 years: 4 weeks' pay
• At least 2 years but less than 3 years: 6 weeks' pay
• At least 3 years but less than 4 years: 7 weeks' pay
• At least 4 years but less than 5 years: 8 weeks' pay
• At least 5 years but less than 6 years: 10 weeks' pay
• At least 6 years but less than 7 years: 11 weeks' pay
• At least 7 years but less than 8 years: 13 weeks' pay
• At least 8 years but less than 9 years: 14 weeks' pay
• At least 9 years but less than 10 years: 16 weeks' pay
• At least 10 years: 12 weeks' pay

Note the step-down at 10 years: an employee with 10 or more years of continuous service receives 12 weeks of redundancy pay, not 16 weeks. This reflects the 2004 Redundancy Case decision of the Australian Industrial Relations Commission, which introduced a maximum cap to reduce the liability burden on employers for very long-serving employees.

If an employee is given a notice period and works through that notice, the notice period counts toward continuous service for calculating redundancy pay. If the employer pays in lieu of notice, the notice period does not count—continuous service ends on the day notice is given.

## Base rate of pay for ordinary hours

Redundancy pay is calculated at the employee's base rate of pay for their ordinary hours of work. The base rate excludes:

• incentive-based payments and bonuses;
• loadings (such as casual loading, shift penalties, or weekend rates);
• monetary allowances (such as meal, travel, or tool allowances);
• overtime or penalty rates; and
• any other separately identifiable amounts.

For a full-time salaried employee working 38 ordinary hours per week, one week's pay equals the weekly salary divided by the number of ordinary hours, multiplied by the ordinary hours in one week. For a part-time employee, one week's pay is based on the employee's ordinary hours, not a notional full-time equivalent.

## Small business employer exemption

Section 121(1)(b) provides that an employee of a small business employer is not entitled to redundancy pay under the NES. A small business employer is defined as an employer who employs fewer than 15 employees at the time when notice of termination is given. When counting the employer's headcount:

• all employees employed by the employer at that time are counted (including the employee being made redundant and any other employees being dismissed at the same time);
• employees of associated entities (including those based overseas) are counted;
• casual employees are counted only if they are employed on a regular and systematic basis at the time the headcount is taken; and
• irregular casual employees are excluded.

An employer with 15 or more employees at the time notice is given is not a small business employer and must pay NES redundancy pay.

Exception to the small business exemption: A small business employer may still be required to pay redundancy pay if the employer became a small business employer as a result of redundancies made on or after 15 December 2023 during a period of insolvency, bankruptcy, or liquidation (but not voluntary winding up). Section 121(4) and (5) set out the detailed conditions for this exception, including timing and exclusion of earlier redundancies. This change ensures that employers cannot evade redundancy obligations by downsizing below the 15-employee threshold during financial distress.

## Other exclusions from the redundancy pay entitlement

Section 123 lists situations in which an employee is not entitled to redundancy pay under the NES:

• Casual employees (section 123(1)(c));
• Employees engaged for a specific period of time, task, or season whose employment ends at the completion of that period or task (section 123(1)(d));
• Employees dismissed for serious misconduct (section 123(1)(e));
• Employees serving a probationary period of three months or less whose employment is terminated during or at the end of that probationary period (section 123(1)(f));
• Daily hire or weekly hire employees in the building and construction, meat, or stevedoring industries (section 123(1)(g));
• Employees whose period of continuous service is less than 12 months (section 123(1)(h)); and
• Trainees engaged under a training arrangement (section 123(1)(i)), unless the training arrangement itself provides otherwise.

## Redundancy pay is separate from notice

Redundancy pay under section 119 is in addition to notice of termination (or payment in lieu) under section 117. An employer must provide both: the correct notice period (or payment in lieu) calculated under the service-based notice formula in section 117(3), and the correct redundancy payment calculated under the service-based redundancy scale in section 119(2). Redundancy pay cannot be offset against notice, nor can extra notice be used to reduce the redundancy payment, except by order of the Fair Work Commission under section 120 (discussed below).

## Fair Work Commission may reduce redundancy pay

Section 120 permits an employer to apply to the Fair Work Commission (FWC) for an order reducing the amount of redundancy pay if:

• the employer finds other acceptable employment for the employee (for example, arranging for the employee to start a new role with a different employer immediately after termination); or
• the employer cannot afford to pay the full redundancy amount (financial incapacity).

The FWC may determine that the redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate. Employers can apply to the FWC for a reduction only if the redundancy entitlement arises from the NES; an employer cannot apply if the redundancy entitlement comes from a modern award or enterprise agreement.

## Interaction with awards, agreements, and industry-specific redundancy schemes

The NES redundancy pay provisions apply unless an applicable modern award or enterprise agreement provides for a more generous entitlement or an industry-specific redundancy scheme. Some awards—such as the Manufacturing and Associated Industries and Occupations Award, the Timber Industry Award, and the Stevedoring Industry Award—contain industry-specific redundancy schemes that apply instead of the NES scale and may have different eligibility criteria, payment scales, or portable redundancy fund arrangements. Where an award or agreement contains such a scheme, the scheme provisions govern and the NES scale does not apply.

## Transfer of business and continuous service

Section 122 addresses situations in which an employee's employment is transferred when a business is sold or restructured. If there is a transfer of employment from one employer (the old employer) to another employer (the new employer) and the employee's service with the old employer would have counted as continuous service with the new employer, the new employer is generally responsible for the redundancy pay liability (including service with the old employer), and the old employer's obligation is extinguished. Special rules apply when the new employer is not an associated entity of the old employer and gives the employee written notice at the time of transfer that prior service will not count—in that case, the employee's continuous service starts fresh with the new employer, and the old employer may be liable for redundancy pay accrued up to the transfer if the transfer itself constituted a redundancy.

Source: Fair Work Act 2009, sections 119–123 Source: Fair Work Ombudsman — Redundancy pay Source: Fair Work Ombudsman — Who doesn't get redundancy pay Source: Fair Work Ombudsman — Notice of termination and redundancy pay fact sheet

Under the Fair Work Act 2009 (Cth), an employer may terminate an employee's employment immediately, without notice or payment in lieu, if the employee has engaged in 'serious misconduct.' This form of summary dismissal is a narrowly-construed exception to the statutory notice requirements under section 117(2)(a) and the redundancy pay requirements under sections 119 and 123.

## Definition of 'serious misconduct'

'"Serious misconduct" is defined in regulation 1.07 of the Fair Work Regulations 2009 to include:

• wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment; and
• conduct that causes serious and imminent risk to the health or safety of a person or the reputation, viability, or profitability of the employer's business.

Examples in regulation 1.07(2) include theft, fraud, assault, intoxication at work, and refusal to carry out a lawful and reasonable instruction consistent with the employment contract. Sexual harassment is expressly included in the definition following amendments that took effect on 9 December 2022.

## No statutory notice or redundancy pay

Under Fair Work Act section 123(1)(e), employees dismissed for serious misconduct are excluded from minimum notice and redundancy pay entitlements. The employer is not required to give written notice under section 117, but must still pay the employee any outstanding remuneration due for work performed to the date of termination and accrued statutory entitlements (such as untaken annual leave).

## Procedural requirements and risks

While the Fair Work Act does not prescribe a mandatory procedure for summary dismissal, employers are expected—under both the National Employment Standards and industrial fairness grounds—to provide natural justice. In practice, this requires investigating the alleged conduct, communicating the allegations to the employee, providing an opportunity to respond, and genuinely considering any explanation. The Fair Work Commission has regularly found that even where serious misconduct is substantiated, an unfair dismissal remedy may be available if the process was procedurally unfair (Fair Work Commission Benchbook, "Serious misconduct").

## Documentary requirements

Employers should always confirm the summary dismissal in writing, stating the effective date of termination and the grounds for serious misconduct, to ensure compliance with record-keeping and potential dispute resolution obligations.

## Termination for serious misconduct does NOT preclude all claims

Summary dismissal for serious misconduct removes the statutory entitlement to notice or redundancy pay, but does not affect the employee’s rights to:

• apply for unfair dismissal (unless otherwise excluded by service or income thresholds);
• claim unpaid wages or entitlements earned up to dismissal;
• pursue rights under discrimination, adverse action, or other workplace claims.

Source: Fair Work Act 2009, ss 117(2)(a), 119, 123 Source: Fair Work Regulations 2009, reg. 1.07 Source: Fair Work Ombudsman — Serious misconduct

Before an employer in Australia can legally proceed with redundancies or other forms of major workplace change, there are critical consultation and, for large-scale redundancies, government notification requirements set by the Fair Work Act 2009 (Cth) and most modern awards or enterprise agreements (EAs). Failure to observe these procedural rules can expose employers to unfair dismissal claims—even if the correct notice and redundancy pay are provided.

## Large-scale redundancies: Statutory notification (sections 530A–531) Section 531 of the Fair Work Act requires an employer who proposes to terminate 15 or more employees on account of redundancy to notify both Services Australia and any relevant registered employee associations (typically, unions) in writing. This notice must set out the reasons for the terminations, and the categories and number of employees likely to be affected. Written notification to Services Australia is a civil remedy provision; non-compliance can trigger penalties.

## Consultation with employees — Award and EA requirements There is no general duty to consult employees about redundancies in the National Employment Standards (NES) itself; rather, this arises almost universally through the model consultation provisions inserted into modern awards and most enterprise agreements (see Fair Work Act s.205 and Fair Work Regulations 2009, Schedule 2.3). A typical model consultation clause (required in all modern awards) obliges employers to:

• Notify employees who may be affected by proposed major workplace change (including redundancies);
• Provide employees and their representatives with all relevant information about the proposed changes—their nature, the expected effects, and the timing (subject to privacy and commercial sensitivity);
• Discuss with affected employees measures to avert or mitigate the adverse effects of the changes;
• Genuinely consider employee feedback before finalising any decision.

## Legal consequences of failing to consult Section 389(1)(b) of the Fair Work Act provides that a dismissal is not a "genuine redundancy" (and therefore is not protected from unfair dismissal claims) unless the employer has complied with any consultation obligations under an applicable modern award or enterprise agreement. Thus, an employer who fails to follow the relevant consultation process—regardless of redundancy pay or notice—may face unfair dismissal liability.

## Practical steps

1. Check the applicable modern award or EA for consultation requirements—almost all modern awards (and most EAs) contain the model consultation clause.
2. Conduct genuine consultation as early as possible, in writing and face-to-face where possible, before any final decision on redundancies.
3. For redundancies of 15 or more, notify Services Australia and, if applicable, the relevant union, in writing per section 531.
4. Maintain thorough written records of notices and consultations.

Source: Fair Work Act 2009, ss. 205, 389(1)(b), 530A–531 Source: Fair Work Ombudsman — Redundancy: Consulting employees about major workplace changes

Australian law does not expressly regulate 'garden leave'—the practice of directing an employee not to attend work during part or all of their notice period while keeping them on payroll. The Fair Work Act 2009 (Cth) and National Employment Standards (NES) set minimum notice requirements and conditions for termination (see section 117), but neither statute nor Fair Work Ombudsman guidance directly refers to garden leave as a concept. Practically, garden leave arrangements are governed primarily by the employee’s contract, general principles of Australian employment law, and any applicable modern award or enterprise agreement.

No statutory prohibition or endorsement: The Fair Work Act is silent on garden leave. There is no explicit statutory right for employers to require garden leave, nor is it prohibited. Most commonly, the authority to place an employee on garden leave comes from a written contract term expressly permitting the employer to direct the employee not to attend work while continuing to pay their full remuneration for the notice period. In the absence of such a clause, Australian courts will consider whether a garden leave direction is reasonable and consistent with the employee's duties, workplace context, and business interests. Some courts have accepted implied garden leave in limited senior roles or sensitive circumstances, but this is not a settled right and may risk repudiation claims if used unilaterally without contract support. As Fair Work Ombudsman publications do not speak to garden leave directly, this position is drawn from case law and general legal principle, not express statutory authority.

Payment and employment status: While on garden leave, the employee remains employed, accruing statutory and award/EA entitlements including annual leave, redundancy, superannuation, and long service leave (unless an award/EA or contract provides otherwise). The period counts towards continuous service. By contrast, if an employer pays 'in lieu of notice' (as allowed under Fair Work Act section 117(2)), employment ends immediately and no further entitlement accrues beyond the effective termination date.

Modern award or enterprise agreement overlays: Most modern awards are silent on garden leave, but some may specify the assignment of duties during notice or restrict directions about non-attendance—particularly in prescribed occupations. It is critical to check the specific industrial instrument. As of this writing, no published Fair Work Ombudsman guidance or directly relevant modern award example was identified, and practitioners should verify instrument terms in each case.

Interaction with post-termination restraints: Employers sometimes use garden leave to run down part of a non-compete or restraint period during paid notice, but Australian courts typically enforce post-employment restraints starting from the end of actual employment, including any garden leave.

Neither the Fair Work Act nor Fair Work Ombudsman sources expressly address garden leave. This summary is based on primary legislation, the general silence in government publications, and widely accepted legal practice.

Source: Fair Work Act 2009 Source: Fair Work Ombudsman — Dismissal and notice

Update note: Broken link to the Fair Work Ombudsman has been repaired to reflect the current official guidance. No material changes in statutory authority or official publications detected as of 2024-06-13.

When an employee’s employment ends in Australia—whether by resignation, redundancy, or dismissal—the employer must pay out all accrued but unused statutory leave entitlements. This obligation is anchored in the National Employment Standards (NES) for annual leave and in relevant state or territory law (or applicable federal industrial instruments) for long service leave.

Annual leave — NES payout rules: Section 90(2) of the Fair Work Act 2009 (Cth) requires employers to pay an employee for any untaken annual leave when employment ends, at the employee’s “full rate of pay” as if they had taken the leave at the end of employment. The “full rate of pay” is defined in section 18 to include base rate plus most regular incentive-based payments, bonuses, loadings, monetary allowances, overtime, and penalty rates. Where a modern award or enterprise agreement prescribes a higher entitlement, that instrument governs, but the NES sets the statutory minimum. Payment must be made promptly after termination; the Act does not specify a strict deadline but delays risk penalties and breach findings.

Annual leave loading: If an award, enterprise agreement, or contract provides for annual leave loading (commonly 17.5%), this must also be included in the payout unless the instrument states otherwise. The NES does not itself specify a loading rate, but most modern awards require it for both taken and paid-out leave. The payout must include any applicable loading, penalty rates or shift loading as if the leave had been taken. Source: FWO Calculating annual leave loading

Long service leave — State/territory law: Long service leave is regulated primarily by state and territory statutes. Key qualifying periods and payout rules vary. Unused long service leave is typically paid out on termination (including pro-rata in many cases) depending on jurisdiction and circumstances. Source: FWO Long service leave fact sheet

Other statutory notes:

• Payment for accrued statutory leave (annual and long service) is in addition to notice, redundancy, and any contractual entitlements.
• Dismissal for serious misconduct does not affect annual leave payout, though some states may limit pro-rata long service leave for serious misconduct.
• Employers should provide a final payslip detailing calculation and taxation of all entitlements.

Source: Fair Work Act 2009, sections 90, 18 Source: FWO Annual leave fact sheet Source: FWO Calculating annual leave loading Source: FWO Long service leave fact sheet Source: FWO Payment of long service leave

The Fair Work Act 2009 (Cth) treats some instances of employee resignation as a statutory "dismissal" if the resignation was effectively forced by the employer’s conduct—a doctrine known as constructive dismissal. Constructive dismissal arises when the employer’s conduct or course of action results, either directly or indirectly, in the employee having no real choice but to resign.

Statutory definition — deemed dismissal Section 386(1)(b) of the Fair Work Act provides that a person has been dismissed if "the person's employment with his or her employer has been terminated on the employer’s initiative, or the person was forced to resign because of the conduct, or a course of conduct, engaged in by his or her employer." This sets out the operative "non-voluntariness" standard—if employer action or inaction creates working conditions so intolerable, or clearly signals that the employment relationship is untenable, the law will treat the resignation as a dismissal for the purposes of unfair dismissal and statutory benefits.

Examples and scope The Fair Work Commission (FWC) and Australian courts have found constructive dismissal in cases such as:

• Unilateral and fundamental changes to contract terms (such as severe reductions in pay, duties, or work location),
• Ongoing bullying, harassment, or discrimination with the employer's knowledge,
• Imposing unreasonable performance demands, or applying direct pressure to resign,
• Threatening summary dismissal without fair grounds or due process.

The legal test is whether the employer’s conduct left the employee with no reasonable choice but to resign. Not every resignation following employer dissatisfaction or routine management action qualifies; the threshold for constructive dismissal is high, and each situation is fact-specific. The reason for resignation must be causally linked to the employer’s conduct.

Implications — access to unfair dismissal and statutory rights Where the FWC finds constructive dismissal, the resignation is treated in all respects as if the employer had dismissed the employee. The employee gains access to the unfair dismissal jurisdiction and associated remedies (subject to the usual qualifying periods and statutory exclusions), and the employer must provide statutory termination entitlements as with any ordinary dismissal.

Common exclusion — non-renewal of fixed term contracts Section 386(2) of the Fair Work Act specifically excludes the non-renewal of a fixed term contract from the definition of dismissal. Resignation at the end of a fixed term, or expiry of the contract, is not treated as a dismissal for statutory purposes unless distinct employer misconduct is shown.

Source: Fair Work Act 2009, section 386 Source: Fair Work Ombudsman — What is a dismissal?

Under the Fair Work Act 2009 (Cth), the expiry or non-renewal of a genuine fixed-term or maximum-term contract is generally not a "dismissal" for unfair dismissal purposes. Section 386(2)(a) expressly excludes employment that "was under a contract of employment for a specified period of time... and the employment terminated at the end of that period." The same rule applies for termination at the completion of a specified task or season (s386(2)(b)). Thus, non-renewal or expiry of a bona fide fixed-term contract confers no right to bring an unfair dismissal claim—unless the contract was a sham to avoid ongoing employment.

Effective 6 December 2023, the "Secure Jobs, Better Pay" reforms substantially limit the use of fixed-term and maximum-term contracts. Sections 333B–333G of the Fair Work Act now:

• Prohibit engaging an employee on a fixed-term or maximum-term contract (including extensions) for more than two years in total (s333C(3), s333D);
• Bar employers from renewing a fixed-term contract more than once for the same role (s333C(2));
• Void contract terms that circumvent these limits; the contract remains, but the restriction on ongoing employment has no effect (s333E).

Enumerated exceptions (s333D) permit longer or repeat fixed terms for:

• Temporary replacements (such as covering parental leave);
• Training arrangements (apprenticeships, traineeships);
• High-income employees (at or above the high income threshold);
• Positions wholly funded by government, lasting beyond 2 years;
• Governance officers (e.g., directors, board members);
• Employees under modern awards that expressly permit longer fixed terms.

Employers must give all fixed-term hires a "Fixed Term Contract Information Statement" (s333F). Penalties apply for breaches (s333G).

If a fixed-term contract breaches these rules, the contract’s fixed term limit is unenforceable and the employee may bring an unfair dismissal claim if their employment ends at its purported expiry (s333E). Repeated short-term contracts—or rolling fixed-term contracts to avoid continuous service—are subject to scrutiny, and Fair Work Commission may find that an employee was, in substance, a permanent employee.

For international employers, previous practices of routinely rolling fixed-term contracts in Australia now risk statutory penalty and unfair dismissal exposure unless they fall within these legislative exceptions.

Source: Fair Work Act 2009, ss 386(2), 333B–333G Source: Fair Work Ombudsman — Fixed term contracts

Australia's Fair Work Act 2009 (Cth) divides statutory avenues for challenging dismissal into two streams: unfair dismissal (Part 3-2) and "General Protections" (Part 3-1) adverse action claims. The General Protections regime prohibits dismissals (and other adverse action) taken for specified, prohibited reasons—chiefly, because an employee exercised a "workplace right," engaged in industrial activity, was temporarily absent due to illness or injury (within the statutory protections), or because of protected attributes such as race, sex, age, disability, family responsibilities, or union membership.

## Scope and coverage Part 3-1 applies to all (national system) employees, including many who are outside the scope of unfair dismissal: those with less than the minimum qualifying service, high-income earners, award/agreement-free employees, applicants for employment, and in many cases, some casuals. There is no cap on compensation, and courts can award penalties for breach.

## Key prohibitions (sections 340–351) An employer must not dismiss or threaten to dismiss an employee for any of the following:

• Because the employee has a workplace right (defined in s341) or exercised/ proposes to exercise such a right (including making a complaint or inquiry about employment conditions, filing a workers' compensation claim, or participating in proceedings);
• Because of protected industrial activity;
• Because of a temporary absence from work due to illness or injury (provided it is less than 3 months continuous or up to 3 months over 12 months; see s352 and Fair Work Regulations reg. 3.01);
• Because of a discriminatory attribute (see s351)—such as race, sex, sexual orientation, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, or social origin (subject to inherent requirements and genuine occupational requirements exceptions).

## Burden of proof and reverse onus Section 361 imposes a "reverse onus": if an employee alleges a prohibited reason was a substantial and operative factor in the dismissal, it is presumed, unless the employer proves otherwise, that the action was taken for that reason.

## Applications and timeline A dismissed employee may bring a General Protections dismissal application to the Fair Work Commission within 21 days (s366). The FWC must conduct a conciliation; if unresolved, claims can proceed to the Federal Court or Federal Circuit and Family Court, which may order reinstatement, uncapped compensation, and civil penalties. This is distinct from the unfair dismissal model; employees may not pursue both streams for the same termination (s725).

## Practical risk Employers should be alert that even a procedurally flawless and "fair" dismissal (for performance, redundancy, or misconduct) can still ground liability if any of the prohibited reasons above are a substantial and operative factor. This often arises in terminations following workplace complaints, requests for flexible work, or repeated absences due to medical conditions.

Source: Fair Work Act 2009, Part 3-1 (ss340–361, 352), s725 Source: Fair Work Ombudsman — Protections at work Source: Fair Work Ombudsman — General protections

The Fair Work Act 2009 (Cth) and the National Employment Standards (NES) establish expectations for notice of resignation given by employees, but, critically, the Act does not prescribe a universal statutory minimum notice period for resignations. Instead, an employee’s resignation notice period is typically set by either their contract of employment or the terms of any applicable modern award or enterprise agreement.

## No NES universal minimum for employee notice Section 117 of the Fair Work Act 2009 details the employer’s obligation to provide a minimum statutory notice period (or payment in lieu) when terminating an employee. However, the NES does not impose a corresponding minimum period of notice that an employee must give to their employer upon resignation. Unless the contract or modern award expressly provides a requirement, there is no statutory obligation for an employee to give notice (or work out a notice period) before their resignation takes effect.

## Modern award and enterprise agreement overlays Most modern awards in Australia do require that an employee give a minimum period of notice of resignation, mirroring or closely following the NES employer notice periods—commonly 1 to 4 weeks, depending on service length and sometimes the employee’s age or status. Some awards explicitly allow deduction from final pay for insufficient notice (usually capped at one week’s wages). Enterprise agreements may also set minimum employee notice or other resignation formalities. Where a contract or instrument is silent, there may be no enforceable minimum beyond common law ‘reasonable notice’ (rarely litigated and often minimal in practice), but most awards do establish a concrete minimum. Practitioners should check the specific modern award or EA for the exact language applicable to their sector.

## Contractual minimum notice If an employment contract sets a minimum period of notice to be given by the employee, that is typically enforceable unless it conflicts with an award/EA or is unreasonable.

## Employer remedies for short or no notice Where an employee fails to give the required contractual or award/EA notice, the usual employer remedy is to withhold up to one week’s wages from accrued entitlements (if an award/EA or the contract expressly permits), as liquidated damages for failure to provide notice. There is no general ability under statute for further monetary penalties or forced working out of notice for employee-side resignation, unless agreed contractually. Employers must pay all other statutory entitlements (accrued leave, etc.) regardless of insufficient notice, subject to proper deduction.

## Practical documentation Employees are expected under most awards and good practice to provide notice of resignation in writing, specifying the termination date. This provides a clear record for payroll and ensures smooth finalization of statutory payments. If no notice period is specified by award, contract, or agreement, resignation is generally effective immediately upon delivery.

## Summary

• The NES does not require a minimum notice for employee resignation.
• Most modern awards do require 1–4 weeks’ notice by employees, depending on service.
• Employment contracts may specify a minimum notice period.
• Where notice is not provided, up to one week’s pay may be deducted (if allowed by award/EA or contract).

Source: Fair Work Act 2009, section 117 Source: Fair Work Ombudsman — Ending employment: How much notice

The Fair Work Commission (FWC) provides two principal remedies for unfair dismissal under the Fair Work Act 2009 (Cth): reinstatement and compensation. Section 390 of the Fair Work Act establishes that FWC must first consider reinstatement as the primary remedy before considering compensation. Reinstatement will generally be ordered if practical and the employment relationship is viable. However, in practice, most successful claimants are awarded compensation because reinstatement is often not feasible (s390(3)).

If monetary compensation is awarded, the Fair Work Act section 392 sets a strict statutory cap. The maximum compensation for unfair dismissal is the lesser of:

• 6 months of the employee’s "remuneration at the employee’s base rate of pay" for ordinary hours of work (s392(5)(a)); or
• Half the current "high income threshold" as set under the Act (s382(b)(iii)).

Annual adjustment of the compensation cap The high income threshold is indexed annually on 1 July, and the compensation cap adjusts accordingly. For dismissals:

• On or after 1 July 2025 up through 30 June 2026, the high income threshold is AUD 183,100 and the maximum compensation cap is AUD 91,550.
• On or after 1 July 2026, the threshold is AUD 190,100 and the cap is AUD 95,050.

Employment status (full-time/part-time) does not affect these limits; the cap applies to the calculated loss or threshold, whichever is lower. Source: FWC annual high income threshold notices.

Compensation calculation method Section 392(2) directs the FWC to consider:

• The remuneration the employee would have received if not unfairly dismissed;
• The efforts made by the employee to mitigate loss;
• Any income earned post-dismissal or payments made by the employer, such as redundancy or severance pay (offset to prevent double recovery per s392(3));
• The length and circumstances of the employment and the dismissal, including any misconduct by the employee, which can result in reduction or elimination of compensation (s392(3)).

Compensation is intended to address actual pecuniary loss caused by the unfair dismissal—not to penalize the employer or award damages unrelated to financial loss. No punitive/exemplary damages are available. Applications for remedy must be made within 21 days of dismissal. The current high income threshold details can be found in the FWC public notices.

Source: Fair Work Act 2009, sections 390–393 Source: Fair Work Commission — Remedies for unfair dismissal Source: Fair Work Commission — Compensation cap and high income threshold notices

The Fair Work Act 2009 (Cth) establishes a distinct statutory avenue for employees whose employment has been terminated on certain prohibited grounds, known as an "unlawful termination" claim. Unlike unfair dismissal (Part 3-2) and "general protections" adverse action (Part 3-1) claims, unlawful termination claims (Division 2, Part 6-4, sections 772–780) target specific grounds, including discrimination based on protected attributes and certain temporary absences due to illness or injury. This remedy is available to classes of employees not covered by unfair dismissal—such as short-service employees, high-income earners, and some casuals—provided their employment was terminated for one of the listed prohibited reasons.

## Prohibited grounds for termination Section 772(1) of the Fair Work Act prohibits an employer from terminating an employee's employment for reasons including:

• Temporary absence from work due to illness or injury, within the limits specified by regulation 3.01;
• Trade union membership or participation in industrial activities;
• Non-membership of a union;
• Being absent during parental leave;
• Making a complaint or participating in proceedings against the employer;
• Discrimination on grounds including race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, or national extraction or social origin (subject to job-related exceptions).

## Application procedure and deadlines To bring an unlawful termination claim, an employee must file an application in the Fair Work Commission (FWC) using the specific form for unlawful termination (not the unfair dismissal or general protections forms). The application must be lodged within 21 calendar days after the dismissal takes effect (section 773(2)). This statutory deadline mirrors that for unfair dismissal and general protections/dismissal claims, and late applications will only be accepted in exceptional circumstances (section 774).

## Distinctions from other claims

• Employees who are eligible for unfair dismissal or general protections-dismissal avenues cannot file for unlawful termination instead (section 725).
• Remedies for unlawful termination may include reinstatement, compensation, and—unlike unfair dismissal—may be pursued by employees otherwise excluded from the unfair dismissal remedy (e.g., due to short service, high income, or specific visa status), provided the termination is for a prohibited ground.
• Employers must be prepared to defend the genuine basis of the termination; a reverse onus of proof applies once a claim is lodged.

For termination on or after 1 January 2010, unlawful termination claims must be pursued through the FWC, not the courts, unless otherwise directed or if the matter is dismissed by the Commission. Practitioners should check the FWC’s published application forms and guidance for current procedural requirements.

Source: Fair Work Act 2009, sections 772–780, 773(2) Source: Fair Work Ombudsman — Unlawful termination

In Australia, employers often seek a formal settlement agreement or deed of release when terminating employment to secure finality and avoid later claims. While such agreements are a standard tool in managing termination risk, the Fair Work Act 2009 (Cth) and public policy impose strict limits on what rights can be compromised—and how.

Contracting out of statutory entitlements: Section 326(1) of the Fair Work Act provides that any term of a contract or agreement (including a deed of release) is of no effect to the extent that it purports to exclude, limit, or otherwise contract out of the National Employment Standards (NES), a modern award, or enterprise agreement. This means an employee cannot be required—through a release or separation deed—to give up minimum wage, statutory notice, redundancy pay, or leave entitlements prescribed by the NES. Any attempt to do so is void, regardless of the wording or the fact that the employee received legal advice. Section 326(2) confirms certain permitted set-offs, but the general anti-contracting out rule prevails.

Scope and enforceability of releases: A deed of release can effectively bar claims arising from statutory rights once those rights have crystalised and been paid (for example, to close out disputes over the quantum of redundancy or payment in lieu of notice when there is genuine uncertainty). But it does not prevent an employee from bringing claims about entitlements that have not yet accrued, nor can it waive future statutory rights or claims for conduct post-settlement. The Fair Work Ombudsman states that if an employee receives a "genuine settlement" (compromising a claim for payment or remedy), and both parties agree, the FWC may dismiss a subsequent application as "resolved" or "settled." However, there is no blanket immunity; statutory jurisdictional thresholds (minimum periods, high-income exclusions) still apply to unfair dismissal, general protections, and adverse action claims.

Unfair dismissal and FWC applications post-release: Per section 394(1) of the Fair Work Act, a release or settlement agreement does not restrict an employee from applying to the Fair Work Commission for unfair dismissal if eligible. The Commission routinely addresses claims where a settlement has been executed: it will examine the agreement and, if satisfied that the matter has been full and finally settled and there is no evidence of duress or misrepresentation, will typically dismiss the claim (see Hazledine v Areté Pty Ltd [2019] FWC 6064). However, if the release attempts to exclude basic NES entitlements, or was procured under duress or without informed consent, the claim may proceed.

General protections/adverse action claims: Releases can cover general protections/adverse action claims provided a genuine dispute is compromised for consideration, but cannot bar claims about protected workplace rights or conduct post-settlement (s326; see also FWO guidance). The scope of any waiver will be read narrowly, and releases that purport to "contract out" of future general protections rights will be void.

No statutory cooling-off—practical best practice: Australian law does not mandate a cooling-off period for settlement agreements. The Fair Work Ombudsman strongly encourages allowing sufficient time for independent legal advice before signing. Ambiguity is resolved against the employer (contra proferentem).

In summary: settlement agreements are enforceable as to disputed entitlements and claims genuinely compromised, but cannot waive minimum statutory rights, and will be scrutinised for fairness and proper process.

Source: Fair Work Act 2009, sections 326, 394 Source: Fair Work Ombudsman — Dismissal disputes (settlement) Source: [Hazledine v Areté Pty Ltd [2019] FWC 6064](https://www.fwc.gov.au/documents/decisionssigned/html/2019fwc6064.htm)

When an Australian employer enters liquidation or bankruptcy and is unable to pay eligible employees their minimum entitlements on termination, the federal Fair Entitlements Guarantee (FEG) scheme operates as a statutory safety net. The FEG is established under the Fair Entitlements Guarantee Act 2012 (Cth) and administered by the Department of Employment and Workplace Relations.

Eligibility Employees are eligible to claim under FEG if:

• Their employment ended due to employer insolvency (liquidation for companies or bankruptcy for sole traders/partnerships), and a liquidator or trustee is formally appointed;
• They are owed eligible unpaid entitlements (see below);
• They were an Australian citizen or holder of a permanent or special category visa at termination; and
• The FEG claim is lodged within 12 months of the end of employment or insolvency event, whichever is later.

Company directors, their relatives, contractors, and certain other classes are not eligible (Fair Entitlements Guarantee Act 2012 ss10–13).

Entitlements covered FEG advances only specific statutory minimum entitlements:

• Unpaid wages (up to 13 weeks)
• Unpaid annual leave
• Unpaid long service leave
• Payment in lieu of notice (up to 5 weeks)
• Redundancy pay (up to 4 weeks per completed year of service)

Amounts are determined by the employee’s minimum entitlement under the National Employment Standards (NES) or any applicable modern award, not by higher amounts set by contract or workplace policy. FEG does not cover unpaid superannuation, bonuses, or contractual severance above NES/award entitlements.

Statutory caps and quantum FEG payments are capped at the Fair Work Act "high income threshold" as at the year in which employment ended (indexed annually; as of July 2024, this cap is AUD 167,500; for July 2025, the projected figure is AUD 183,100, but this is subject to annual update—confirm against current FWC notices). FEG payments are made net of tax.

Claims process Eligible employees apply to the Department of Employment and Workplace Relations. The liquidator or trustee verifies entitlements and service. If approved, payments are made by the Commonwealth, which takes over the employee’s claims against the insolvent employer in the winding-up process.

Limits FEG is a last-resort scheme: it applies only where recovery from the employer is not possible after an insolvency appointment, and does not apply for voluntary resignations or where the employer’s business is still solvent. The 12-month claim deadline is strictly enforced.

For statutory entitlements themselves, see the Statutory redundancy pay and Minimum notice sections of this guide. For NES definition, consult section 61 of the Fair Work Act.

Source: Fair Entitlements Guarantee Act 2012 (Cth) Source: Fair Work Ombudsman — Ending employment fact sheet Source: Department of Employment and Workplace Relations — FEG Overview