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  • Calendarlast updated July 2018
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Document Overview

This Termination Letter (Redundancy) explains that you are terminating an employee on the basis of redundancy. It is important that you follow the correct procedures when terminating an employee. The termination of any employee should always be set in writing. A written record can help protect your business if any questions or legal issues arise regarding the termination. It is recommended that you seek legal advice before terminating an employee as there are a number of legal options available to a disgruntled employee, including commencing proceedings against an employer for unlawful termination or unfair dismissal.

 

Use this Termination Letter (Redundancy) if: 

  • You would like to terminate the employment of an employee;
  • You would like to concisely explain to the employee why he/she has been dismissed; and
  • You would like to have a record of the termination in the event of a lawsuit.

What does the Termination Letter (Redundancy) cover?

  • Informs the recipient that his or her position has become redundant; and
  • Sets out the redundancy payment that will be made.

Other names for Termination Letter (Redundancy) include:

  • Letter of Redundancy;
  • Letter of Notification of Redundancy; and
  • Redundancy of Termination Letter.

What’s the difference between a termination letter and deed of release?

A termination letter is used when an employer needs to terminate an employee either due to layoffs, poor performance or an other appropriate mean. It is important to have a termination letter as it provides a physical record of termination in the event of a lawsuit.

A deed of release is a formal agreement by which an employer and employee seek to settle a dispute. A deed of release is usually used when an employee has made, or is considering to make, a claim against their employer due to unfair dismissal, unlawful termination or unpaid entitlements.

As an employer, do I have do give a reason to terminate an employee?

An employer must follow its own disciplinary procedures and policies, in which require procedural fairness to be given to employees. However, there is no common law obligation on an employer to give reasons for terminating an employment contract on notice.

Further, there is no implied right of an employee under an employment contract to be head in relation to grounds for intended dismissal. However, failure to provide an employee a reasonable opportunity to respond to grounds for dismissal prior to the decision will increase the likelihood of the dismissal to be found to be unfair by the Fair Work Commission unfair dismissal scheme.

So legally, no, you do not need to provide a reason to terminate an employee. However, for legal security, it is best to communicate the grounds that concern the individuals employment and provide an opportunity for the employee to respond to such grounds prior to dismissal.

How much notice are employers required to provide employees upon termination?

Although this may be stipulated in an employment agreement, the minimum notice period will depend on the period of continuous service. This is highlighted below:

 

Period of continuous serviceMinimum notice period
1 Year or Less1 week
More than 1 year - 3 years2 weeks
More than 3 years - 5 years3 weeks
More than 5 years4 weeks

Further to this, if an employee is over 45 years old and have worked for the employer for more than 2 years they are required to receive an extra week of notice.

How do I terminate an employee before the end of their probation period?

Employers can put their employees on a probation period (also known as a probationary period) to assess if employees are suitable for the role and business. A probation period can range from a few weeks to a few months. In the event that an employer seeks to terminate an employee before their probation period they still need to follow the appropriate legal procedures. It is important to know the probation period is still a normal period of employment, during which the employee is entitled to the statutory minimum entitlements of employment. Further, it is important to be acutely aware of the probation period and be informed as to whether the employee is to receive further entitlements after the probation period concludes.

Although the probation provides a safer option for employers to test the waters with new employees, it must be noted that an employer can not terminate an employee during any period for an unlawful reason, such as race, sex, age, religion etc. Further, an employee can not be terminated due to a lodged workplace complain or due to an enquiry the employee has made as this would conflict the general protections regime.

How is an employee’s annual leave handled following termination?

Following termination an employee is entitled to ‘final pay’, which includes any financial commitments owed by the employer during the employment period.

Under final pay an employee is entitled to any accumulated annual leave, including annual leave loading that would have been paid during the employment period.

There may be a specified date in which final pay must be paid under an award, employment contract or registered agreement. If no agreement exists, it usually best practice for an employee to be paid on their last day of work or the following day.

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