Navigating Employee Terminations: A Guide for Small Businesses

Managing employee terminations is a delicate process that can be emotionally taxing for both parties involved. Whether it’s an employee dreaming of a dramatic exit or a manager eager to part ways with a troublesome team member, the end of the year often brings a surge in departures. This period can be fraught with conflicts over leave payouts and other issues. Without expert HR guidance, businesses risk financial and legal liabilities during these transitions. Here are essential tips for handling employee terminations smoothly:

1. Written Confirmation:

Insist on written notice from employees seeking to terminate their employment. This document should clearly state their reasons for leaving and their final working day. Consult with HR support services if needed, as verbal resignations can lead to misunderstandings.

2. Resignation in Haste:

Give employees time to reconsider if they resign impulsively due to a workplace dispute. The Fair Work Commission advises that employers should not immediately accept resignations made under special circumstances, such as emotional distress or pressure.

3. Contractual Obligations:

Before agreeing to any terms of termination, review the employment contract to ensure all obligations have been met. This includes paying out any remaining leave entitlements and final salary payments.

4. Exit Interviews and Knowledge Transfer:

Conduct exit interviews to understand the reasons behind an employee’s departure and address any issues to improve retention. Use this opportunity for the outgoing employee to hand over their duties to a successor.

5. Clarify Restrictions:

Ensure that any post-employment restrictions, such as non-compete clauses, are reasonable and legally enforceable. These are designed to protect the company’s interests without unfairly hindering the employee’s future career prospects.

6.  Heat of the Moment resignations

If an employee is resigning in “Haste” because of a workplace argument or disagreement, then it is recommended that you give them time to cool down and then check that they are still wanting to resign. The Fair Work Commission noted in case law principles that:

  • It may not be reasonable to immediately accept a resignation where there are special circumstances;
  • Special circumstances may include words said in anger, under undue pressure or the intellectual capacity of employee;
  • Where there are special circumstances, employers should allow a reasonable period of time to pass. The employer may need to enquire whether the employee actually intended to resign;
  • Given the special circumstances, whether an employee intended to resign will be judged objectively by the courts; and
  • Where a resignation is given and the intention is unambiguous, the employer is not required to make further enquiries.

workplace argument or disagreement


If an employer fails to take these steps and simply accepts a resignation made in the ‘heat of the moment’, it may be subject to an unfair dismissal application against them. Section 386(1)(b) of the Fair Work Act 2009 (Cth) distinguishes between a genuine resignation and one where an employee has felt forced to resign ‘because of conduct, or a course of conduct, engaged in by his or her employer’, which is in fact considered a dismissal at the initiative of the employer. In the case of Minato v Palmer Corporation (1995), a retail employee stormed out of the workplace saying to her supervisor that she could “shove the f***ing job up her a***”. When the employer refused to accept the employee’s withdrawal of her resignation, it was found to be ‘harsh, unjust and unreasonable’ and, therefore, an unfair dismissal under section 385(b) of the Fair Work Act 2009 (Cth).

Find out more in our previous post on this subject –

Navigating employee terminations can be tricky, but we’ve got you covered! 💼