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Post-Employment Contract Termination Steps

Reading time: 7 mins

Termination of an employment contract is not merely a conclusion of work duties. Instead, it marks the beginning of a series of critical post-termination steps. These steps ensure a smooth and legally compliant transition for both employers and employees.

In this article our employment lawyer discusses the important steps employers should take after terminating an employment contract in Australia.

Make Final Payments within 7 days

Employers must pay employees their final pay within 7 days of their employment ending. This includes unpaid wages, earned vacation time, and other benefits like long-term leave or severance pay.

Retrieve Company Property

Employers must promptly retrieve any company-owned items from former employees after terminating their work agreement. These items may include electronic devices, access cards/keys, and uniforms/equipment.

Failure to retrieve company property after termination can have serious consequences for both employers and employees. For employers, it can result in the loss of valuable assets, compromised security, and potential legal issues. It can also cause misuse or unauthorized access to company information, which can harm the business.

On the other hand, for employees, failure to return company property can damage their professional reputation, hinder future job prospects, and even result in legal action. Therefore, it is essential for both parties to prioritize the prompt retrieval of company-owned items to ensure a smooth transition and protect the interests of all involved.

Provide References or Support

Although Australian law does not require references to be issued, offering support and guidance during this transition can encourage goodwill.

Consider:

Reference letters. If the termination of employment is amicable, a favourable reference can enhance the employee’s future employment prospects.

Support services. Offer information on outplacement services or career counselling to assist the employee in their job search.

Employment Contract Termination

Terminate Access

Secure the company’s access after termination to protect sensitive information.

The employer must terminate access to:

Company systems. Swiftly deactivate the terminated employee’s access to all company systems, including email, shared drives and software platforms. This is not only to protect confidential information but is also consistent with cybersecurity best practices.

Physical premises: Ensure physical security by blocking access to the workplace. This involves disabling access cards, updating security codes, and informing relevant employees about the terminated employee’s status.

Maintain Confidentiality

Maintain confidentiality post-termination. This includes:

Trade secrets and proprietary information. Remind the employee of their ongoing obligation to keep company trade secrets and proprietary information confidential. Clearly communicate the consequences of breaching confidentiality agreements. Put emphasis on the legal consequences.

Non-Disclosure Agreements. Reaffirm any existing non-disclosure agreements in place to protect sensitive company information. Consider a debriefing session to reinforce the importance of maintaining confidentiality even after leaving.

Complete Documentation

Thorough documentation is crucial for legal compliance and potential future disputes. Ensure:

Termination letter. Draft a comprehensive termination letter that outlines the reasons for termination, the effective date, and any post-termination obligations. Clearly communicate the employee’s rights and obligations to avoid any possible misunderstandings.

Exit interviews. If possible, conduct an exit interview to gather feedback and insights that may be valuable for improving the organisation. It also gives the departing employee to share feedback and potentially identify areas for improvement.

Record retention. Retain records related to the termination of employment. These records may include correspondence, performance evaluations and any signed agreements. Sound record retention is invaluable in the event of legal challenges.

Legal Counsel

Key Takeaways:

  • Employers should make final payments, including outstanding wages, accrued leave, and entitlements, within 7 days of employment termination.
  • Retrieve company-owned items from terminated employees, including electronic devices, access cards/keys, and uniforms/equipment.
  • Offering references or support services can encourage goodwill and assist the employee in their job search.
  • Terminate access to company systems and physical premises to protect sensitive information and maintain security.
  • Maintaining confidentiality post-termination is crucial, including reminding the employee of their obligation to keep trade secrets and proprietary information confidential. You must complete thorough documentation, including a termination letter and exit interviews, for legal compliance and potential future disputes.

Frequently Asked Questions

When does the binding effect of an Employment contract cease?

The binding effect of an employment contract generally ceases under the following circumstances:

Termination of Contract: The contract ends when either party terminates it in accordance with the terms and conditions stipulated in the contract1.

End of Fixed Term: In the case of a fixed-term contract, the binding effect ceases at the end of the set period2.

Start of Work Without Contract: If an employee starts work without a written contract, the contract is considered to have taken effect and is binding from the moment the employee starts work

There are some clauses that are likely to continue to apply after the contract has ended. It is important to speak with a qualified employment lawyer about any post-termination obligations.

An Employment Agreement in Australia is a contract between an employer and an employee. It sets out the terms of employment, including work hours, pay, and leave. It must meet the legal requirements in the National Employment Standards and the relevant industry award or agreement. The agreement must follow Australian Government rules.

It can be written or spoken. It can have clauses to safeguard businesses. These clauses can include confidentiality and intellectual property terms.

If you believe you have been unfairly dismissed in Australia, it is recommended to first speak with your employer about your concerns and any potential obligations they may have overlooked.

If this initial conversation does not resolve the issue, you can then contact the Fair Work Commission promptly. It is important to note that you must apply to the Commission within 21 days of the dismissal taking effect. If you are uncertain about any aspect of the process or your rights, seeking legal advice is advisable.

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