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- Other forms of termination
Overview — Other forms of termination
Termination of contracts of employment without notice can arise in a number of circumstances — the most important being summary dismissal and acceptance of a repudiatory breach which are dealt with elsewhere. See Summary dismissal and Repudiation of employment contract.
Some of the less common situations in which a contract of employment can be terminated without notice include:
- • frustration;
- • abandonment;
- • bankruptcy or insolvency of the employer;
- • summary dismissal; and
- • repudiation.
Frustration of employment contract
Where an employment contract is frustrated, it comes to an end by operation of law rather than at the initiative of the employer. Frustration of employment may occur, for example, as a result of the death or imprisonment of an employee. However, employers should be aware that the courts and tribunals are generally reluctant to find that a contract has been frustrated.
See When has an employment contract been frustrated?
Abandonment of employment
In abandonment of employment situations, the employer’s acceptance of the employee’s repudiation (constituted by the abandonment) is generally considered to be the act that terminates the employment contract. This is significant for the purposes of the unfair dismissal provisions under the Fair Work Act 2009 (Cth) which depend for their operation upon termination of employment being at the initiative of the employer.
See What constitutes an abandonment of employment?
Bankruptcy or insolvency of the employer
Bankruptcy or insolvency of an employer does not automatically terminate the employment contracts of employees of the bankrupt or insolvent entity. The appointment of receivers and managers may have the effect of terminating employment contracts, although this is not necessarily the case. Whether it does so or not will depend on the terms of their appointment.
Employees whose employment is terminated due to the insolvency or bankruptcy of their employer and who are unable to recover outstanding employee entitlements from the employer or another source may be entitled to a payment under the Commonwealth-funded Fair Entitlements Guarantee (FEG) scheme.
See What happens to the employment relationship on the bankruptcy or insolvency of the employer?
Summary dismissal
Summary dismissal occurs where an employer terminates an employee’s employment without providing notice or payment in lieu of notice. It is reserved for the most serious cases where no lesser form of disciplinary action is appropriate.
See What is a summary dismissal?
Repudiation
A repudiatory breach of a contract of employment may occur where one party to the contract engages in conduct that evinces an intention no longer to be bound by the contract, or to carry out the employment contract only in a way that is substantially inconsistent with that party's obligations under the contract. Such breach will entitle the innocent party to elect to terminate the contract and to end the employment immediately.
Repudiation may also occur if a party to an employment contract exhibits an unwillingness or inability to perform obligations under a contract such that it will not be substantially performed.
See What is a repudiatory breach of the employment contracts?