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2 Terminating the employment of an ongoing APS employee

The main points and considerations applying to the termination of employment of an ongoing Australian Public Service (APS) employee are as follows:

  • Termination of an ongoing APS employee must comply with the APS-specific requirements set out in the Public Service Act 1999 (PS Act) and subordinate legislation and be consistent with the requirement to uphold the APS Values and the APS Employment Principles.
  • Termination decisions must also comply with the relevant provisions of the Fair Work Act 2009 (FW Act), the Age Discrimination Act 2004, the Disability Discrimination Act 1992, the Racial Discrimination Act 1975 and the Sex Discrimination Act 1984, and with relevant requirements of administrative law.

2.1 APS-specific requirements

  • Termination of employment of APS employees occurs under section 29 of the PS Act:
    • For Senior Executive Service (SES) employees, section 38 of the PS Act provides that an agency head cannot issue a notice of termination under section 29 to an SES employee unless the Australian Public Service Commissioner has issued a certificate stating that all relevant requirements of the Australian Public Service Commissioner’s Directions 2013 (the Directions) made under subsection 11A(1) of the PS Act have been satisfied in respect of the proposed termination and that the Commissioner is of the opinion that the termination is in the public interest.
    • There are also separate incentive to retire provisions that operate in relation to ongoing SES employees (section 37 of the PS Act and clause 7.3 of the Directions). Further information on SES incentive to retire arrangements is available at The Senior Executive Service: selection, mobility and separation.
  • Notice of termination must be in writing (subsection 29(1)).
  • The ground or grounds must be specified in the written notice of termination (subsection 29(2)).
  • Termination can only be on one or more of the grounds spelt out in subsection 29(3) of the PS Act.
  • Termination for a breach of the APS Code of Conduct may only be imposed where an agency head has determined a breach has occurred in accordance with the procedures established under subsection 15(3) of the PS Act.
    • Clause 4.2 of the Directions provides that where the conduct of an employee raises concerns that relate both to effective performance and to possible breaches of the Code of Conduct, an agency head must, before making a decision to initiate an inquiry under subsection 15(3) of the Act, have regard to any relevant standards and guidance issued by the Commissioner.
  • There are certain limitations in superannuation legislation on an agency head’s power to terminate the employment of an ongoing APS employee on the grounds of inability to perform duties because of physical or mental incapacity.
  • Any relevant procedures and requirements set out in workplace arrangements applicable to the employee should be complied with before the employee’s employment is terminated.
  • The agency head must notify in the Public Service Gazette a decision to terminate the employment of an ongoing APS employee, where the employee has been terminated on misconduct grounds (clause 2.29 of the Directions).
  • There is no right of appeal or review under the PS Act or the PS Regulations in relation to a decision to terminate the employment of an ongoing APS employee (apart from a right under PS Regulation 7.2 for a former employee to request an investigation of their separation entitlements). However, general principles of administrative law apply to termination decisions under section 29 of the PS Act, meaning review of the process by the Courts (generally the Federal Court) may be available depending on the circumstances of the decision. In addition, other avenues may be available under the FW Act – see Part 2.2 below.

2.1.1 Grounds for termination under Public Service Act

Detailed information relating to the specific grounds for termination of employment of an ongoing APS employee as set out in section 29 of the PS Act can be found at the following parts of this guide:

Termination

  • where the employee is excess to the requirements of the agency – part 2.3
  • where the employee lacks, or has lost, an essential qualification for performing his or her duties – part 2.4
  • for non-performance, or unsatisfactory performance, of duties – part 2.5
  • for inability to perform duties because of physical or mental incapacity – part 2.6
  • for failure to satisfactorily complete an entry-level training course – part 2.7
  • for failure to meet a condition of engagement imposed under subsection 22(6) of the PS Act – part 2.8
  • for a breach of the Code of Conduct – part 2.9.

2.2 Fair Work Act provisions

  • A person who was employed as an ongoing APS employee may be able to seek relief in relation to the termination of their APS employment in a number of forums, including under the provisions of the FW Act.
    • For example, an dismissed APS employee may be able to make an unfair dismissal application to the Fair Work Commission (FWC) on the grounds that the termination of their employment was harsh, unjust or unreasonable (see part 3-2 of the FW Act).
    • In addition, a dismissed employee who believes that they have been dismissed in contravention of the General Protections provisions of the FW Act (e.g. because of the exercise of their workplace rights, participation in industrial activity or for a discriminatory reason) can apply to the FWC for relief (see part 3-1 of the FW Act).
  • The FW Act also contains provisions setting out the obligations on employers to notify Centrelink and registered employee associations where the employer proposes to terminate the employment of 15 or more employees for reasons of an economic, technological, structural or similar nature (see sections 530 and 531 of the FW Act).
  • Subject to limited exceptions, an ongoing APS employee needs to be given notice of termination or payment instead of notice at least equal to the amount as set out in section 117 of the FW Act. Higher amounts may be provided under the APS Award or enterprise agreement or other workplace arrangement that applies to the employee. Such notice or payment instead of notice does not, however, have to be provided in cases of serious misconduct (this term is defined in regulation 1.07 of the FW Regulations).
    • Agencies will need to determine on a case by case basis whether the conduct of an employee falls within this definition of ‘serious misconduct’ in the FW Regulations and therefore whether the employee is entitled to notice of termination, or payment in lieu.
    • However, this does not mean that APS employees can have their employment terminated on the spot for serious misconduct. Agencies will need to follow their established procedures for determining whether an employee has breached the APS Code of Conduct, and termination of employment with or without notice on the ground of misconduct can only occur at the end of a properly conducted misconduct process.
  • The FW Act also includes provisions relating to redundancy pay in certain circumstances as well as providing an entitlement to the payment of unused annual leave entitlements when an employee’s employment ends.

2.3 Specific grounds for termination – excess to requirements (s.29(3)(a))

Under paragraph 29(3)(a) of the Public Service Act 1999 (PS Act), an agency head may terminate the employment of an ongoing Australian Public Service (APS) employee who is excess[3] to the requirements of that agency.

The PS Act framework also includes provision for an agency head to reduce the classification of an employee in their agency (without the employee’s consent) on the grounds of being excess to the requirements of the agency.

Also relevant are specific ‘incentive to retire’ provisions which apply to Senior Executive Service (SES) employees only. Further information on the management of excess SES employees is available at The Senior Executive Service: Selection, mobility and separation.

2.3.1 Management of excess staff situations

Consistent with the devolved employment framework operating in the APS, downsizing exercises are conducted by individual agencies within the parameters of Government policies, their own workplace arrangements and budgets.

Subject to the terms of any agency-specific enterprise agreement, agency heads have some discretion to decide how to manage an excess staff situation. There are a range of options available in managing changing workforce requirements—for example redeployment within an agency or elsewhere within the APS, natural attrition, targeted offers of voluntary retrenchment and involuntary retrenchment (as a last resort). Any such process will need to be consistent with the APS Values and APS Employment Principles, the Fair Work Act 2009 (FW Act) and the agency’s enterprise agreement. In any excess staff situation, agencies should establish clear, objective and defensible strategies for identifying which staff are excess.

Because of the range of circumstances that can arise, it is not possible to be prescriptive about the processes to be followed in each situation—different processes will fit different circumstances. Whatever strategy or process is ultimately chosen, it is important that the agency maintain control of the process and should, wherever possible, seek to retain the most productive staff—a decision on who will be made an offer of voluntary retrenchment is clearly a management responsibility.

Voluntary retrenchment has a role in facilitating structural and functional change. However, careful management is required to avoid creating expectations of receiving a redundancy payment to separate from the agency. In addition, redundancy provisions should not be used as an alternative to rigorous performance management procedures or other administrative action.

APS redeployment policy

In April 2011, the Government announced that APS redeployment arrangements were to be enhanced and would be facilitated by a new APS Redeployment Policy. The new arrangements came into effect on 23 May 2011 and are intended to operate consistently with the existing employment framework applying in APS agencies, in particular the APS Bargaining Framework and agency enterprise agreements.

The APS Redeployment Policy sets out eight key principles to guide agencies when reducing staffing levels. It also introduces an APS-wide arrangement for employees who are excess and who seek redeployment across the APS. The policy builds on existing agency arrangements already in place for managing excess staff by introducing more formal processes to assist employees to seek redeployment across the APS.

As part of the new arrangements, the Australian Public Service Commission has established an on-line register for excess employees to register their interest in redeployment, so that other agencies may consider them for any vacancies. APS agencies are required to review the register to identify and assess employees who may be suitable. This can occur either before advertising occurs or prior to applications closing.

Further information on the operation of the APS Redeployment Policy, including operating procedures for the on-line redeployment register.

2.3.2 Australian Public Service Bargaining Framework

The APS Bargaining Framework, which sets out Australian Government policy as it applies to workplace relations arrangements in APS agencies in respect of their APS employees, and its accompanying Supporting Guidance provides that:

  • each APS agency must include provisions in their collective/enterprise agreements and other workplace instruments that provide for access to compulsory redeployment, reduction and retrenchment (RRR) arrangements for the management of excess staff; and
  • APS agencies are not able to enhance existing redundancy arrangements (other than where required by legislation or in exceptional circumstances with the approval of the Minister for the Public Service and Integrity).

The requirement to provide for compulsory RRR provisions is intended to ensure that agencies maintain the capacity to resolve excess staff situations by either:

  • moving the employee to a suitable job at or below their substantive classification level (with or without the employee’s agreement) by:
    • assigning different duties to an employee (section 25 of the PS Act);
    • reducing an employee’s classification without their consent, where the employee is excess to requirements at the higher level (sections 23(4) & 25 of the PS Act and Rule 12 of the Public Service Classification Rules 2000); or
  • terminating the employee’s employment under section 29 of the PS Act with or without the employee’s agreement.

The Supporting Guidance to the APS Bargaining Framework sets out what is meant by ‘existing redundancy arrangements’ for the purposes of the no-enhancement requirement. Agencies are able to adapt their redundancy provisions to meet their specific needs, subject to satisfying the no-enhancement test.

2.3.3 Fair Work Act

In addition to the General Protections and Unfair Dismissal provisions (see Appendix A of this guide), the FW Act includes a number of other provisions that are important in considering the termination of APS employees on excess grounds. They relate to:

  • the National Employment Standards;
  • a ‘genuine redundancy’ exemption from the application of the unfair dismissal provisions; and
  • advising Centrelink and unions in relation to certain proposed termination decisions.

National Employment Standards – redundancy pay

The National Employment Standards (NES) in the FW Act operate as a safety net, setting key minimum entitlements which apply to all APS employees, including in relation to redundancy pay. The NES are not able to be excluded or modified to the detriment of an employee by an enterprise agreement or a modern award or by a contract of employment. However, where permitted by the NES provisions, a modern award or enterprise agreement may modify certain NES entitlements in limited circumstances (see section 55 of the FW Act). Note that the Australian Public Service Award 1998 (APS Award 1998), which includes redundancy pay and notice of termination provisions, is not a ‘modern award’ for the purposes of this provision.

Under the NES, certain employees are entitled to redundancy pay when their employment is terminated by the employer because the employer no longer requires the job done by the employee to be done by anyone (except in cases of ordinary and customary turnover of labour)¾see section 119 of the FW Act.

The amount of redundancy pay under the NES is based on an employee’s length of service and provides a benefit of between 4 and 16 weeks pay (section 119 of the FW Act). Redundancy pay is payable at the employee’s base rate of pay for his or her ordinary hours of work. The length of an employee’s redundancy pay period will be determined by the table in subsection 119(2) of the FW Act. Under the NES, there is no entitlement to redundancy pay for certain types of employees including employees with less than 12 months continuous service and casual employees (see sections 121 and 123 of the FW Act).

Where an agency agreement or other instrument setting terms and conditions of employment provides for redundancy entitlements which are equivalent or more beneficial to employees than the NES amount, the employee’s entitlement and the NES entitlement will operate in parallel so that the employee will get the benefit of the NES entitlement and any above-NES entitlement provided for in the industrial instrument (see subsection 55(6) of the FW Act). For example, if the award or agreement entitlement for an employee with at least 10 years continuous service is a redundancy payment of 20 weeks, the provisions of the NES will apply, as a minimum standard, to 12 weeks of that payment. However, the employee would receive 20 weeks redundancy pay.

In this regard, the normal APS severance or redundancy benefit as set out in the APS Award 1988 and replicated in agency agreements is 2 weeks pay per year of continuous Commonwealth service, with a minimum benefit of 4 weeks pay and a maximum benefit of 48 weeks pay. This provides a more generous benefit overall than that provided under the NES, although the NES is more generous than the APS arrangements for certain employees with short service.

  • For employees with between 2 and 3 years service, the APS benefit would be between 4 and 6 weeks pay (depending on how many completed months service the person also had) while the NES guarantees at least 6 weeks pay for all persons in this category, where the NES applies; and
  • For persons with between 3 and 4 years service, the APS benefit would be between 6 and 8 weeks pay while the NES guarantees 7 weeks pay for all persons with this period of service, where the NES applies.

Employees who fall into either of the two situations identified above who are terminated on excess grounds (in circumstances where the agency no longer requires the employee’s job to be done by anyone) will be entitled to the benefits specified in the NES, notwithstanding that their agency agreement may specify a lesser entitlement and/or is silent on NES redundancy entitlements.

APS agreements should be drafted to provide that the standard APS redundancy benefit available to excess APS employees on termination of employment is subject to any minimum amount the employee is entitled to under the NES. Under the APS Bargaining Framework, this will not be regarded as an enhancement of an agency’s RRR entitlements.

Impact of NES redundancy pay entitlement on retention arrangements

Another impact of the introduction of the NES redundancy pay entitlement is that, if an excess employee has an entitlement to a NES redundancy benefit on termination of employment, that entitlement will apply regardless of whether the excess employee has, prior to termination, accessed a period of retention in employment.

Many APS agreements provide retention in employment as an alternative to redundancy pay. Retention periods allows excess employees to remain in employment for specified periods (up to 13 months in some instances) while they seek to be redeployed. Where the employee is not successful in being redeployed by the end of the relevant period of retention, APS arrangements provide that termination of employment can occur with no (APS) redundancy benefit being paid.

To address the issue of the introduction of the NES, the Supporting Guidance now provides that agency agreements should include offsetting arrangements which provide that the retention period will be reduced by an amount equivalent to an employee’s entitlement to an NES redundancy benefit (calculated as at the employee’s termination date), in circumstances where the employee receives an NES redundancy payment on termination.

A number of APS agreements also provide that where there is insufficient productive work available for an excess employee during the remainder of their retention period and where there are no reasonable redeployment prospects of redeployment in the APS, the employment may be terminated and the balance of the retention period paid to the employee as a lump sum. The Supporting Guidance now provides that in these cases agreements should make it clear that that an employee will, on termination of employment, be paid a lump sum comprising:

  • the balance of the retention period (as shortened for the NES) and this payment will be taken to include the payment in lieu of notice of termination of employment; and
  • an additional redundancy payment equal to the amount by which the retention period was shortened due to the NES component.

For agency agreements made before the introduction of the NES on 1 January 2010 which do not include these offsetting arrangements, regulation 2.02A of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 provides that where an APS employee enters into a retention period, the employee will, if their employment is terminated:

  • not receive redundancy pay under the NES where the amount paid to the employee during the retention period is greater than, or equivalent to, the amount payable under the NES; or
  • receive a redundancy payment equivalent to the difference between the NES entitlement and the value of the retention period where the amount payable during the retention period is less than the benefit available under the NES.

Genuine redundancy exemption from unfair dismissal

The FW Act includes a ‘genuine redundancy exemption’ from the application of the unfair dismissal provisions of that Act. Section 389 of the FW Act provides that a person’s dismissal will be a case of genuine redundancy if:

  • the employer no longer needs the job to be done by anyone because of changes in the operational requirements of the employer’s enterprise; and
  • the employer has complied with any obligation in an applicable modern award or enterprise agreement to consult about the redundancy.

It is important to note that section 389 of the FW Act goes on to provide that a person’s dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.

The question of how this exemption will be applied in the APS context has not been tested. The Commonwealth is the employer of all APS employees and so the Commonwealth is ‘the enterprise’ for the purposes of section 389 of the FW Act. While it is the norm for redeployment opportunities to be explored within an agency where an employee is identified as excess, it is possible that if attempts are not made to redeploy an employee both within the agency and across the APS prior to making a decision to terminate the employee’s employment on excess grounds, it may be difficult for an agency to make out the genuine redundancy exemption, should the employee subsequently lodge an unfair dismissal claim[4]. Ultimately, however, a decision as to whether the exemption applies will be a matter for the FWC.

This does not necessarily mean that a termination decision will be considered to be unfair if redeployment opportunities are not pursued prior to a termination decision being made. However, it may be the case that the termination decision is able to be reviewed by the FWC.

Advising Centrelink and Unions

Division 2 of Part 3-6 of the FW Act deals with the obligations on employers to notify Centrelink and relevant registered employee associations if the employer decides to terminate the employment of 15 or more employees for reasons of an economic, technological, structural, or similar nature, or for reasons including such reasons. Notification needs to occur prior to the termination decision taking effect.

Under this Division, an employer must not terminate the employment of an employee who fits in this category until:

  • written notification has been provided to Centrelink (section 530); and
  • each registered employee association that has a member who it is entitled to represent, and who is one of the 15 or more employees, is notified. Notification of the registered employee associations is only enforceable where the employer could reasonably be expected to have known that one or more of the employees who will be dismissed as a result of the decision is a member of the registered association (subsection 531(2)).

In addition to any consultation term under an award, enterprise agreement or industrial instrument, an employer must consult with the union(s) whose members are affected by the decision (see subsection 531(3) of the FW Act).

Section 534 of the FW Act provides that these requirements do not apply to certain categories of employees including employees dismissed because of serious misconduct.

It is also worth noting in this context that enterprise agreements are required to include a term that requires the employer to consult with employees about major workplace changes that are likely to have a significant effect on the employees (section 205).

2.3.4 Redeployment of an excess employee - movement of an excess employee between agencies

Redeployment is a cost-effective method of dealing with excess staff. It provides an opportunity to retain skills and experience, often built up over many years and at some cost to the Commonwealth, and it avoids the financial, human and other costs associated with retrenchments. The redeployment of excess staff to suitable vacancies also avoids many of the costs and delays associated with recruiting and training new staff.

As noted above, there are new redeployment arrangements in operation in the APS which are designed to encourage the redeployment of excess staff. Further information is available at APS redeployment policy.

In addition, agency agreements and/or general policies may contain procedures for assisting with the redeployment of excess staff, including whether the agency will provide access to external providers of redeployment services.

Voluntary moves

Excess APS employees may be redeployed between APS agencies (at or below level) under section 26 of the PS Act. Section 26 provides that an agency head can enter into a written agreement with an employee from another agency to move to the gaining agency, and that the agreement has effect subject to its terms and according to the Directions.

A decision as to whether an excess employee who agrees to move to another APS agency at a lower classification level is entitled to any income maintenance may depend on the wording of the agreements applying in the two agencies concerned. Regardless of whether there are any specific provisions in an agency’s enterprise agreement, in order to facilitate the redeployment process it may be possible in certain circumstances for the losing agency to agree to continue to pay income maintenance after the person moves to another agency.

Compulsory moves

Section 27 of the PS Act provides the authority for an excess APS employee to be moved (at or below their classification level) to another agency, without the employee’s agreement. Under this section, the Australian Public Service Commissioner may, by direction in writing, move an excess employee to another agency, without anyone’s consent. For the purposes of section 27 of the PS Act, an APS employee is an excess employee only if the agency head has notified the Commissioner in writing that the employee is excess to the requirements of the agency.

This power is expected to be used only in exceptional circumstances where the Commissioner is satisfied that it is in the interest of the APS to do so and the employee’s suitability is demonstrated. As a matter of practice, the Commissioner will normally only exercise this power after consultation with the heads of the two affected agencies. Where an excess employee is moved by the Commissioner, the agency head of the gaining agency will determine the duties of the employee in the agency under section 25 of the PS Act.

2.3.5 Restrictions on engagement of redundancy benefit recipients

The Directions set out certain limitations on the subsequent employment in the APS of persons who have received a redundancy benefit from an APS agency or the Australian Parliamentary Service and their ‘redundancy benefit period’ has not expired. For further information refer to Re-engagement.

2.3.6 Agency-specific arrangements

Detailed provisions concerning the management of non-SES excess staff are typically set out in agency enterprise agreements and/or agency policies. RRR arrangements can vary between different agencies, but in broad terms the more common arrangements are as follows:

  • a definition of the circumstances in which an employee may be considered excess – this is normally expressed in the following terms:
    • the employee is included in a class of employees employed in the agency, which class comprises a greater number of employees than is necessary for the efficient and economical working of the agency;
    • the services of the employee cannot be effectively used because of technological or other changes in the work methods of the agency or (structural or other) changes in the nature, extent or organisation of the functions of the agency; or
    • the duties usually performed by the employee are to be performed at a different locality, the employee is not willing to perform duties at the locality and the agency head has determined that the provisions of this clause apply to that employee.
  • the provisions only apply to ongoing employees who have completed their period of probation;
  • there may be a commitment to an initial discussion/consultation period as well as a consideration period for employees to consider their options (up to 4 weeks for each);
  • an employee is identified as excess (this sets in train the formal procedures);
  • an excess employee generally has two options:
    1. Accept an offer of voluntary retrenchment (a once-only offer) leading to termination of employment with a redundancy benefit within a reasonably short timeframe (although allowance is made for a reasonable consultation process and for employees to consider their options).
      • The standard rate for the redundancy benefit in the APS is 2 weeks pay per year of continuous Commonwealth service with a minimum of 4 weeks and a maximum of 48 weeks pay.
      • This amount is separate from other benefits a person may be entitled to on separation from the APS including notice (or payment in lieu of notice), as well as payment for any annual leave or long service leave entitlement. In addition, staff may, depending on their age and method of termination, also be able to access superannuation benefits. OR
    2. Enter into a retention period during which redeployment options are explored.
      • The length of the retention period may vary across agencies, but the maximum amount contemplated by the agreement making parameters is 13 months for employees with 20 or more years of service, or who are over 45, and 7 months for other employees, although these periods are reduced by an amount equivalent to the employee’s entitlement to a redundancy payment under the NES.
      • The extent of redeployment assistance given to excess employees in these circumstances will be set out in agency specific arrangements.
      • An employee may be reduced in classification as part of the redeployment process and an agency agreement may specify the salary maintenance provisions that apply in these circumstances.
      • If at the end of the retention period the excess employee has not been redeployed, the employee can be involuntarily terminated without an APS redundancy benefit (but the employee may be entitled to a redundancy payment under the NES).

Many agencies follow these ‘typical provisions reasonably closely, although a number have introduced some modifications – for example, by:

  • reducing the length of the retention period available to excess employees or removing retention in employment as an option altogether (and paying a redundancy benefit on voluntary or involuntary retrenchment in these circumstances);
  • shortening the consideration and consultation periods;
  • introducing accelerated separation arrangements (which in essence allow an employee to receive an extra payment in lieu of the balance of the consultation and consideration periods where the employee agrees to be terminated within a certain timeframe);
  • allowing the employer to initiate provisions which result in the employee being terminated prior to the end of the retention period where redeployment is proving impractical. In these circumstances the employee may be entitled to be paid the balance of the retention period (or part of it) as a lump sum payment.

Subject to the terms of an agency’s enterprise agreement, there is a substantial amount of discretion available to an agency head in managing excess staff situations and in deciding which employees are to be excess to requirements. Agencies should consider developing staff reduction strategies that are appropriate to the nature and scope of the downsizing exercise and the agencies’ operational requirements and which are integrated with longer term workforce planning strategies.

2.3.7 Dealing with employees who are not fit for and not at work

Where an agency is considering offering voluntary retrenchment to an employee who is not fit for and not at work, the agency should be satisfied that:

  • the employee is excess to requirements;
  • the appropriateness of termination on the grounds of physical or mental incapacity has been assessed and any request for invalidity retirement has been considered and determined by the relevant superannuation authority (see Part 2.6 of this guide for further information); and
  • the Commonwealth is not exposed to unnecessary or increased liability arising under workers compensation legislation or at common law in relation to an illness or injury as a result of the agency offering, and the employee accepting, voluntary retrenchment.

Agencies should consult ComSuper and Comcare as necessary for further information.

2.4 Specific grounds for termination – lack of, or loss, of an essential qualification for performing duties (s.29(3)(b))

An agency head may terminate the employment of an ongoing Australian Public Service (APS) employee who does not hold, or who ceases to hold, or becomes ineligible to hold or use, an essential qualification for the performance of his/her duties.

In the employment context, an essential qualification can include a formal educational or vocational standard that has been attained by/awarded to the person and that is established as essential for the performance of particular duties. It may also refer to other things such as holding a driving licence, or the requirement to attain and maintain a security clearance at a particular level, as well as qualifications which are more along the lines of a particular quality or accomplishment that is required for the employee to be able to perform their duties properly or safely. For example, in some cases an employee may be required to meet and maintain a certain level of physical fitness for the performance of their duties.

Where the performance of particular duties require an essential qualification, this should be made clear to the employee prior to being assigned to the particular duties. In addition, an agency will need to consider whether agency-specific procedures for the termination of employment on the ground of lack or loss of an essential qualification should be established. Any such procedures should clearly indicate the types of qualifications that are considered essential, the circumstances where termination of employment or reduction in classification is likely to be considered, and should have due regard to procedural fairness.

When an agency head is considering termination on this ground, it may be appropriate to consider whether, in the particular circumstances of the case, redeployment to other duties or a reduction in classification on the ground set out in paragraph 23(4)(d) of the Public Service Act 1999 (PS Act) is a more appropriate alternative to termination of employment.

In addition, in some cases, the circumstances that resulted in the loss of an essential qualification could mean that termination on other grounds might be considered.

  • For example, if an employee was convicted of a criminal offence that resulted in the loss of a security clearance, then it may be appropriate to consider whether the employee has breached the APS Code of Conduct. If this is the case, then termination of employment on the ground set out in paragraph 29(3)(g) of the PS Act may be more appropriate – see 2.9.

Employees whose employment is terminated on this ground will have an entitlement to notice of termination or payment in lieu of notice in accordance with the provisions of the Fair Work Act 2009 - see Appendix A of this guide.

2.5 Specific grounds for termination – non-performance, or unsatisfactory performance of duties (s.29(3)(c))

An agency head may terminate the employment of an ongoing Australian Public Service (APS) employee on the ground of non-performance, or unsatisfactory performance, of duties.

  • Non-performance and unsatisfactory performance in an employment context usually means that an employee who has the capacity to perform their duties is not performing them at all or is performing them unsatisfactorily.

The APS Employment Principles provide that the APS is a career bases service that… requires effective performance from each employee (paragraph 10A(1)(d) of the Public Service Act 1999 (PS Act)). Chapter 4 of the Australian Public Service Commissioner’s Directions 2013 (the Directions) expands on this employment principle and provides, inter alia, that each agency will have:

  • fair and open performance management processes and practices that support a culture of high performance, in which all performance is effectively managed; and
  • provides each APS employee with a clear statement of the performance and behaviour expected of him or her, and an opportunity to discuss his or her responsibilities.

Note that Clause 4.2 of the Directions provides that where the conduct of an employee raises concerns that relate both to effective performance and to possible breaches of the Code of Conduct, an agency head must, before making a decision to initiate an inquiry under subsection 15(3) of the Act, have regard to any relevant standards and guidance issued by the Commissioner. This material is currently being developed and will be published on the Commission’s website when available.

Under Chapter 4 of the Directions, it is made clear that employees are required to participate constructively in agency-based performance management processes and practices. These processes/practices should include specific provisions for assessing and resolving cases of underperformance which can result in a range of outcomes including reassignment of duties, reduction in pay and classification or termination of employment. Agencies need to consider whether they develop different performance management systems and procedures for non-ongoing employees and ongoing employees who are subject to a probationary period. In addition, these systems and procedures should differentiate between non-performance and underperformance of duties.

Any procedures for managing non-performance or underperformance established by an agency should have regard to procedural fairness and clearly indicate the circumstances where termination of employment or reduction in classification is likely to be considered. They should contain provisions for employees to be warned about non-performance or unsatisfactory performance and to be given a fair chance to improve performance.

Performance management procedures are often included in an agency's enterprise agreement. It is suggested that where an agency includes procedures for assessing performance and determining unsatisfactory performance of duties within their enterprise agreement, it would be prudent to clearly exclude non-ongoing APS employees and ongoing APS employees who are subject to a probationary period from those formal procedures. Performance management expectations and procedures for these staff can be set out elsewhere.

Employees terminated on this ground will have an entitlement to notice of termination or payment in lieu of notice in accordance with the provisions of the Fair Work Act 2009 (FW Act) - see Appendix A of this guide.

2.5.1 Non-performance of duties

Non-performance of duties includes situations where an employee has been:

  • absent from work without approval and it is no longer reasonable for the employer to continue the employment relationship; or
  • on an unauthorised absence and has not responded satisfactorily to reasonable attempts by the agency to have the employee return to duty;
  • granted leave, but has not returned to work at the end of a period of approved leave and a further period of leave has not been approved; or
  • attending at the workplace but not undertaking assigned duties – however, as noted below, it may be more appropriate to deal with such a situation under an agency’s procedures for determining whether an employee has breached the APS Code of Conduct.

The first three circumstances above deal with a situation where an employee either fails to attend for work, or fails to return to work from leave, and therefore fails to perform the duties for which they are employed. This can give rise to ‘abandonment of employment’ issues.

Where an ongoing APS employee does not return to work in these circumstances it will not necessarily amount to resignation at common law. In other words, the breach of the contract of employment by the employee may not terminate the employment relationship even where it consists of a failure to perform any of the obligations of an employee. As such, given the potential uncertainty as to whether an employee has actually abandoned their employment, an agency head should consider taking action under paragraph 29(3)(c) of the PS Act in order to bring the matter to a conclusion.

In line with notice obligations under the FW Act and procedural fairness requirements, agencies should make reasonable attempts to ascertain the reasons for the employee's failure to return to work or undertake his/her duties, and give the ongoing APS employee a warning of the consequences of not resuming duties and a reasonable opportunity to explain the continued absence or to return to duty, prior to making any decision as to whether termination of employment is warranted.

In considering whether to terminate the employment of an employee because of an absence from work, an agency head will also need to have regard to section 352 of the FW Act which prohibits termination of employment where an employee is temporarily absent from work because of illness or injury of a kind prescribed by the FW Regulations. FW Regulation 3.01 defines what temporary absence because of illness or injury means—for further information on this regulation, refer to Part 2.6 on termination on the ground of inability to perform duties because of physical or mental incapacity.

Depending on circumstances, a situation where an employee attends work but fails to comply with a proper direction to perform his/her assigned duties (i.e. in the fourth circumstance described above) may be more appropriately dealt with under the Code of Conduct procedures - see clause 4.2 of the Directions and Part 2.9 of this guide.

2.5.2 Unsatisfactory performance of duties

Consideration of the termination of employment of an ongoing APS employee on this ground will usually be handled as part of an agency's performance management or underperformance arrangements.

Agency performance management procedures will usually include:

  • when the employee can be advised that his or her performance appears to be unsatisfactory;
  • details of any period of work performance assessment that will be applied to the employee;
  • possible consequences for the employee if he or she does not attain and sustain the required standards by the end of the performance assessment period; and
  • the employee's right to respond to issues raised during the process before a final decision is made.

Underperformance cases should be managed in accordance with relevant agency procedures. Failure to do so could result in the Fair Work Commission or another review body determining that any resultant action to reduce an employee’s classification or terminate employment should be set aside.

There may be circumstances where an employee who is performing unsatisfactorily could, more appropriately, be dealt with under an agency’s code of conduct procedures. Examples could include where an employee fails to perform their duties with appropriate care and diligence, where an employee fails to comply with a lawful or reasonable direction about the way they are to perform their duties, or where an employee refuses to participate in the agency’s performance management/appraisal process. Agencies will need to decide whether it is more appropriate to deal with such cases under the underperformance processes or as a breach of the Code of Conduct – see clause 4.2 of the Directions and Part 2.9 of this guide.

The Australian Government Solicitor’s 2009 Legal Briefing 92 entitled Dealing effectively with unsatisfactory performance in the Australian Public Service may also assist in the management of underperformance cases.

2.5.3 Non-performance or underperformance of duties due to injury, illness or disability

The scope and availability of paragraph 29(3)(c) as a ground for the termination of employment where an ongoing APS employee is unable to perform their duties because of a physical or mental incapacity will depend on the circumstances of each case. In most cases, termination because of an employee’s physical or mental incapacity should be considered under paragraph 29(3)(d) of the PS Act (see Part 2.6 of this guide).

However, there may be situations where paragraph 29(3)(c) may be available.

  • For example where an agency has reassigned duties to an ongoing APS employee under section 25 of the PS Act because the employee was prevented from performing their previous duties due to physical or mental incapacity, and it is judged that the employee is able and qualified to perform the new duties, then if the employee unreasonably refused to perform the duties, it may be open to an agency to terminate the employment on the ground of non-performance of duties. In such a case, the incapacity of the employee to perform the duties previously assigned may not be relevant.

The termination of an employee on the ground of non-performance or underperformance of duties in cases where a person has a medical condition raises complex legal issues. Agencies are encouraged to seek specific legal advice before proceeding with the termination of employment in these circumstances to ensure compliance with legal requirements.

2.6 Specific grounds for termination – inability to perform duties because of physical or mental incapacity (s.29(3)(d))

Subject to certain limitations set out below, an agency head may terminate the employment of an ongoing Australian Public Service (APS) employee on the ground that the employee is unable to perform his or her duties because of physical or mental incapacity. The Fair Work Act 2009 (FW Act), the Disability Discrimination Act 1992 (DD Act) and the legislation governing Commonwealth superannuation arrangements all provide important limitations on the availability of this head of power to terminate employment and are dealt with below.

Also relevant is Public Service (PS) Regulation 3.2 which provides that where an agency head believes that the state of health of an APS employee:

  • may be affecting the employee’s work performance; or
  • has caused, or may cause, the employee to have an extended absence from work; or
  • may be a danger to the employee; or
  • has caused, or may cause, the employee to be a danger to other employees or a member of the public; or
  • may be affecting the employee’s standard of conduct;

the agency head may, by written notice, direct the employee to:

  • undergo a medical examination by a nominated medical practitioner for an assessment of the employee’s fitness for duty; and
  • give the agency head a medical report of the examination (the nominated medical practitioner may also give the agency head a report of the examination).

In addition, regulation 3.2 also provides that an agency head may direct an employee to undergo a medical examination where:

  • an APS employee is to be assigned new duties and the agency head believes that the employee’s state of health may affect the employee’s ability to undertake the duties; or
  • the employee is to travel overseas as part of the employee’s employment.

Note that the term ‘nominated medical practitioner’ is defined in the PS Regulations as a person who is registered, or licensed, as a health practitioner under a law of a State or Territory that provides for the registration or licensing of health practitioners and is nominated by the agency head to assess the fitness for duty of an APS employee in the agency.

2.6.1 Fair Work Act

Under the General Protections provisions in the FW Act:

  • an employer is prohibited from dismissing an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the Fair Work Regulations (section 352); and
  • an employee is prohibited from taking adverse action against an employee because of their race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin (section 351).
    • In addition, an employer is also prohibited from taking a range of other adverse actions against an employee (e.g. refusal to employ or injuring the employee in his or her employment), or a prospective employee, on discriminatory grounds.

Section 352 of the FW Act sets out certain exemptions from these provisions including where the action taken is not unlawful under another anti-discrimination law, or is necessary because of the inherent requirements of the employee’s job. In addition, subsection 342(3) of the FW Act also provides a more general exemption in relation to action that is authorised by or under a Commonwealth law. This exemption could apply to action authorised by or under the Public Service Act 1999 (PS Act). However, it is suggested that an agency should seek specific legal advice about the operation of this provision before seeking to rely on it.

In relation to a temporary absence because of illness or injury, regulation 3.01 of the FW Regulations provides that a prescribed kind of illness or injury exists if the employee provides a medical certificate for the illness or injury, and the employee's absence has not extended for more than three months or the total absences within a 12 month period have not exceeded three months.

An absence of longer than three months may also be a temporary absence within the meaning of the FW Regulations if the employee is on paid personal/carer’s leave for the whole of the period.

The relevant provisions of the FW Act and FW Regulations effectively prohibit an agency head from terminating the employment, under section 29 of the PS Act, of an employee who is on paid personal/carer’s leave because of their own illness or injury, if that absence forms any part of the reason for termination. The FW Regulations make it clear that the absence has to be for the reason set out in 97(a) of the FW Act, that is, a person’s own injury or illness, so carer’s leave is not covered.

  • Issues surrounding the interpretation of section 352 of the FW Act and FW Regulation 3.01 are quite complex, so agencies may wish to consider getting their own legal advice on the application of these provisions to the particular circumstances applying in the agency.

In addition, a period of paid personal/carer’s leave because of illness or injury does not include a period when the employee is absent from work while receiving workers’ compensation.

  • Under the Safety, Rehabilitation and Compensation Act 1988, an employee cannot access personal/carer’s leave while on compensation leave—this includes the initial 45 week period of compensation leave where an employee is entitled to 100% of his/her normal weekly earnings and any subsequent period where reduced compensation payments are made.

Employees terminated on the ground set out in paragraph 29(3)(d) of the PS Act will have an entitlement to notice of termination or payment in lieu of notice in accordance with the provisions of the FW Act – see Appendix A.

2.6.2 Disability Discrimination Act

Paragraph 15(2)(c) of the DD Act provides that it is unlawful for an employer to discriminate against an employee on the ground of the employee’s disability by dismissing the employee. As with the FW Act, the prohibition on disability discrimination does not apply where, because of a disability, the employee would be unable to carry out the inherent requirements of the particular employment. But unlike the FW Act, the DD Act expressly incorporates the concept of ‘reasonable adjustment’ in relation to indirect disability discrimination, and agency heads need to be aware of this.

2.6.3 Superannuation issues

In considering whether to terminate the employment of an ongoing APS employee who is a member of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the Public Sector Superannuation accumulation plan (PSSap), an agency head also needs to have regard to the requirements set out in the relevant superannuation legislation in relation to termination on medical grounds.

For CSS members, section 54C of the Superannuation Act 1976 provides as follows:

‘In spite of anything contained in any Act, industrial award or contract of employment, an eligible employee who has not reached his or her maximum retiring age is not… capable of being retired from the employment or office…on the ground that, because of any mental or physical condition, the eligible employee is unable to perform his or her duties, unless the Board has certified in writing that, if the eligible employee is so retired, he or she will be entitled to receive benefits…’.

‘Maximum retiring age’ for the purpose of this provision is 65 years of age.

For PSS and PSSap members, section 13 of the Superannuation Act 1990 and section 43 of the Superannuation Act 2005 provide in similar terms, although in both cases the provision does not apply to employees who are aged 60 or over.

In effect, the test applied by the relevant superannuation authority (currently the Commonwealth Superannuation Corporation (CSC)) in these cases is that the employee must be considered to be totally and permanently incapacitated (TPI). That is, because of a mental or physical condition, it is unlikely that the person will ever be able to work in any employment or hold any office for which the person is reasonably qualified by education, training or experience, or could become reasonably qualified for after retraining.

If the CSC assess that an employee is TPI and the employee’s employment is subsequently terminated under paragraph 29(3)(d) of the PS Act, the employee will be entitled to receive invalidity retirement benefits under the relevant superannuation legislation. In cases where the CSC is not satisfied that an employee is TPI, the employee’s employment cannot be terminated on the ground specified in paragraph 29(3)(d) of the Act.

  • If paragraph 29(3)(d) of the PS Act is relied upon as the ground for termination in a case where such a certificate has not been issued, the termination could be subject to challenge under the Administrative Decisions (Judicial Review) Act 1977, FW Act or the DD Act.

Non CSS, PSS or PSSap members

If an ongoing APS employee is not a member of the CSS, PSS or PSSap, then the use of the ground set out in paragraph 29(3)(d) of the PS Act to terminate employment is not subject to the requirement that the employee be assessed as TPI as set out above.

However, agencies will still need to be satisfied that the employee’s mental or physical incapacity is sufficiently serious to prevent them from performing their duties and ensure that they have had regard to the relevant provisions of the FW Act and the DD Act in considering terminating the employment of an ongoing APS employee on the ground of physical or mental incapacity.

2.7 Specific grounds for termination – failure to satisfactorily complete an entry-level training course (s.29(3)(e))

An agency head may terminate the employment of an ongoing Australian Public Service (APS) employee where the employee does not satisfactorily complete an entry-level training requirement notified to the employee.

This ground may be considered where the employee:

  • is engaged or assigned duties in a training classification; or
  • is not engaged in a formal training classification but was clearly advised that completion of the relevant training was the basis of their employment; or
  • is not in a formal training classification, but the requirement to undergo training is specified as a formal condition of engagement (imposed under subsection 22(6) of the Public Service Act 1999 (PS Act)).
    • However, it may be preferable in this case to consider termination under paragraph 29(3)(f) of the PS Act where there is a failure to satisfactorily complete the training – see Part 2.8 of this guide.

A person engaged or assigned duties on the basis that they are to undertake entry-level training should be informed in writing prior to their engagement or assignment of the applicable training requirements and the consequences of any failure to meet any or all of the training requirements (including any requirements about on-the-job performance).

  • When an employee is engaged, these requirements can be imposed as a condition of engagement under subsection 22(6) of the PS Act. Such conditions need to be imposed prior to the person’s engagement as there is no power to impose such conditions of engagement once employment has commenced.
  • When an employee commences duties (other than on engagement) in a position, an agency head’s general employer power under section 20 of the PS Act provides the authority to determine relevant training requirements.

The advice to the employee should indicate at what stage in the training course a failure to meet certain requirements can potentially lead to termination of employment.

Employees terminated on this ground will have an entitlement to notice of termination or payment in lieu of notice in accordance with the provisions of the Fair Work Act 2009 – see Appendix A of this guide.

2.8 Specific grounds for termination – failure to meet a condition of engagement (s.29(3)(f))

An agency head may terminate the employment of an ongoing Australian Public Service (APS) employee where an APS employee fails to satisfy one or more of the conditions attached to their engagement.

  • Subsection 22(6) of the Public Service Act 1999 (PS Act) provides the authority for an agency head to impose conditions on the engagement of a person as an ongoing APS employee, including (but not limited to) conditions dealing with probation, citizenship, formal qualifications, security and character clearances or health clearances.
  • For further information on conditions of engagement refer to the following links on the Australian Public Service Commission’s website:
    • Conditions of engagement;
    • Probation; and
    • Citizenship in the Australian Public Service.

A condition of engagement may be specified in any notification of the employment opportunity and/or in any supporting selection documentation—i.e. as a general indication to potential applicants that certain conditions will apply. However, where it is intended to impose a specific condition of engagement on a person who is to be engaged as an APS employee, it needs to be notified to the employee prior to the engagement, e.g. with the offer of engagement. Where a condition is not notified to the prospective employee before engagement then that condition cannot be applied to the employee.

Conditions imposed under subsection 22(6) of the PS Act must relate to the engagement of the person (as opposed to the ongoing performance of duties) and cannot endure indefinitely (i.e. once all conditions imposed under subsection 22(6) have been satisfied, an employee cannot have their employment terminated on the ground set out in paragraph 29(3)(f)). The agency should provide information to the employee on how and when the condition of engagement may be satisfied.

Employees terminated on this ground will have an entitlement to notice of termination or payment in lieu of notice in accordance with the provisions of the Fair Work Act 2009 – see Appendix A.

2.9 Specific grounds for termination – Breach of the APS Code of Conduct (s.29(3)(g))

An agency head may terminate the employment of an ongoing Australian Public Service (APS) employee on the ground that the employee has breached the APS Code of Conduct.

The APS Code of Conduct is set out in section 13 of the Public Service Act 1999 (PS Act). Subsection 15(2A) of the PS Act also provides that a person who is, or was, an APS employee is taken to have breached the Code of Conduct if the person is found (under relevant procedures) to have, before being engaged as an APS employee:

  • knowingly provided false or misleading information to another APS employee, or to a person acting on behalf of the Commonwealth; or
  • wilfully failed to disclose to another APS employee, or to a person acting on behalf of the Commonwealth, information that the person knew, or ought reasonably to have known, was relevant; or
  • otherwise failed to behave honestly and with integrity.

Under subsection 15(3) of the PS Act, an agency head must establish procedures to be followed in determining whether an APS employee in the agency has breached the Code of Conduct. Section 15 also sets out the range of sanctions that may be imposed where a breach has been found, which includes termination of the employee’s employment.

Note that under clause 4.2 of the Australian Public Service Commissioner’s Directions 2013, where the conduct of an employee raises concerns that relate both to effective performance and to possible breaches of the Code of Conduct, an agency head must, before making a decision to initiate an inquiry under subsection 15(3) of the Act, have regard to any relevant standards and guidance issued by the Commissioner. This material is currently being developed and will be published on the Commission’s website when available.

Further details on handling misconduct can be found in the Australian Public Service Commission’s publication Handling Misconduct: A human resources practitioner's guide to the reporting and handling of suspected and determined breaches of the APS Code of Conduct.

The Commission has produced a range of other publications on Conduct and related issues which can also be accessed from the APS Values, Employment Principles and Code of Conduct page.

Employees terminated on this ground will have an entitlement to notice of termination or payment in lieu of notice in accordance with the provisions of the Fair Work Act 2009, unless the termination is because of serious misconduct as defined in that Act - see Appendix A of this guide.

Footnotes

[3] Agency enterprise agreements will typically specify the circumstances in which an employee may be identified as excess.

[4] Note that the APS Redeployment Policy introduced in April 2011 is designed to assist in the redeployment of excess staff across the APS.