Termination of Employment in Construction

What it is

Termination is where a builder''s paperwork gets tested. Get the process wrong and the Fair Work Commission can order up to $95,050 for a dismissal taking effect on or after 1 July 2026. Construction also has one rule almost no other industry has: a daily hire employee can be finished with one day''s notice. Most builders either do not know it, or apply it to people it does not cover.

Notice under the NES

The National Employment Standards set the floor, and notice runs on continuous service.

Continuous service	Minimum notice
1 year or less	1 week
More than 1 year to 3 years	2 weeks
More than 3 years to 5 years	3 weeks
More than 5 years	4 weeks

An employee over 45 who has completed at least 2 years of service when they receive notice gets an additional week, capping the NES at five weeks. Notice must be written. You can pay it out at the employee''s full pay rate, including allowances, loadings, overtime and penalty rates.

Daily hire and the one day rule

MA000020 sorts employment into daily hire, full-time weekly hire, part-time weekly hire and casual. Clause 9.1(a) says one day''s notice will be given on either side, or one day''s pay will be paid or forfeited. Notice given at or before the usual starting time expires at the completion of that day''s work. Give it after the shift has started and the employee finishes at the end of the next shift. A tradesperson gets one hour before termination to gather, clean, sharpen, pack and transport tools.

This is not the award beating the NES. The NES itself carves daily hire employees in building and construction out of notice of termination altogether, and the award then supplies the one day.

The rule only reaches people actually engaged as daily hire, and clause 8.2 requires you to tell each employee in writing at engagement which category they are in. One day''s notice also settles how much notice, not whether the dismissal was fair.

Summary dismissal

Clause 9.2 preserves your right to dismiss without notice for misconduct or refusing duty, and the NES removes notice where an employee is fired for serious misconduct. The Fair Work Ombudsman gives theft, fraud, sexual harassment and assault as examples. The gate is narrow: wilful conduct inconsistent with continuing the employment, or serious and imminent risk to health and safety. Lateness and sloppy work will not clear it. If you are unsure, give notice and pay it out.

Unfair dismissal

Eligibility, not merit, is where most builders win or lose. The employee must have served the minimum employment period: 6 months, or 12 months if you are a small business employer. They must be covered by an award or agreement, or earn less than the high income threshold, which is $190,100 from 1 July 2026 and indexes every 1 July. Applications go to the Commission within 21 days. Almost every on-site tradesperson is covered by MA000020, so the threshold rarely saves a builder. The minimum employment period does.

Small business employer means fewer than 15 employees. Count casuals engaged on a regular and systematic basis, employees of associated entities and the person being dismissed. Under 15, follow the Small Business Fair Dismissal Code: complying with it means the dismissal is not unfair.

Compensation is capped at the lesser of 26 weeks of remuneration or half the high income threshold, which is $95,050 from 1 July 2026.

General protections

This is the one with no threshold and no cap. Adverse action includes dismissing an employee, injuring them in their employment or altering their position to their detriment. It is unlawful when taken because the person has or has used a workplace right, engages in industrial activity, or because of a protected attribute such as age, disability or carer''s responsibilities.

There is no minimum employment period and no high income threshold here. The compensation cap sits in section 392, which governs unfair dismissal only. The reverse onus is the sting: once the employee alleges the reason, you have to prove it was not the reason. That proof lives in your file notes, or it does not exist.

The warning trail and final pay

The Commission asks whether there was a valid reason, whether the employee was told it and given a chance to respond, and where performance is the issue, whether they were warned. Build the file before you terminate, not after.

Final pay covers wages for hours worked plus accrued annual leave with loading, which is paid out even where the award or contract says it is not. Sick and carer''s leave is not. Most awards require final pay within 7 days after the last day, and payment in lieu of notice must be made before or on the day of termination.

If the job is going rather than the person, this is a redundancy, and MA000020 runs its own scheme that pays from day one. See our entry on redundancy in a small construction business.