What is unfair dismissal?
An employee has been dismissed if the employee’s employment is terminated by the employer, or if the employee resigns because they were forced to do so because of the conduct of the employer (known as constructive dismissal).
A person has been unfairly dismissed when the Fair Work Commission is satisfied that:
- the person has been dismissed
- the dismissal was harsh, unjust or unreasonable
- the dismissal was not a case of genuine redundancy
- where the employer is a small business, the dismissal was not consistent with the Small Business Fair Dismissal Code
Who can make an unfair dismissal claim?
A person can make an unfair dismissal claim if they have:
- completed the minimum employment period
- are covered by a Modern Award (or award-based transitional instrument) or if an enterprise agreement (or agreement-based transitional instrument) applies to the person
What is the minimum employment period?
Employees must have served a minimum employment period before they can make an unfair dismissal claim. Minimum employment periods are:
- one year for employees of a small business (a business with less than 15 employees)
- six months if the employer is not a small business
What constitutes harsh, unjust or unreasonable?
Employers need to ensure procedural fairness is applied when dismissing an employee. When considering whether a dismissal was harsh, unjust or unreasonable, the Fair Work Commission will look at all of the following factors:
- whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)
- whether the person was notified of that reason
- whether the person was given any opportunity to respond to that reason
- any unreasonable refusal by the employer to allow the presence of a support person for any discussion relating to the dismissal
- if the dismissal was related to unsatisfactory performance, whether the employee had been warned about the unsatisfactory performance before the dismissal
- the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in making the dismissal
- the degree to which the absence of dedicated human resource management specialists or expertise in the employer’s enterprise would be likely to impact on the procedures followed in the dismissal
- any other matters the Fair Work Commission considers relevant
What is the Small Business Fair Dismissal Code?
Small businesses have different rules for dismissal.
The Small Business Fair Dismissal Code is a legislative instrument declared by the Minister for Employment. In effect since 1 July 2009, it applies to small business employers with fewer than 15 employees. This is calculated on a simple headcount of all employees including casual employees who are employed on a regular and systematic basis. It provides protection against any unfair dismissal claims that are lodged with the Fair Work Commission (FWC). The FWC will rule that the dismissal was fair if the employer can provide evidence that the Code was followed before dismissing the employee. This evidence may include the warning that has been given (except in cases of summary dismissal), a completed checklist, copies of written warning(s), and a statement of termination or signed witness statements.
After conducting a thorough investigation, it is fair for a small business employer to dismiss an employee without notice or warning when the employer has reasonable grounds to believe the employee was guilty of serious misconduct. Serious misconduct includes theft, fraud, violence and serious breaches of work health and safety procedures. For a dismissal to be deemed fair, it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. The employer must base this report on reasonable grounds.
In other dismissals, an employer must give the employee a valid reason based on their capacity or conduct to do the job if they are at risk of being dismissed. The employee must be warned in writing that they risk being dismissed if there is no improvement. Further, the employer must provide the employee with an opportunity to respond to the warning, giving them a reasonable chance to rectify the problem. Rectifying the problem might involve the employer providing additional training and ensuring the employee clearly understands their job expectations.
Employees who have been dismissed because of a business downturn or their position is no longer needed cannot bring a claim for unfair dismissal. However, the redundancy needs to be genuine.
Follow the correct procedures
All businesses should have employment contracts and clearly outline business policies and procedures in an employee handbook. Both should also define the terms and conditions of employment and provide clear disciplinary rules and procedures for dismissal. It is wise to have new employees sign their employment contract, handbook and induction checklist to show they have read them. Then you need to enforce those rules and procedures consistently and fairly.
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Peninsula offers tailored advice, resources, and documents for business owners and employers. From recruitment to staff management to dismissal, we can handle it all for you. Call us on 1300750491 to learn how we can help you.
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