Australia’s current unfair dismissal laws have now been in place since mid-2009, yet many employers remain unaware of what exactly an ‘unfair dismissal’ is and what they can do to minimise the risks of a claim being filed by a disgruntled ex-employee.
So, let’s take a closer look.
Under the Fair Work Act 2009, an ‘unfair dismissal’ is one which is ‘harsh’ or ‘unjust’ or ‘unreasonable’. While these terms are not defined in the Act, there are a range of questions the national workplace relations tribunal – the Fair Work Commission – must ask when deciding whether a dismissal was unfair. These questions include (but aren’t limited to):
· was there a valid reason for the dismissal relating to the employee’s capacity or conduct?;
· was the employee notified of that reason?; and
· was the employee given an opportunity to respond?
Another important question the Fair Work Commission must consider is whether the employee was legally-protected from unfair dismissal when they were fired. This is because only employees who have completed the applicable ‘minimum employment period’ are eligible to pursue an unfair dismissal claim.
The minimum employment period is determined by the total number of employees employed by the business, and includes any workers in an ‘associated entity’. If the business has fewer than 15 employees, the applicable minimum employment period is 12 months. In all other businesses (i.e. those with 15 or more employees), the minimum employment period is 6 months.
Importantly, if the business qualifies as a ‘small business’, the employer is also entitled to rely on the ‘Small Business Fair Dismissal Code’ when letting an employee go. If the employer complies with the Code and an unfair dismissal claim is then made against the business, the Fair Work Commission will find the dismissal to be ‘fair’.
Lastly, it’s important to note that the Fair Work Commission will give considerable attention to the process that was followed by the employer leading up to the dismissal. For example, if an employee was dismissed for poor performance, the Fair Work Commission will generally expect the employee to have been given a prior final warning.
Similarly, if an employee is dismissed for misconduct, the Fair Work Commission will be keen to know if the employee was given an opportunity to ‘show cause’ why they shouldn’t be dismissed before a final decision to end their employment was made.
· Know which employees are protected from unfair dismissal;
· Always follow a fair, thorough, and impartial dismissal process; and
If yours is a small business, always comply with the Small Business Fair Dismissal Code. Making sure you know where you stand before you dismiss an employee can save a lot of time and money down the track.
We're giving you FREE access to find out which stocks our Switzer Report experts think have the highest upside in October and beyond!