Termination of Employment is a Risky Business that can be Very Expensive
The decision to dismiss an employee may be easy, however defending an unfair dismissal claim can be both difficult and expensive. The following article identifies some of the pitfalls and provides advice on how best to mitigate the problems.
Even if there is a valid reason for dismissing an employee, employers will find themselves in trouble if the process of the dismissal is flawed.
In determining the fairness, or otherwise, of an applicant’s dismissal, the Fair Work Commission (FWC) is required to consider a number of other issues in relation to the dismissal and most of these relate to procedural fairness.
The Fair Work Act 2009 (the Act) sets out the criteria which must be considered by the FWC when deciding whether a dismissal is an ‘unfair dismissal’. As well as needing a valid reason there are a number procedural of points to be considered:
- Whether the employee was notified of the reason for termination;
- Whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee;
- If the employee was allowed a support person to be present at any discussions relating to dismissal; and
- Whether the employee had been warned about any unsatisfactory performance before the dismissal (if the dismissal related to unsatisfactory performance).
If these points are not satisfied, a decision could go against the employer – valid reason or not!
And even accepting that there was procedural fairness, FWC will still need to be satisfied that the dismissal was not ‘harsh, unjust or unreasonable’, further complicating the whole process.
The expression ‘harsh, unjust or unreasonable’ has been determined by various industrial tribunals to mean:
- ‘Harsh’ — because of its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the alleged offence; or
- ‘Unjust’ — because the employee was not guilty of the alleged offence on which the employer acted; or
- ‘Unreasonable’ — because it was decided on inferences that would not reasonably have been drawn from the material before the employer.
The termination can be harsh but not unjust or unreasonable; unjust but not harsh or unreasonable; or unreasonable but not harsh or unjust – all issues that the FWC will consider and the employer should of thought of at the time of the dismissal.
Valid Reasons for Dismissal
Misconduct includes theft, fraud, harassment, bullying, persistent lateness, disobedience, coming to work drunk or under the influence of drugs, rudeness to clients, customers or other employees; poor timekeeping (evidenced over a period of time); and absenteeism without reasonable cause.
If the behaviour amounts to serious misconduct the employee may be sacked on the spot without notice. However, to allege serious misconduct and sack an employee without notice, the employer must still follow fair procedures.
Poor Work Performance occurs when an employee is genuinely unable to perform the required duties of the job. In such cases the employer is validly able to dismiss the employee. However for this to be fair, the employer will usually need to show that it had raised these concerns with the employee and gave them a chance to respond to any allegations, or to take steps to improve their performance within a reasonable time.
Contrary to popular myth there is no legislative requirement as to the number of warnings that must be given. This will usually depend on the circumstances and the seriousness of the allegations. If an industrial agreement, policy or contract of employment specifies certain steps to be followed, failing to do so may be considered to be a breach of process by FWC. In any case (with the exception of serious misconduct) it is appropriate that a warning is issued prior to dismissal putting the employee on notice that if their conduct or behaviour doesn’t improve, they will be dismissed. This warning doesn’t need to be in writing but it is much easier to prove if it is written.
Procedural fairness for underperforming employees
Where an employee’s performance continues to be below standard despite the efforts to correct any deficiencies or where there are serious issues of misconduct, it may be necessary to take corrective action.
Each case needs to be considered in light of its particular facts. The course of action to be taken will generally involve a consideration of a number of factors such as:
- The employee’s length of service
- The employee’s conduct and performance during the period of the employee’s service
- What the employee has to say about their conduct or performance
- The need to give the employee an opportunity, over a reasonable period of time, to improve their conduct or performance
- The seriousness of the issue at hand, be it an issue concerning performance or conduct.
Except where there is a clear case of serious misconduct warranting termination without notice, a system of progressively firmer steps should be taken to ensure an employee has an adequate opportunity to reflect on their conduct and/or performance and correct it.
It is the employer’s responsibility to ensure that an employee understands that the reason for corrective action being taken is their failure to comply with the job requirements and not as a result of failure to comply with a personal request. This procedure should prevent claims of victimisation or discrimination. It is essential that the employee be advised that failure to improve may result in dismissal.
Procedural fairness for instances of serious misconduct
In instances where misconduct is alleged, employers should adhere to a process, which is extremely similar to the process that should be followed in situations of underperformance:
- Raise the allegation(s) with the employee, preferably in a formal meeting, providing as much detail as possible;
- Allow the employee a chance to respond to the allegations;
- Investigate the allegations thoroughly; and
- Communicate the findings to the employee and the action being considered.
If the results of the investigation indicate that the allegations are valid and therefore dismissal is the appropriate outcome, employers must then:
- Advise the employee that dismissal is being considered based on the findings of the investigation;
- Again, allow the employee a chance to respond;
- Consider the employee’s response and the circumstances of the situation;
- Come to a final conclusion regarding whether or not termination is appropriate, and advise the employee of your decision, giving reasons for your decision.
The general protections prohibit “adverse action” being taken against a person when that person decides to, or not to, exercise a “workplace right” or engage, or not engage, in “industrial activities”.
An employee is also protected from adverse action because of their race, colour, sex, age and other grounds.
In essence, the provisions protect employees, employers and independent contractors against unfair, unlawful and discriminatory treatment in the workplace.
Adverse action is taken by an employer against an employee if, the employer undertakes or threatens to undertake any of the following:
- Dismisses the employee
- Injures the employee in their employment (e.g. by reducing the employee’s hours or number of shifts per week or taking unwarranted disciplinary action)
- Alters the position of the employee to the employee’s prejudice (eg by suspending or demoting the employee)
- Discriminates between the employee and other employees.
Remedies for breaches the general protections are determined by a Magistrate’s Court and damages are not specified. Claims can be made within 21 days of the adverse action being initiated.
In short, make sure:
- You have the facts
- You document every thing you do, every discussion you have and every piece of correspondence you send or receive (including text messages).
- You have a valid reason.
- You discuss it with the employee.
- You allow the employee to answer the allegations.
- You allow the employee to have a support person.
- You give a warning about performance or conduct – unless the matter is serious warranting summary (instant dismissal).
- If you stand down the employee pending an investigation, the employee must be paid.
- You afford the employee a “fair go” at all times.
Claims for unfair dismissal must be made within 21 days of the employee being dismissed (although FWC has discretion under certain circumstances to extend that period. Remedies can include reinstatement of the employee or damages of up to six (6) months pay.
Most claims for unfair dismissal are dealt with in a Conciliation Conference conducted by the Fair Work Commission. If the claim is not resolve at that point it may be referred to arbitration, which is a far more formal process requiring the filing of statements, examination of witnesses and a binding decision by the tribunal or court.
Claims can become legal issues and should be dealt with immediately and referred to a professional for advice and assistance.
The employer to whom the claim is directed should:
- Inform the ex-employee or their representative that the matter has been referred on;
- Give the ex-employee the contact details of the person that the matter will be referred to;
- Not make any personal comment on the matter or offers of resolution;
All relevant details should be forwarded to whoever is dealing with the matter on behalf of the Company, including:
- The ex-employee’s personnel details;
- The circumstances which led to the employee being dismissed;
- The grounds on which the ex-employee believes that they have been unfairly dismissed.
CHRIS DELANEY is a highly regarded Employee Relations professional with over 40 years’ experience in Workplace Relations. He provides workplace relations advice to ASIAL members and has represented the Australian Security Industry Association Limited (ASIAL) in the Ministerial Enquires, the making of Modern awards and most recently negotiating the Commonwealth Games multi employer enterprise bargaining agreement.
ASIAL provides corporate members with professional advice and assistance in these matters. If representation in the Fair Work Commission is required, filing of documents or negotiation with the employee’s representative contact ASIAL’s Workplace Relations Advisor Chris Delaney for assistance.
The information provided in this article is for convenient reference only. It is not, nor is it intended to be legal advice. Chris Delaney & Associates Pty Ltd and ASIAL provide this information on the basis that it is not to be relied upon in any or all cases, as the circumstances in each matter are specific Accordingly, we provide this information for general reference only, but we advise you to take no action without prior reference to professional advice on the specific detail of the matter.