An unfair dismissal can take
many forms, including issues such as a disingenuous redundancy, a
dismissal inconsistent with the Small Business Fair Dismissal Code
(the Code), or a dismissal that is harsh, unjust or unreasonable.
The Fair Work Act 2009 (the Act), effective from 1 July
2009, sets out the parameters of an 'unfair
dismissal'.
Qualifying period
All dismissed employees are excluded
from making an unfair dismissal claim if they have not completed
the applicable minimum employment period at the time of their
termination. The Act prescribes the following minimum employment
periods:
Small businesses
A small business, for the purposes
of unfair dismissal, is defined by the Act as a business with fewer
than 15 employees. If small business employers wish to dismiss an
employee, they should follow the procedures outlined in the Code
and its associated checklist, to avoid or defend an unfair
dismissal claim successfully.
Aspects of the Code
- The Code recognises that summary dismissal (termination of an
employee without notice or warning) may be warranted in issues of
serious misconduct, such as theft, fraud, violence or serious
breaches of occupational health and safety procedures.
- In the case of an under-performing employee, the Code requires
the employee be warned and given a reasonable opportunity to
improve his or her performance. Where there is no improvement, the
employer may dismiss the employee. However, if the employee makes a
claim for unfair dismissal, the employer may need to provide
evidence of compliance with the Code, such as a copy of the
completed Code checklist or copies of any written warnings to the
employee.
Relevant factors in determining whether a dismissal is
unfair
In deciding whether a termination is
harsh, unjust or unreasonable, Fair Work Australia
(FWA) will consider several factors, including
(but not limited to):
- whether there was a valid reason for the dismissal;
- whether the employee was notified of the risk of their
employment being terminated (by either verbal or preferably a
written warning);
- whether the employee was given an opportunity to respond and
improve (for performance-related dismissals);
- the size of the employer's business (including whether it had a
dedicated human resources function) and the degree to which that
would impact on the procedures followed in the dismissal; and
- whether the employee was permitted to have a support person
present to assist at any discussions over the dismissal.
Genuine redundancy
An employer may dismiss an employee for
reasons of 'genuine redundancy' and such a dismissal will not be
considered unfair. A genuine redundancy occurs when the employer no
longer requires a particular person's job to be performed by anyone
because of changes in the business's operational requirements. In
these circumstances, the employer must also have complied with any
consult obligations on the redundancy, in any relevant modern award
or enterprise agreement.
An employer intending to claim a
termination was as a result of 'genuine redundancy' must be able to
prove that redeployment was not possible within the employer's
business or businesses of any of its associated entities.
Procedural steps
Unfair dismissal claims must be lodged
with FWA within 14 days of the termination taking effect (or such
further period that FWA allows). Once an application for unfair
dismissal has been lodged, FWA will investigate it. This will
involve discussions with the employer and the employee to try to
resolve the claim and may include a conference or hearing. Parties
will only be entitled to be represented by a lawyer if FWA grants
permission.
Remedies for unfair dismissals
The preferred remedy under the Act is
reinstatement, however FWA may consider ordering payment of
compensation in certain instances. Any compensation awarded will be
capped.
If FWA orders reinstatement of a dismissed employee, the employer
must return the employee to the position they were employed in
immediately before the dismissal. Alternatively, for example where
this is not possible, the employee must be appointed to another
position on terms and conditions no less favourable than those on
which they were employed previously.
In addition to reinstatement, FWA may
also order the employer to pay the person an amount for wages lost
as a result of the dismissal.
To avoid wasting time and money defending unfair dismissal claims,
employers should seek professional advice before terminating any
employees, to ensure they comply with the Act.
For further information, please contact:
Louise Houlihan, Partner
Ph
(direct): +61 3 9608 2273
Email: l.houlihan@cornwalls.com.au