Dismissing an employee is always a difficult decision to make. However, if you need to let an employee go, it is critical to ensure you do so legally. After all, unfair dismissal claims against employers are costly and problematic. Nevertheless, you can help avoid them by keeping the following tips in mind.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
What is Unfair Dismissal?
Unfair Dismissal is when an employer fires an employee in a way that is harsh, unjust or unreasonable. Under the Fair Work Act 2009 (‘the Act’), the Fair Work Commission may compel an employer to reinstate or compensate any employee who was dismissed unfairly.
In deciding whether a dismissal was unfair, the Fair Work Commission may consider whether:
- there was a valid reason for the employee’s dismissal; and
- the employer’s conduct meets the guidelines set out by the Act.
However, small businesses with less than 15 employees will have separate guidelines under the Small Business Fair Dismissal Code.
Who Can Make An Unfair Dismissal Claim?
An employee can make an unfair dismissal claim if they:
- have been employed with your business for the minimum engagement period, which is twelve months for a business with fourteen or fewer employees and six months for a business with fifteen or more employees; and
- are covered by a modern award or enterprise agreement or earn less than the high-income threshold, which is $167,500 as of 1 July 2023.
You should be mindful that a casual employee may also be able to make an unfair dismissal claim if they:
- have been employed with your business for the minimum engagement period, which is twelve months for a business with fourteen or fewer employees and six months for a business with fifteen or more employees;
- are employed on a regular and systematic basis; and
- have a reasonable expectation of ongoing employment on a regular and systematic basis.
Employees have 21 days after being dismissed to make an unfair dismissal claim with the Fair Work Commission. However, in exceptional circumstances, the Fair Work Commission may accept claims made by an employee outside the 21-day timeframe.
Hence, you should consider following a procedurally fair process when terminating an employee, even if they are not eligible to make an unfair dismissal claim. This may reduce the likelihood of an employee shoehorning a different type of termination claim, such as a general protection claim. The tips below will help your business mitigate the risk of an unfair dismissal claim.
Continue reading this article below the form1. Communicate With Your Employee
Communicating with your employee is essential in protecting yourself from unfair dismissal claims. By making it clear what you expect of your employees and how they are performing, you can resolve any performance issues up front and, if not, prevent any feelings of hostility or humiliation.
Employees might be less likely to bring an unfair dismissal claim if they feel you are open about your expectations. While there is no rule that an employer must give an employee a certain number of written warnings before dismissal, allowing an employee to improve their performance, contest any allegation, or explain any misconduct will help reduce the risk of an unfair dismissal claim.
2. Follow Your Workplace Policies
If you have a formal policy and procedure for dealing with your employees’ performance issues, you should follow them. Failing to follow a policy you have communicated to your staff will increase the likelihood of you breaching the employment contract or agreement.
If you do not have a formal policy, you may want to consider putting one in place. A good starting point would be ensuring that you provide an under-performing employee with the following in writing:
- warning of any meetings about their employment;
- the opportunity to respond to allegations of their misconduct or performance;
- the ability to have a support person with them during discussions about their employment; and
- notice that failure to improve their conduct will result in dismissal.
3. Record Everything
The best way to ensure you comply with the Act is to keep records of all your interactions with your employees. Regularly updating your employees’ HR files with records of any performance management or disciplinary actions will help you track how your staff perform and comply with your legal obligations.
Records can include:
- sending follow-up emails to meetings to confirm what you and your employee discussed; or
- taking notes during any meeting concerning an employee’s performance or misconduct.
Furthermore, well-kept records will help you defend your actions if you face an unfair dismissal claim by an ex-employee.
4. Make Sure Your Basis for Dismissal is Lawful
To avoid an unfair dismissal claim, ensure the reason you are terminating an employee is lawful. Examples of valid reasons for termination include poor performance or misconduct. If you dismiss an employee for misconduct, ensure you have investigated the misconduct and allowed the employee to explain the conduct.
Under the Small Business Fair Dismissal Code (Code), an unfair dismissal claim does not arise if a small business employer has complied with the Code’s requirements. The Code requires:
- reasonable grounds to believe the employee was guilty of serious misconduct, such as theft, fraud, violence or a serious breach of health and safety requirements;
- for other dismissals, evidence that the employer gave the employee a warning based on their performance or conduct and that they risk dismissal if they do not improve, and gave the employee the opportunity to improve their performance or respond;
- evidence that an employee gives employees to have someone (other than a lawyer) assist them when dismissal is possible; and
- evidence of compliance with the Code if an employee lodges an unfair dismissal claim.
Key Takeaways
Deciding to dismiss an employee can take time and effort. You must consider a range of factors, including:
- whether the employee has access to unfair dismissal;
- whether you have a valid reason for the termination;
- the procedure you follow; and
- if and when you terminate the employee’s employment.
If you need help with an unfair dismissal claim, our experienced employment lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
An unfair dismissal claim is when an employee alleges that they were terminated in a harsh, unjust or unreasonable way. There are several factors that the Fair Work Commission will consider when determining if a dismissal was harsh, unjust or unreasonable. These factors include, but are not limited to, whether there was a valid reason for the dismissal and whether the employee was notified of the reason.
A lawful reason for dismissing an employee can be poor performance or misconduct. However, even where the employee performs poorly or engages in misconduct, you should still follow a procedurally fair process before terminating employment. This will reduce the risk of an unfair dismissal claim. You should also ensure that you do not dismiss an employee for an unlawful reason, such as based on their gender.
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