By Ceri Hohner
Did you know that there are more than 16,500 unfair dismissal claims made to the Fair Work Commission (FWC) in the 2019-20 financial year? In these unprecedented times, businesses of all shapes and sizes have had to make drastic decisions just to survive. These decisions include reducing the number of hours employees work, altering the tasks they undertake and in harsher circumstances, termination.
Late last year, the FWC has ruled that employers must consider the impacts and challenges that the COVID-19 pandemic has placed on their employees before commencing the dismissal process.
In this article, I discuss how workplace procedures can impact the outcomes of unfair dismissal claims and break down the key takeaways from the FWC’s decision. So, let’s get into it…
What is unfair dismissal?
Unfair dismissal is when an employee is dismissed from their job in a harsh, unjust, or unreasonable manner. The FWC determines what is ‘harsh, unjust, or unreasonable’ with consideration of the following:
- Was there a valid reason for the dismissal related to the employee’s capacity or conduct?
- Was the employee notified of that reason and given an opportunity to respond?
- If the employer didn’t allow the employee to have a support person present at any discussions about the dismissal, was that unreasonable?
- Had the employee been previously warned that their performance was unsatisfactory?
- Did the size of the business or lack of dedicated human resource management specialists or expertise impact the employer’s procedures when they dismissed the employee?
- Any other matters that the FWC considers relevant.
Unfair dismissals and COVID-19
The FWC’s 2019-20 annual report has revealed a 40 per cent increase in the number of applications that were lodged during the height of the pandemic between March and June 2020. The rapid increase observed by the FWC can be attributed to the overwhelming pressure and speed of economic changes in the past year, which has led to more fragile and fractured employment relationships within the workplace.
Clair Petersen v Kizuri Capital Pty Ltd  FWC 5332:
In an FWC decision handed down in October 2020, an applicant was awarded close to $7,500 following a successful unfair dismissal claim.
The applicant, who was employed as a salesperson at a pet product manufacturer and wholesaler, was dismissed from her employment based on conduct and performance deficiencies, which included client complaints and failing to perform tasks as directed. At the hearing for the claim, the employer also produced additional reasons for the termination, including that the employee had made disparaging social media posts about the business, had engaged in private activities during work hours and drove during work hours while consuming alcohol.
On two separate occasions, the employer felt that the employee wasn’t performing her role satisfactorily and had issued two formal warnings which addressed time management issues concerning weekly and daily sales reports.
While it was determined that the failure of the employee to meet her reporting obligation standards constituted a performance failure and that the employee had engaged in some misconduct in respect of personal activities during work time etc., the FWC identified that not all underperformance and misconduct constitutes a valid reason for dismissal and that a warning would’ve been appropriate.
The Commissioner found that the employer had failed to consider the impacts of COVID-19 on the applicant appropriately. In particular, it had reduced the applicant’s work hours and issued a 20 per cent pay decrease, yet still required her to perform the same amount and level of work for the business. Despite the reduction in hours and pay, the applicant was required to balance conflicting and competing obligations of her customers to the same extent while also complying with new reporting responsibilities that had been implemented during COVID-19. As noted by the FWC, “this was, objectively viewed, an unreasonable cocktail of expectations on [the employee]. With the sudden changes to working hours, pay and job security, [her] performance could not at that time be objectively assessed against orthodox working hours or standard performance criteria.”
When considering the lack of a valid reason for dismissal, the employer’s failure to notify the employee of the additional reasons it relied on to terminate her which only came to light when the unfair dismissal claim was made, and the employee’s inability to respond to those reasons, the FWC found in favour of the applicant and deemed the dismissal unfair. The FWC’s decision also noted that the employer “tried to act fairly but its judgment, in the final analysis, was rash and impaired.”
When terminating an employee, it’s essential that employers consider the impacts of COVID-19 and how it may affect their employees. Employers should utilise flexible and adaptable strategies when making management decisions during the pandemic and ensure performance expectations are reasonable for the context in which that performance is undertaken and assessed.
More broadly, employers should always undertake appropriate performance management processes and effectively engage and communicate with their employees during these unprecedented times. Noting the FWC’s warning in the above case that not all poor behaviour or performance will warrant dismissal, there’s a careful line to tread between the management of employees and termination. Businesses must ensure that they’re engaging in a fair and balanced process when disciplining employees.
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Ceri Hohner is a Senior Associate and Solicitor at FCB Workplace Law (our parent company) who has assisted clients across Australia from a range of industries and businesses.