Firing a difficult employee can be awkward, emotional and risky if not done correctly. However, unfortunately proper employee termination is a necessary consideration for all businesses.
Employers must keep in mind that every termination is different, therefore there are different risks and considerations for each. However, in all cases, businesses are in a better position to minimise risk when following a best practice approach to ending the employment relationship.
How do you terminate an employee?
There is no one-size-fits-all guide on how to terminate an employee, as much depends on the reason for termination and the length of the employee’s service. For example, a termination due to underperformance will differ from a termination for serious misconduct. Likewise, a termination due to a genuine redundancy will require a completely different approach!
Notwithstanding this, below we have outlined some of the general steps in the termination of an employee for misconduct. Given today’s climate where claims of harassment, sexual harassment and discrimination are common, termination for misconduct could affect any workplace. Here are the best practice steps:
- Gather all available information:
The first step is to gather all available information regarding the nature of the allegations of misconduct prior to commencing a counselling/interview process. Depending on the nature of the allegations this may involve gathering witness statements, video surveillance, any past warnings and copies of workplace policies.
- Investigation interview:
Invite the employee to a meeting to discuss the allegations regarding their conduct. Here it is recommended the employer give the employee no less than 24 hours’ notice of the meeting and invite the employee to bring a support person.
Conduct an investigation interview with the employee, giving them a proper opportunity to respond to the allegations and information;
- Review and consider response:
Review and consider the response of the employee and any other information provided before making a decision regarding whether the employee’s employment should be terminated. This requires the employer to break and consider the employee’s response before a decision is made.
In some cases, this may involve the preparation of an investigation report, which contains the relevant facts, and whether the allegations are proven on the balance of probabilities.
- Termination/outcome meeting:
Once the conduct has been established and dismissal is deemed appropriate, the next step is to invite the employee to a meeting to discuss the outcome. Again, it is recommended at least 24 hours’ notice is provided and the employee is offered to bring a support person to this meeting.
During the meeting the employee is advised of the reasons for the termination. There are also number of important considerations about the amount of notice to be provided to the employee (if any) and whether there are any outstanding entitlements payable. For more information on termination pay and entitlements see our related article here.
- Other post-employment considerations:
There are also a number of considerations employers must take into account when exiting an employee from the business. Important considerations include:
- Ensuring employees return all company equipment, such as keys;
- ensuring handovers have been completed where necessary;
- reminding employees of any ongoing obligations under their contract of employment, such as those relating to confidentially or post-employment restraints; and
- the collection of the employee’s personal items.
What is summary dismissal?
Summary dismissal occurs when an employee is terminated without notice because of serious misconduct in the workforce. Serious misconduct is when an employee engages in willful or deliberate behaviour that causes serious and imminent risk to the health or safety of a person, or the reputation, viability or profitability of the employer’s business.
The threshold for satisfying the requirements of serious misconduct are high and as such, a decision to summarily dismiss an employee should be well considered and reserved for extreme cases.
Common actions that may satisfy the serious misconduct requirement for summary dismissal include theft, fraud, assault, intoxication at work, or refusing to carry out a lawful and reasonable instruction. Whilst these actions are generally associated with serious misconduct, businesses must use their discretion to determine whether the severity of the actions justifies summary dismissal.
What constitutes unfair dismissal?
A significant risk that businesses face when terminating an employee is unfair dismissal. Employees who have been employed for 6 months, or in the case of small businesses (less than 15 employees) 12 months, have access to unfair dismissal. Unfair dismissal protects employees against a termination, which the Fair Work Commission (FWC) deems harsh, unjust or unreasonable.
There is a strict checklist that the FWC must consider when determining whether an employee has been unfairly dismissed. The first consideration is whether there is a valid reason for dismissing the employee.
However, regardless of whether there is a valid reason for dismissal, employers must also ensure they follow due process as otherwise the terminated employee may still be found to have been unfairly dismissed. To follow due process employers should:
- notify the employee of the issue;
- give adequate notice of meetings in relation to the issue;
- give the employee an option to bring a support person;
- give the employee a chance to respond to all of the concerns before making a determination on what action will be taken; and
- consider whether or not the employee had been warned about unsatisfactory behavior or performance in the past.
It is important for businesses to remember that unfair dismissal is only one avenue a terminated employee can take. Depending on the reasons for termination employees may also have access to:
- General protection claims;
- Discrimination claims; and
- Remedies for breach of contract.
Remedies available to employees
If an employee has been unfairly dismissed the remedies that may be sought include:
- reinstatement (that is, the employee getting their job back and receiving back pay);
- compensation, up to a maximum of 6 months’ pay; and
- non-financial outcomes such as a written statement of services.
Whilst reinstatement is considered the preferred remedy, often this is not possible due to the breakdown in the relationship between the parties after dismissal. If reinstatement is not possible, the most severe remedy is that the business may have to pay the employee is the lesser of 6 months’ pay or half the current unfair dismissal high income threshold. The high income threshold for 2018/2019 is $145,400, which means the maximum remedy a business will be required to pay is $72,000.
When an employee makes an unfair dismissal, there are a number of stages where both parties can attempt to settle the dispute. The first opportunity to settle is at a conciliation conference. However, if an agreement is not reached the dispute will proceed to a hearing before the FWC, which is a costly and time-consuming process for any business.
What does this mean for your business?
Whilst there are always risks in terminating an employee, having an understanding of the legal framework means that businesses can minimise their exposure to potential unfair dismissal claims. A failure to follow due process when terminating an employee can be an expensive exercise, which requires legal representation to defend any resulting proceedings.
Are you thinking of terminating an employee? HR Assured offers advice from experienced workplace relations consultants whenever you need it. If you would you like to find out more, contact us today!