By Bethany Silverman

When running a business, various issues can arise with your employees, and it is important that you know how to manage these situations, in order to avoid things like unfair dismissal claims against your business. That’s why you should also know what the term ‘unfair dismissal’ actually means, and the implications that one may have on your business,

What is unfair dismissal?

There are several situations which may be classed as an unfair dismissal. Under the Fair Work Act 2009 and unfair dismissal occurs when:

  • A person has been dismissed; and
  • The dismissal was harsh, unjust or unreasonable; and
  • The dismissal was not consistent with the Small Business Fair Dismissal code; and
  • The dismissal was not a case of genuine redundancy.

If an employee is dismissed, it means that their employment has been terminated by the employer OR the person has resigned from their employment but was forced to do so because of conduct or a course of conduct engaged in by the employer (this is called a constructive dismissal).

Who can apply for unfair dismissal?

A number of criteria determine whether an employee can apply to the Fair Work Commission for unfair dismissal.

An employee can make a claim for unfair dismissal with the fair work commission if they meet certain criteria. This includes, having worked for the employer for at least the minimum employment period. This means a period of 6 months if the employer is not a small business and 12 months if the employer is a small business.

Another factor which determined whether an employee can access unfair dismissal is whether they are covered by a modern award or enterprise agreement.

Employees must also earn less than the high-income threshold, which is currently $148,700.

Regular and systematic casuals also have access to unfair dismissal.

Finally, an employee must have been terminated within 21 days of making the application for unfair dismissal.

Harsh, unjust or unreasonable

So, what does harsh, unjust or unreasonable mean? If an employee has made an application for unfair dismissal on this basis, the Fair Work Commission considers a number of criteria, including:

  • Whether there was a valid reason for the dismissal related to the capacity or conduct of the person and whether they were given notice of that reason and given an opportunity to respond;
  • If the employer unreasonably refused the employee to have a support person present in meetings related to the dismissal;
  • If the dismissal was related to performance issues, whether the employee had been warned about the performance issues;
  • Whether the employer had Human Resources support or expertise which may have impacted the procedures effecting dismissal and whether the size of the employer’s enterprise may have impacted such procedures;
  • Any other relevant matters.

Genuine redundancy

An employee can also make an unfair dismissal claim on the basis that they were terminated on the basis of redundancy, however it was not a genuine redundancy.

As an employer, you should be aware of the situations in which a genuine redundancy can occur. Essentially, a genuine redundancy takes place when you, the employer, no longer requires an employee’s job to be performed by anyone. This may be because the business:

  • Introduces new technology;
  • Slows down due to lower sales or production;
  • Relocates interstate or overseas;
  • Restructures or closes down.

A genuine redundancy does not occur if an employer decides to make an employee ‘redundant’ as a way of getting rid of an employee who is difficult or not performing to the expected standard. If an employer does this, the employee  will likely be able to make an unfair dismissal claim.

What if an employee engages in serious misconduct?

If an employee engages in serious misconduct, an employer may terminate employment on the spot, without providing the requisite notice. However, it is advisable to engage in a robust investigation and discussion process before proceeding to termination for serious misconduct, to allow the employee an opportunity to respond. This is because the Fair Work Commission may find that although there was a valid reason for the dismissal, the decision was a disproportionate response in the circumstances.

Remedies for unfair dismissal

If an employee makes an application for unfair dismissal, and the dismissal is deemed to be unfair, the Fair Work Commission can order a remedy which may include:

  • Reinstatement and back-payment;
  • Compensation (capped at 26 weeks’ pay)
  • Non-financial remedies such as a written statement of service

Bethany Silverman is a qualified Workplace Relations Consultant at HR Assured. She regularly engages businesses in matters of compliance and best practice. She has a particular interest in the performance management process.