By Bethany Silverman

There’s no doubt that COVID-19 has had a significant impact on the Australian workforce; businesses have been forced to close, whether permanently or temporarily, restrictions have been placed on what people can and can’t do, and there’s uncertainty about what’s going to happen next.

Since COVID-19 hit, the Fair Work Commission has experienced a 70% spike in unfair dismissal cases, which can be attributed to the significant number of Australians who have lost their jobs as a result of the pandemic.

To put the job losses in perspective, Australia recorded its biggest ever one-month rise in unemployment in March 2020 – from 5.2% up to 6.2%, with this number estimated to rise even further.

While the JobKeeper scheme created a much-needed reprieve for many businesses, many weren’t eligible. For some businesses, the impact of COVID-19 was so great that changes to the operational requirements of the business were necessary, resulting in terminations or redundancies.

If your business is having to make some difficult workforce decisions, read on. Here, we’ll explain what unfair dismissal is and we provide some practical advice to help you mitigate a claim made against you.

When is a dismissal unfair?

Although your business may be experiencing difficulties, it does not mean you can simply terminate an employee without following due process and without reason. The Fair Work Act 2009 defines a dismissal as unfair where:

  • 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.

Employees can lodge a claim with the Fair Work Commission for unfair dismissal if they have worked for the employer for at least the minimum employment period (6 months if the employer a large business and 12 months if the employer is a small business).

Whether an employee can claim unfair dismissal depends on whether they are covered by a modern award or enterprise agreement – both of which may affect their ability to make an unfair dismissal claim.

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 made the application for unfair dismissal within 21 days from the date they were dismissed.

What does the Fair Work Commission look at?

The Fair Work Commission will assess whether a dismissal is unfair, having regard to whether the dismissal was harsh, unjust or unreasonable. This may include:

  • 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

Employees may also lodge an unfair dismissal claim where their role was made redundant, but where it was not a genuine redundancy.

Redundancy occurs when there are changes in the operational requirements of the business such that the employer no longer requires the role to be performed by anyone. These changes may include:

  • The introduction of new technology;
  • A slowdown due to lower sales or production;
  • The business relocates interstate or overseas;
  • The business restructures or closes down.

A genuine redundancy does not occur simply because an employer wants to get rid of an underperforming employee.

Where an employee is covered by an Award or Enterprise Agreement, employers will likely have obligations to consult with employees about major workplace changes, such as potential redundancies. Where an employer fails to consult with an employee, it may be deemed that the redundancy was not genuine.

Even in the midst of COVID-19 and social distancing rules, the obligation to consult remains. This means that an employer cannot simply rely on the argument that ‘we aren’t allowed to meet with our employees face to face to facilitate a consultation’. Although it may not be possible to meet in person, employers must consult! You may need to get creative and schedule teleconferences or Zoom meetings in order to engage in consultation.

For more information on managing redundancies, refer to our redundancy series. Part one can be found here.

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 – as outlined above, one of the factors the Fair Work Commission will look at in determining harshness is whether the employee was given an opportunity to respond. Where this has not occurred, or the employer fails to undertake a fair process, the Fair Work Commission may determine that, although there was a valid reason for termination, the dismissal 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); and
  • Non-financial remedies such as a written statement of service

Dismissing employees can be difficult for employers, particularly in the current climate. If you have questions regarding employee termination and unfair dismissal, please contact the HR Assured Telephone Advisory 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.