The commencement of the Fair Work Act 2009 (FWA2009) in July 2009 brought about significant changes to what constitutes an unfair dismissal, the groups of employees that can make an unfair dismissal claim and the process employers must take when dismissing employees.
As with any new law, important aspects of the law are tested and clarified through case decisions. Since the commencement of the FWA2009, many unfair dismissal claims have been brought to Fair Work Australia (FWA), resulting in further clarification of these changes.
These decisions have dealt with issues including whether dismissals were consistent with the Small Business Fair Dismissal Code and whether dismissals were a case of genuine redundancy.
What is an unfair dismissal?
Where an employee has been dismissed, FWA will assess whether an employer has been both substantively and procedurally fair in dismissing the employee. An employer who has been substantively fair means that they had a valid reason for the dismissal and that the appropriate action was taken under the circumstances. While an employer who has been procedurally fair refers to employers following sound employment practices when dismissing an employee.
What is considered harsh, unjust or unreasonable?
In assessing whether an employer has been both substantively and procedurally fair in dismissing an employee, FWA will consider whether the dismissal was harsh, unjust or unreasonable. It is important to point out the ‘or’ in harsh, unjust or unreasonable, as the dismissal only has to be one of the three to be considered an unfair dismissal.
It is common for a dismissal to be considered unfair, even though the employer had reasonable cause to dismiss the employee. Therefore when an employer is considering dismissing an employee, it is therefore important for the employer to consider the process they have taken so far and the process they will follow if they are to dismiss the employee.
Common reasons dismissals are considered unfair include:
- there was no valid reason for the dismissal related to the employee’s capacity or conduct;
- the employee was not notified of the reason for the dismissal;
- the employee was not given an opportunity to respond;
- the employee was not allowed or did not know they could have a support person at any relevant discussions;
- the employee had not received prior warning that their performance/conduct was not acceptable and what would happen if it didn’t improve.
Employers need to collect evidence as to the reasons for the dismissal and the process that took place prior to and at the time of dismissal, as if the matter went to arbitration at FWA (FWA would make a binding decision that is imposed on the parties), the employer would be required to produce such evidence to support their case.
What is the Small Business Fair Dismissal Code?
There are special unfair dismissal arrangements that apply to small businesses. Until 31 December 2010, a business is considered a small business employer if they have less than fifteen (15) full-time equivalent employees. From 1 January 2011 a business will be is considered a small business employer if they have less than fifteen (15) employees (headcount).
These arrangements are intended to simplify the dismissal process for small businesses. The Small Business Fair Dismissal Code (the code) is a short document produced by FWA that covers the steps that employers must take to avoid the dismissal being considered an unfair dismissal.
FWA also has developed a checklist, which is not part of the code, but is intended to assist employers to comply with the code.
Recent decisions have raised doubts about relying on the code and on checklists, such as the one produced by FWA, when dismissing employees. The code and checklists provide limited assistance where there are disputed facts or an element of doubt about the reasonableness of the employer’s position.
What does this mean for you?
Changes to unfair dismissal provisions in the FWA 2009 means that employers’ current discipline and dismissal methods and practices may not be compliant with legislative requirements. Therefore employers should review their existing methods and practices.
Finding the answers to the questions posed below may assist you to begin this review process.
- If an employee is to be made redundant, does an employer need to offer an alternative position first, if possible?
- Do employees have a right to a support person in discipline and dismissal meetings?
- Do employers have to advise the employee why they are being terminated?
- Does the employer have to provide any information regarding the dismissal in writing?
- Who may make a claim for unfair dismissal?
- What notice does an employer have to give an employee on termination?
How can Business SA help?
Business SA’s workplace relations and employment consultants can help answer these questions, provide tailored advice to employers to help understand legislative requirements, review current workplace practices, and provide assistance to discipline and dismiss their employees, where appropriate.
In the event that an employee makes an unfair dismissal claim against the employer, workplace relations and employment consultants can represent employers in FWA and strive for a favourable outcome for the employer.
Business SA is running unfair dismissal sessions to assist employers to understand and comply with the legislative requirements surrounding termination of employment and in particular unfair dismissal.
To find out more please visit the Business SA website or call the customer service centre on 8300 0103.