As employers, you should be aware of your employees’ rights when considering the termination of their employment. Dismissing an employee may be deemed unfair if it is harsh, unjust or unreasonable, or not due to a genuine redundancy, which could render you liable to pay compensation or reinstate the employee.

Subject to some exceptions, in the event of dismissal – including if the employee was forced to resign by their employer – an aggrieved employee may apply to Fair Work Australia for a remedy. An important matter Fair Work Australia must take into account when considering an unfair dismissal application is whether there was a valid reason for the dismissal.

The management action you take before dismissing an employee will be considered by Fair Work Australia when determining whether the dismissal was fair or not. It is important to remember that there is no “three strikes rule”. However, if an employee’s performance has been unsatisfactory, you should warn them about that and give them an opportunity to respond. If they fail to respond satisfactorily, and dismissal is necessary, you should notify the date of dismissal.

If your practice is a small business in the national workplace relations system with fewer than 15 employees, then you should follow the checklist in the Small Business Fair Dismissal Code. Where a qualifying employer has strictly followed the checklist, then the dismissal will be deemed to be fair.

However, where an employee commits theft, fraud, violence or serious occupational health and safety breaches, you may need to dismiss that employee immediately by way of summary dismissal. If so, you should clearly state the reasons for the dismissal.

You may also need to dismiss an employee because their role has becomes redundant, for example due to a downturn in business, a merger or an internal restructure. If so, the reason for redundancy must be genuine. A redundancy is not genuine if your operational needs have not in fact changed or you have not consulted with the employee. It may also not be genuine if you could have reasonably employed the employee somewhere else within your organisation or an associated business. If the redundancy is not genuine, the employee may claim it as an unfair dismissal.

The unfair dismissal laws under the Fair Work Act do not apply to all employees, in particular those earning over $123,300.00 (on current figures) and those who have only recently been hired: to apply for unfair dismissal, the employee must have completed at least six months of employment (or 12 months under the Small Business Fair Dismissal Code). Employees engaged under a contract for a specified period or task and whose dismissal occurs at the end of the task or period are also not eligible to make an application.

You should also be aware of the required notice periods and final pay for any employees you dismiss, including in the case of redundancy.

If litigation is threatened or is commenced by a dismissed employee, you should notify your employment practices insurer or broker immediately. However, sensible management action taken in a timely manner before dismissal when an employment issue arises can help avoid the cost and time associated with litigation and damage to your business.

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

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