Avoiding unfair dismissal claims
Employees who believe they have been unfairly dismissed can challenge their employer’s decision by making an unfair dismissal claim to either the Fair Work Commission (FWC) or the Western Australian Industrial Relations Commission (WAIRC), depending on the IR system the employer falls under.
Claims fall into two categories:
- unfair dismissal
- unlawful termination
Who can lodge a claim?
To make a claim to the FWC, employees must be employed by a ‘national system employer’. The claim must be lodged within 21 days after the dismissal took effect.
Employees employed by non-constitutional corporations are able to make claims in the WAIRC within 28 days of the effective date of the termination.
Tribunals must not deal with unfair dismissal claims if the employee is paid more than a prescribed amount. The amounts and conditions are as follows:
- WAIRC - if the employee is not subject to an award, order, industrial agreement and/or employer /employee agreement and is paid a salary above a prescribed amount. This amount is indexed annually, adjusted on 1 July every year and is currently $162,990 as at 1 July 2018.
- FWC – if the employee is not covered by an award or agreement and their remuneration exceeds $145,400 per year (as at 1 July 2018, indexed annually).
Specific employees exempted
The Fair Work Act 2009 (Cth) outlines a number of categories of employees who are ineligible to claim unfair dismissal. These include employees:
- serving less than 6 months (12 months for small businesses with fewer than 15 employees);
- engaged on a fixed term contract for a specified time, for a specified task or for the duration of a specified season, and where the employment has terminated at the end of the period, on completion of the task, or at the end of the season;
- who are casuals and not engaged on a regular and systematic basis and do not have a reasonable expectation of continuing employment;
- engaged under a traineeship agreement and the employment was for a specified period of time or limited to the duration of the training arrangement and the employment was terminated at the end of the training arrangement;
- who earn over the high-income threshold (see Salary cap), and are not covered by an award or agreement;
- who were demoted in employment, but the demotion did not result in a significant reduction in remuneration or duties and the employee remains in employment with the employer that effected the demotion; and
- that were terminated due to a genuine redundancy. Please contact the Employee Relations Advice Centre for further information on what constitutes a genuine redundancy.
Employees excluded from claiming unfair dismissal in FWC may still be able to make a claim for unlawful termination, breach of state and federal anti-discrimination laws and breach of contract in the relevant jurisdiction.
There are no fixed rules about what constitutes an unfair termination as each case is judged on its own facts.
The relevant industrial tribunal deals with claims alleging unfair dismissal and considers the reasons for dismissal and whether the employee has been fairly dealt with by the employer before dismissal. This means employers must:
- have a valid reason for termination; and
- ensure the employee is afforded procedural fairness prior to making a decision to terminate.
Procedural fairness encompasses the following factors:
- notifying the employee of the reason for the dismissal;
- giving the employee an opportunity to respond;
- giving the employee an opportunity to have a support person present;
- if the dismissal related to unsatisfactory performance – warning the employee about that unsatisfactory performance before the dismissal;
- the degree to which the size of the employer’s business or the absence of human resource specialists would be likely to impact on the procedures followed in effecting the dismissal; and
- any other matters the tribunal considers relevant.
Reinstatement is the primary remedy unless it can be demonstrated that reinstatement is inappropriate or impractical. If reinstatement or re-employment is not practical, FWC may order an amount to be paid as compensation (capped at six months remuneration).
The industrial tribunals may combine an order for reinstatement/re-employment with an order for back pay of remuneration lost, or likely to have been lost, because of the dismissal. Back pay is not subject to the six-month cap.
If a union makes an unfair dismissal claim on behalf of a member in the WAIRC, the Commission can make an interim order for reinstatement pending the resolution of the claim.
The Small Business Fair Dismissal Code (National system employer)
National system employers with fewer than 15 employees will have the qualifying period doubled to 12 months, during which time employees cannot make a claim for unfair dismissal.
If an employee has been with the business longer than 12 months they are eligible to make a claim for unfair dismissal.
The Small Business Fair Dismissal Code (Fair Dismissal Code) was introduced in 2009. If followed by the employer, it will ensure a dismissal is not unfair. The following factors will be taken into account by FWC when considering if the dismissal is fair under the Fair Dismissal Code:
- the employer clearly warned the employee (either verbally or in writing) that the employee’s conduct or performance needed to improve or they may be dismissed;
- the employer provided the employee with a reasonable amount of time to improve;
- whether any training or an opportunity to develop skills was offered to the employee;
- whether the employee’s conduct or performance improved after the warning;
- whether the employee was advised of the reason for the dismissal and given an opportunity to respond; and
- whether any records were kept of warnings or discussions on how the employee could improve their conduct or performance.
It is important to note that termination should still be considered a last resort and employees must still be afforded what has been termed a ‘fair go’.
Please contact the Employee Relations Advice Centre for further information or if you wish to receive a copy of the Small Business Fair Dismissal Code.
Third party orders
The WAIRC also has power to issue orders against a ‘third party’ to the employment relationship where the Commission considers the ‘third party’ may be acting to prevent, hinder or interfere with the employee’s employment, transfer to a particular site, reinstatement or re-employment.
Certain grounds of termination may be deemed unlawful.
- temporary absence from work because of illness or injury;
- membership or non-membership of a union or participation in union activities;
- seeking office or acting as an employee representative;
- filing or participating in a complaint against the employer;
- race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin - except if based on the inherent requirements of the position;
- absence from work on parental leave; and
- temporary absence from work to carry out a voluntary emergency management activity, where reasonable, having regard to the circumstances.
The FWC can arbitrate general protections dismissal disputes, where the parties consent. An application for unlawful termination must be made within 21 days after the employment was terminated.
Notice of termination
In addition to the above requirements, an employer must give the employee at least the following notice (or compensation in lieu):
|Employee’s period of continuous service||*Notice period in weeks|
|Not more than 1 year||1|
|More than 1 year but less than 3||2|
|More than 3 years but less than 5||3|
|More than 5 years||4|
*Increase the notice period by one week if the employee is more than 45 years old and has completed at least two years of continuous service.
Please note that employers need to apply the notice periods in their contracts and agreements if these notice provisions are more generous than those listed in the table above.
Certain employees are excluded from these notice periods:
- an employee employed for a specified period of time, for a specified task, or for the duration of a specified season;
- an employee whose employment is terminated because of serious misconduct;
- a casual employee;
- an employee (other than an apprentice) to whom a training arrangement applies and whose employment is for a specified period of time or is, for any reason, limited to the duration of the training arrangement;
- a daily hire employee working in the building and construction industry or the meat industry; and
- a weekly hire employee working in connection with the meat industry and whose termination of employment is determined solely by seasonal factors.
The following guidelines are provided as general advice and assistance to employers. They are not comprehensive, nor applicable in every situation.
Each case depends on its own facts and should be carefully considered with assistance from CCIWA’s Employee Relations Advice Centre.
Process for dealing with an employee’s unsatisfactory conduct or performance
- Make an appointment with the employee and let them know it concerns a serious issue regarding their continued employment. Invite them to bring a representative/witness. The employer should also have a witness present who can take notes.
- Where appropriate, provide an interpreter to ensure the employee fully understands the discussion.
- Before the interview, prepare a clear objective statement of what you are dissatisfied with, including specific examples. A broad or ambiguous statement like, “You just don’t fit in,” or “You’ve got a bad attitude,” is not acceptable.
- At the interview the employee must be told:
- that their conduct or performance is unsatisfactory
- exactly what you are dissatisfied with in clear, precise and objective terms
- The employee must be asked to respond to each allegation. Carefully consider the response to see if it justifies the conduct or performance.
- If the response is unsatisfactory, inform the employee of each of the following:
- the response does not justify the conduct or performance;
- the clear, objective performance standards required in the future,
- failure to improve may lead to termination;
- their conduct or performance will be reviewed within a specified time, or earlier, if other serious matters arise (the appropriate period for review varies between cases);
- necessary measures to improve performance (e.g. further training), and;
- they will receive written confirmation of the discussion.
- After the interview, prepare a letter (i.e. a written warning) confirming the matters discussed and preferably have the employee sign a copy of the letter to indicate receipt. If the employee will not sign this a witness can sign to indicate the employee received the letter.
- Monitor performance on a daily basis and conduct another formal interview at the end of the specified review period or earlier if other serious matters arise.
- If there is no satisfactory improvement you may wish to repeat the formal interview process or issue a final written warning.
Note: Depending on the issue, it may be necessary to interview the employee and give a number of written warnings.
When the employee has been given a reasonable number of opportunities to improve their conduct or performance, and they have not done so, issue a final warning.
10. If sufficient improvement has not occurred after issuing a formal warning, conduct another formal interview.
11. If the employee’s response at the interview is unsatisfactory, advise them their continued employment is under review. Invite them to explain why they should not be dismissed and raise any other matters that may warrant special consideration.
12. When deciding whether to terminate, consider the employee’s comments and other relevant matters like:
- alternatives to dismissal, such as a transfer or demotion by agreement; and
- the employee’s length of service and past record
13. If dismissal is appropriate, prepare a termination letter outlining a history of the warnings given, the reasons for the decision and effective termination date and inform the employee of the decision to terminate. Provide the employee with a final chance to respond before the termination.
14. Provide the employee the appropriate notice period or notice in lieu (if applicable).
Only extremely serious incidents constitute gross misconduct. Each case is judged on all the surrounding circumstances. Gross misconduct may include:
- theft, fraud or assault in the course of employment
- wilful damage of the employer’s goods or property;
- breach of confidence, e.g. disclosure of company secrets or working for a competitor; and
- refusal of a reasonable and lawful instruction when warned such action may be regarded as serious misconduct and result in termination without notice.
Industrial Tribunals only view extremely serious incidents as gross misconduct and insist that the employer’s investigations are immediate, thorough, meticulously fair and unbiased.
CCIWA recommends that members responding to alleged serious misconduct seek advice from an employee relations adviser before taking action.
1. Employers should:
- have a policy defining what constitutes gross misconduct;
- educate employees on the meaning of the policy;
- provide regular policy refreshers; and
- apply the policy consistently on all occasions
2. The employer should investigate any alleged incidents of gross misconduct immediately.
- Ask all witnesses to give written and signed statements.
- Keep all investigation details in writing.
- Clearly explain specific details of the alleged misconduct to the employee.
- Ask the employee to respond to the evidence and allegations against them.
- Give the employee’s response proper consideration
3. An employer must have reasonable grounds for genuinely believing the employee is guilty of the alleged misconduct; mere suspicion is not sufficient.
4. When deciding whether to terminate, consider the employee’s comments and the following issues:
- any mitigating circumstances associated with the employee’s misconduct or work record; and
- alternatives to dismissal, e.g. final warning or demotion by agreement.
5. If dismissal is appropriate, the employee must be informed of the decision and provided with a letter of termination outlining the reason for the decision and the termination date. The parties must genuinely make the agreement without coercion or duress.
For specific obligations, refer to the relevant modern award.
Operational requirements (i.e. redundancy)
An employer who is facing changed operational requirements (a downturn in work, restructuring, cutbacks or loss of funding) should contact CCIWA’s Employee Relations Advice Centre on (08) 9365 7660 for further assistance and an information sheet detailing their obligations.
Employment forms guide
CCIWA’s Employment Forms Guide contains pro-forma written warning and termination letters that may be used by employers as confirmation of performance management discussions with an employee. CCIWA recommends employers seek specific advice before terminating employees.
The guide also includes standard, ready-to-use employment forms for just about every facet of managing staff. Each form comes with a set of guidance notes explaining its purpose and application.
The Employment Forms Guide is available to members at a reduced rate. To subscribe to the Guide please contact the Employee Relations Advice Centre on (08) 9365 7660 or email email@example.com.