The Fair Work Act unfair dismissal laws came into effect on 1 July 2009, giving unfair dismissal rights to about 3 million more workers than under Work Choices.

So how will you know if a worker has the right to make an unfair dismissal claim against you?

Simple. Just ask yourself the following questions:

• Are you a national system employer?

This is only an issue if you are not in Victoria or a territory. If you employ workers personally as a sole trader or if you are in a partnership, then the Fair Work Act will not apply. Even if an employer is a body corporate, it needs to be a Constitutional Corporation in order to be covered the FW Act unfair dismissal provisions.

• Is the employee earning under the high income threshold?

The current threshold is $108,300 per annum. To determine this, you will need to calculate the employee’s remuneration correctly. You need to exclude SGC, bonuses, commissions, incentives, overtime, and include salary sacrifice components and amounts guaranteed. Unless an employee is covered by a modern award, etc (see below), an employee can only make an unfair dismissal claim if they earn under the remuneration threshold.

• If the employee is earning more than the high income threshold, are they covered by a modern award, enterprise agreement, NAPSA, AWA, ITEA etc?

An employee earning more than the threshold can only make a claim if they are covered by one or more of the above industrial instruments.

• Has the employee served the minimum employment period?

An employee must have served at least the minimum employment period to be able to make an unfair dismissal claim. The minimum employment period is 6 months (or 12 months if the employer is a small business employer i.e. they employ less than 15 full-time equivalent staff).

Caution: This test reverts to 15 employees on 1 January 2011. For example, an employer with one full-timer and 14 casuals is a small business employer on 31 December 2010 but will not be one on 1 January 2011.

• Did you initiate the termination of employment?

If you did not initiate the termination of employment, then an unfair dismissal claim cannot be made against you.

Remember: Sometimes resignation will be dismissal if forced by your actions. Also, demotion with ongoing employment will also be dismissal if the employee’s remuneration or duties are significantly reduced.

When the employment of an employee who is employed to work for a specific period, season or task ends upon the completion of that period, task, or season, this is not dismissal. However, you need to be careful of ‘fixed term’ contracts that contain an unqualified right of either party to terminate early – these are not contracts for a specific period.

For more details on how you can make sure your business is prepared for all the Fair Work Act changes, take a 14 day FREE trial of the Employment Law Practical Handbook. Click here to find out more!

Charles Power
Editor-in-Chief
Employment Law Practical Handbook

Tags: Constitutional Corporation, employee, fair work act, high income threshold, remuneration, sole trader, Unfair Dismissal Laws