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Having to fire an employee is never easy. In fact, it’s more difficult than ever and can expose you to a raft of legal ramifications. If your decision is found to be unlawful or unfair you’ll likely face an expensive settlement, severe penalties and/or potential prosecution.

Since the introduction of the Fair Work Act (FW Act) in 2009, employees are far more likely to challenge your decision to dismiss them. In fact, the number of unfair dismissal claims lodged by Australian employees nearly tripled within a couple of years. Another concern for employers is that around 75% of unfair dismissal cases are settled via conciliation with the vast majority of these involving a payout.

Unfair dismissal occurs when an employee is dismissed harshly, unjustly or unreasonably. A dismissal can be unfair for many reasons. For example, if the employee is not notified before the decision to dismiss them is made, if the employee is not given an opportunity to respond to the reason for dismissal, or if the employee is dismissed for unsatisfactory performance but is not warned about their unsatisfactory performance beforehand and given a chance to improve.

Unfair dismissal laws under the Fair Work Act allow a dismissed employee to seek an order from the Fair Work Commission to make the former employer reinstate or compensate the employee because the employee has been dismissed unfairly. Reinstatement refers to an order that an employer reappoint a dismissed employee to the same position he or she held immediately before dismissal, or another position.

The unfair dismissal provisions of the FW Act apply to all national system employers. This means that they apply to all private sector employers in all states and territories except Western Australia (WA). WA private sector employers do not qualify as national system employers unless they are a constitutional corporation.

The FW Act unfair dismissal laws will not apply to you if you are a WA employer who is not a national system employer.

Employees are only eligible to apply for an unfair dismissal claim if they have been employed with you for a minimum of 6 months (or 12 months in the case of a small business employee), and as long as they are covered by a modern award or enterprise agreement, or if they are award- and agreement-free they need to be earning less than $142,000 p.a. (i.e. the 2017–2018 high-income threshold.

Casual employees
can also make an unfair dismissal claim if they have been employed on a regular and systematic basis for 6 months or more (or at least 1 year if you are a small business) and they have a reasonable expectation of continuing employment with you.

If an employee makes an unfair dismissal claim against an employer, the application must be filed with the FWC within 21 days of the termination of their employment. There are some circumstances when a late application may be accepted by the FWC.

So what does an employer do if the FWC notifies it that an ex-employee has made an unfair dismissal claim against them?

The employer needs to respond to the claim by completing the relevant form from the FWC website – stating why it does not believe the dismissal was unfair. If there is an initial matter to raise, now is the time the employer should do that because if it is able to successfully challenge the unfair dismissal claim at this early stage, the applicant’s claim will not proceed and no conciliation or hearing will be necessary. If the initial matter (or objection) is unsuccessful, the complaint will be referred to conciliation. An example of an initial matter is that the employee’s salary was above the high-income threshold and therefore the employee is not eligible to make the claim.

The vast majority of FWC unfair dismissal conciliations are successful. From 2016 to 2017, 78.9% of unfair dismissal conciliations resulted in a settlement of the claim. If a settlement is reached at conciliation, the parties will normally commit the agreement to writing and finalise the claim on the agreed terms.

The safest bet for employers is to ensure that all policies and procedures for termination of employment are watertight. When dismissing an employee, employers must carry out a procedurally fair process and be sure that if a claim of unfair dismissal is made against them that they have records of this process to prove it was undertaken fairly.

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Top stories for Unfair Dismissal

Articles


Is it safe to settle an unfair dismissal claim directly with an employee?

Unfair Dismissal

It’s common to settle employee claims by first reaching an in-principle agreement about settlement terms and then recording the settlement in a more comprehensive deed executed by the parties. What if the applicant refuses to execute the deed? Can the employer rely on the in-principle settlement?

By Charles Power on February 3rd, 2019

Your questions answered: Can we dismiss an injured employee who is unable to return to work?

Unfair Dismissal

Q: Is it appropriate to formally terminate an employee due to his inability to carry out the normal duties of his role unless he feels he can?

By Portner Press on February 3rd, 2019

Neo-Nazi electrician receives 11K penalty for ‘appalling’ unfair dismissal

Unfair Dismissal

An electrical contractor who calls himself the “Nazi Sparky” and claims to be “Brisbane’s best Holocauster”, has been ordered to pay an apprentice more than $11,000 in an unfair dismissal claim.

By Portner Press on January 23rd, 2019

Dismissing an employee who can’t work – Is it discrimination?

Unfair Dismissal

If an employer dismisses an employee because of their mental disability, the employer is likely to contravene the general protections of the Fair Work Act.

By Charles Power on December 14th, 2018

FWC finds dismissal for accessing pornography at work was unfair

Leave Provisions

The absence of properly drafted workplace policies can be a problem when dismissing an employee for misconduct.

By Portner Press on November 26th, 2018

Foodora ordered to pay $15K to rider who exposed poor conditions

Unfair Dismissal

After a ‘gig economy’ worker publically raised concerns about his low pay and working conditions, Foodora terminated his services.

By Portner Press on November 21st, 2018

FWC finds dismissal unfair because of ‘non-existent’ procedures

Unfair Dismissal

A Sydney puppy farm’s reasons for dismissing a casual, part-time kennel hand were “capricious, fanciful, spiteful or prejudiced”, the FWC found.

By Portner Press on August 10th, 2018

Who decides if a worker has no capacity to perform their role?

Unfair Dismissal

Whether there is a “valid reason for the dismissal related to the person’s capacity or conduct is a matter to be taken into account...

By Charles Power on August 1st, 2018

Lack of expertise no excuse in unfair dismissal case, says FWC

Unfair Dismissal

A small business’s size and lack of industrial relations expertise was no excuse for the absence of any fair procedure, the FWC found in a rehearing of an unfair dismissal case.

By Portner Press on July 25th, 2018

Punishment must fit the crime, says FWC Full Bench

Unfair Dismissal

A supermarket worker has won unfair dismissal case on appeal after the Full Bench of the Fair Work Commission (FWC) found his employer’s disciplinary action – dismissal – to be excessive.

By Kelly Godfrey on July 20th, 2018