While it’s never a desired course of action, there are times when an employer needs to terminate the employment of someone within their organisation. The reasons for this can be many and varied but one thing all employers need to be highly cautious of is that they don’t leave themselves open to an unfair dismissal claim which could have serious legal and financial consequences for their business.
Under Australia’s Fair Work Act (FWA; “the Act”), policed by the Fair Work Commission, an employee can make a claim for unfair dismissal if they can prove they were dismissed by an employer in an unreasonable, harsh or unjust manner. Under the terms of the Act, an unfair dismissal claim can only be made by employees who earn less than $145,000 per annum (in 2018-19) but where an employee is covered by a modern award or enterprise agreement, under s 382(2) of the Act, they are able to bring an unfair dismissal claim regardless of their income level if they have completed the minimum employment period with the employer. Those not working under an award or enterprise agreement, and whose salary is over the high income threshold, must rely on other legal means in order to challenge their termination, which we’ll outline below.
What is involved in defending an unfair dismissal claim?
Firstly it should be noted that in terms of unfair dismissal, some different rules apply depending on whether you’re considered a small business (less than 15 employees), including that an employee must have been working in the business for 12 months before being apply to apply for unfair dismissal. For all other enterprises, they must have been with the company for six months. An eligible dismissed employee must make their application within 21 days of dismissal.
In defending a claim, an employer should always first check that the employee is able to make the claim on jurisdictional grounds. If the employee resigned, for example, they’re unable to make an unfair dismissal claim. Contractors to the business and casuals may also be ineligible, although under s 384 of the Act, a casual may be eligible if they have the relevant period of service on a “regular and systematic basis” and with “a reasonable expectation of continuing employment by the employer”.
Perhaps most importantly, the unfair dismissal application can be challenged on the basis it is not made on reasonable grounds. This is where a pro-active workplace policy and sound, experienced legal advice can prove invaluable, ensuring you had genuine reasons for terminating the employee which followed the correct procedure outlined in a workplace agreement, for instance, and perhaps supported by a performance management policy against which the employee’s performance was objectively assessed before dismissal.
What is the situation with higher earners?
If you have had to dismiss an employee earning over $145K, you need to be aware that they can still seek redress through a number of other means.
The employee can make an adverse action claim under the General Protections provisions of the FWA, for example. What is adverse action? Any action which could be considered to affect the employee adversely, including disciplinary action such as a written warning, changing an employee’s work duties to their detriment, or discriminating between one employee over another, are examples. As an employer, the onus of proof lies with you to prove that the action was not a result of the employee attempting to exercise their workplace rights. It’s worth noting that when making a General Protections claim, only claims of unfair dismissal must be brought within 21 days of the initial decision.
If relevant, a high salary option could also make a claim for discrimination within a period of one year after the dismissal occurs. Unlike a General Protections claim, in this situation an employee must prove that the action taken against them was for an illegal, discriminatory reason.
Finally, someone earning over $145K could claim for breach of contract. This will generally require than an employment contract was in place between yourself and the employee, that it was valid and enforceable, and that the employee can prove the contract was breached in part or in whole. Breach will be considered on the basis of the actions of the employer; repudiation; an assessment of the continuation of the contract after termination of the employment.
However, even where there is no written contract, there are terms either express or implied which may give rise to legal action. In the absence of an express agreement as to how the employment may be terminated, there is an implied term that it may be terminated on ‘reasonable notice’ (such period as is reasonable at the time the notice is given), or summarily for serious and wilful misconduct.
How an employer should respond
Consulting legal professionals experienced in matters of employment law is essential if you’re facing a claim for unfair dismissal.
Whether you’re being asked for information by the FWC, need to formulate a response to the employee’s application, require guidance through the initial conciliation process, or need assistance creating company policies and procedures around employee dismissal, Delaney & Delaney can help.
Our employment lawyers are specialists in a wide range of workplace issues facing employers, including unfair dismissal claims. With a hard won reputation for excellence and integrity gained over 100 years of practice, contact us today on (07) 3236 2604 or by email admin@delaneyanddelaney.com.au.