Employment Relations Business Improvement Report
MERV SALTMARSH ER & Business Improvement Manager
Risk Management Dismissals The decision to dismiss an employee is an area of the employment relationship that requires an understanding of a wide range of legislative and other obligations of an employer. The decision is also a significant one in terms of the effect on the employee and the business. Not surprisingly, a significant amount of resources, time and effort needs to be devoted to the associated decisions and processes. Knowing the legal risks and obligations involved is essential. WHAT OBLIGATIONS ARISE? Unfair dismissal laws, which are set out in the Fair Work Act 2009 (Cth) (FW Act), apply to a large number of Australian employees and generally give those employees the broadest protection from having their employment terminated. Therefore, a good starting point is to consider whether or not an employee is covered by unfair dismissal laws. Who is covered by unfair dismissal laws? Employees who are earning up to $142,000 (not including superannuation) and incentive bonuses or payments (indexed for CPI each year) are covered by unfair dismissal laws. In addition, employees who are covered by awards or enterprise agreements made under the FW Act or its predecessor, irrespective of their earnings, will be covered by the unfair dismissal laws. This is the case except for: • Certain casual employees • Employees who were dismissed during their first six months of employment (or 12 months in the case of small employers) • Employees engaged on a specified term contract if the ending of the employment is due to the contract not renewed at expiry • Certain employees engaged under traineeships. If considering dismissing an employee, ask what obligations will impact upon the decision. • Comply with any unfair dismissal laws that apply and any workplace policies, industrial agreements or contractual provisions that may impact upon dismissal or discipline of employees. • Identify any payments the employee is entitled to on ending of the employment. Under unfair dismissal laws, an employer cannot dismiss an employee unless they have a valid reason connected with the employee’s conduct, capacity or because of a genuine redundancy. • In addition, if the dismissal is related to conduct or WHAT DO UNFAIR DISMISSAL LAWS REQUIRE? • KEY POINTS •
capacity, it may still be unfair if the employee is not notified of the reason for their dismissal, not given an adequate opportunity to respond to those reasons, not provided with a warning in certain circumstances, not allowed a support person to assist them in discussions about the hearing or if the dismissal was otherwise procedurally unfair. • A valid reason is one that is sound and defensible and related to the employment. Except for serious misconduct (e.g. theft), if dismissing an employee because of inadequate performance or misconduct, an employer may need to establish more than one incident of misconduct or poor performance to justify the dismissal. • In addition, the existence of prior warnings about the employee’s misconduct or poor performance will normally be necessary in the sense that the employee has been made aware that failure to improve their performance or conduct may jeopardise their ongoing employment. • In the case of the valid reason, employers need to establish the misconduct on the “balance of probabilities”. A rigorous investigation of the circumstances is often a key element of satisfying that burden of proof. • Employers need to ensure that they have sought and taken into account all relevant evidence and properly tested it and that, prior to any dismissal decision, they have given the employee an opportunity to respond to any allegations against them, including having given them sufficient detail of the matters that may form the basis for dismissal. A dismissal that is found to be unfair may lead to the employee being reinstated to the position that they were employed in prior to the dismissal or to another position on terms and conditions no less favourable than that position. • This may include an order that the employee be appointed to an associated entity of the employer • Where reinstatement is ordered, Fair Work Australia can make an order that continuity of service of employee is not broken by the dismissal and that they be compensated for any loss of pay suffered between time of dismissal and reinstatement. • If Fair Work Australia considers reinstatement is inappropriate, it may order payment of up to a maximum of six months’ pay • In determining the amount of compensation, Fair Work Australia must take all relevant circumstances into account, including the employee’s length of service, the remuneration that the person would have received had they not been dismissed. • Income reasonably likely to be earned by the person since the dismissal.
REMEDIES UNDER UNFAIR DISMISSAL LAWS •
12 enquiries@tha.asn.au 03 6220 7300
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