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Employment Law Series: Disputes arising from employment termination – Unfair dismissal

As we all know, often termination is challenging and if not handled delicately can result in a dispute.  The common disputes that arise out of employment termination are:

  • Unfair Dismissal; and
  • General Protection claims.

In this article, we examine unfair dismissal.

 


 

Who can claim for unfair dismissal?

  • The unfair dismissal regime applies to national system employers and employees[1]. All employees and employers in the Australian Capital Territory are covered by the national system, no limitations apply (except for defence personnel) but this is not the same for other states.
  • The employee must have been employed with the employer for at least “the minimum employment period” which is generally 6 months or 12 months for a “small business employer”[2].
  • An employee covered by a modern award and/or an enterprise agreement.
  • Employees who are not covered by an award or enterprise agreement, and whose annual rate of earnings are equal to or more than $142,000 cannot bring an unfair dismissal claim.

 


 

What is unfair?

The Fair Work Act 2009 (Cth) (FWA) provides protection for certain employees from dismissal that is “harsh, unjust or unreasonable” (Pt 3-2). The phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd 30 as follows:

“….It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases, the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

 

In determining whether a dismissal was harsh, unjust or unreasonable, the Commission must consider the criteria in section 387 of FWA:

  • whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)
  • whether the person was notified of that reason;
  • whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;
  • any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal;
  • if the dismissal related to unsatisfactory performance by the person — whether the person had been warned about that unsatisfactory performance before the dismissal;
  • the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal;
  • the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
  • any other matters that the FWC considers relevant.

Examples of what the Court and Tribunals determine to be unfair are:

  • If an employer asks an employee to resign or creates a situation where the employee is given no other option but to resign; and
  • Failure to have or follow a proper disciplinary process.

 


 

Constructive dismissal

The possibility of a performance management process being initiated should not be used as a threat to encourage an employee to resign — doing so is likely to result in the resignation being characterised as a constructive dismissal.  John Steven Little v Petfood Processors (WA) Pty Ltd (2010) 62 AILR ¶101-216; [2010] FWA 5753

 

[1] S380 FWA

[2] s 382(a), 383 and 384

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