Managing employees can be complex, but a claim-free and happy workplace with motivated, loyal, and productive employees, is possible through a few simple steps and a fair and transparent process, free from discrimination, or harsh, unjust or unfair treatment.

Disciplinary action which is not handled correctly, can expose a business to legal risk. These risks include findings of unfair dismissal, adverse action (like unlawful termination) and discrimination. If a claim is successful, it can lead to damaging financial penalties by Fair Work Australia, the reinstatement of an unfairly dismissed employee and damage to the employer’s reputation.

Due to the minefield of legislation when it comes to Fair Work, terminating an employee is the greatest risk for employers to take. This is only because there is a chance that the employee could dispute the termination through one of four methods of claim:

  1. Unfair Dismissal
  2. General Protections/ Adverse Actions
  3. Breach of Contract
  4. Discrimination

If owners and managers are not careful, any of these methods of dispute can negatively impact businesses in some if not all the following ways;

  • Lost time,
  • Compensation and penalty costs (the compensation for unfair dismissal claims is limited to six months wages or up to $76,800k in compensation – as of the 1st of July 2020)
  • Legal costs,
  • Potential forced reinstatement of the staff member, and
  • Damage to the business’s reputation.

What about employees of less than 12 months?

Your employees can not bring an unfair dismissal claim in the first 12 months of their employment, which means they cannot take you to the Fair Work Commission simply because they believe their dismissal was “harsh, unjust or unreasonable”.

However, this does not mean you can dismiss an employee for any reason, even in the first 12 months of employment. You are still bound by the general protections in the termination provisions of the Fair Work Act.

Here are some examples when a business gets a dismissal wrong

  • Basic error costs employer over $10,000 in unfair dismissal case – In this case the employer lost an unfair dismissal case and was ordered to pay compensation to the employee in the amount of $10,695(approximately 13 weeks’ pay).  Adding insult to injury, the employee then sought a cost order against the business, arguing it had acted unreasonably during the proceedings. The costs application was successful, with the Commission found that the business acted unreasonably when it reneged on the “entirely reasonable” settlement struck during conciliation without any proper basis for doing so.  A costs order in the amount of almost $3,000 was ordered against the business (on top of the $10,695 in compensation).
  • An employer has been ordered to pay 17 weeks’ salary worth $22,882 as compensation to an employee who was unfairly dismissed by her employer after she refused to sign her revised employment contract. 
  • Farmer v KDR Victoria Pty Ltd T/A Yarra Trams[2014] FWC 6539 a tram driver was found to be wrongly accused of using his mobile phone while operating a tram after a flawed investigation into the incident, therefore there was no substantive and valid reason for dismissal. 
  • An employee was dismissed from after she was found asleep on the job the morning after the Melbourne Cup. She was sacked for being intoxicated at work, but the Commissioner found the business did not have sufficient evidence to prove she was drunk and did not provide her with an opportunity to respond to the allegation. She subsequently won the case and was awarded close to $7,000 in compensation.
  • A recent case involving a casual bottle shop worker who was unfair dismissed for not cleaning up a broken sign showed a casual worker can be covered by unfair dismissal protection if they can show they work regular shifts. The employee was awarded $7,000 in compensation after the Fair Work Commission ruled he was covered by unfair dismissal laws because he worked on a regular and systematic basis and could reasonably expect to work the same shifts each week.
  • If you encourage something, you can’t sack someone for it – an insurance broker awarded $300,000after he was sacked for passing out drunk in a hotel corridor. Employees in the company were expected to socialise and consume alcohol with clients and prospective clients and were routinely reimbursed alcohol expenses resulting from employee gatherings or entertaining clients.  Justice Taylor awarded damages of $296,650: $99,092 in lost salary, $118,182 for his lost retention bonus, $48,620 in long service leave and $30,755 in interest. – “If the employer is going to conduct a training conference that includes alcohol at dinner and paying for alcohol at a venue afterwards the employer needs to accept some degree of responsibility,” 

Did you know: The Commission has the discretion to order one party to an unfair dismissal matter to pay the other party’s legal or representational costs, but only where the Commission is satisfied the matter was commenced or responded: vexatiously or without reasonable cause, or. with no reasonable prospect of success.

Employers often tell us that the system is geared towards the employee BUT NO –you’re your case right and you, as a business can get orders awards in your favour too – In Green v Toll Holdings Pty Ltd (2015 / 8793) – The Fair Work Commission made an order requiring an employee who filed an unfair dismissal claim against his former employer “without reasonable cause” to pay the employer’s legal costs of $18,618.31.

Key Takeaways

  • Unfair dismissals can be upheld where terminations are substantively unfair, that is where there is no valid reason to terminate employment.
  • Procedural fairness is also an important consideration in determining whether are dismissal is unfair.
  • The FWC also takes into consideration whether the termination is otherwise unduly harsh in relation to the effect on the dismissed employee.

This is where a disciplinary manual can guide businesses safely through the disciplinary process step by step through the provision of templates, tips and advice and to ensure procedural fairness. If this manual is followed, you will be drastically reducing the risk of having an unfair dismissal claim filed against your business. However, it must be said that this manual is paired best with expert advice to ensure that each unique case is taken into full consideration.

For a disciplinary process to be considered effective and risk-free, business owners and managers need to understand:

  • What can be viewed as an unfair dismissal;
  • How and when a business can lawfully dismiss an employee;
  • How a business’s policies and procedures can help you manage dismissals in the workplace;
  • The alternatives to a dismissal; and
  • The notice and termination compensation requirements.

Fresh HR Insights has assisted various business owners in the preparation of unfair dismissal claims while also acting as an agent in the conciliation process. Even so, we sincerely hope that you adhere to our procedures so that this is prevented. We can help make sure that you have the right documentation, the right process, and approach all dismissals as per the Fair Work Australia Legislation. Do you need practical support? Click here to book a consultation with us today,