It is true that the great majority of unfair dismissal claims in Australia are resolved before they reach a hearing with the Fair Work Commissioner. However, these disputes can still end up costing companies significant time and money.

A person has been dismissed from their employment when:

  • Their employment has been terminated at the initiative of the employer, or
  • They have resigned their employment but the resignation was forced by something the employer did.

 What Can Be Considered An Unfair Dismissal?

We can say that an employee has been unfairly dismissed when the Fair Work Act labels it as such. If a dismissal is found to have been:

  • Unreasonable, unjust, or harsh;
  • Was not a genuine redundancy;
  • And was not consistent with the Small Business Fair Dismissal Code.

 2018-2019 FWC Annual Reports

The Fair Work Commission’s (FWC) annual reports highlight emerging trends within employment law in Australia. The latest report for the 2018-2019 financial year advises that employers have greater regard to the general protections provisions when interacting with members of the workforce.

To summarise the findings within these reports, there has been significant growth in the number of general protections claims over the previous financial year. It is interesting that while the number of applications lodged and finalised has decreased (5,287 in 2017-18 down to 4,932 in 2018-19), an increasing number of agreements are only achieving approval once there has been a provision of undertakings. Here are some of the key findings regarding unfair dismissals within this report:

  • 13,422 applications for unfair dismissal were finalised, 78% of which were resolved after a conciliation.
  • Just 5% of applications were resolved by the FWC. Only 19% of which were found to be harsh, unreasonable or unjust dismissals.

The Costs

The costs that a claim such as this can have on your business extends further than just the monetary kind. Some of these can include the cost of disruption to the business, management time, the cost of legal representation, and more still.

On average, an unfair dismissal case can cost a business up to $13,500.

One case in August 2017 saw a basic error cost an employer more than $10,000 in an unfair dismissal case.

A few of the claims within the case include the business having failed to appreciate its exposure to an adverse outcome leading to an aggressive stance, reneging on a settlement agreement, a failure to maintain communication during settlement discussions, a number of failures to produce witnesses, damaged credibility of statements, and more.

The outcome of this case was an unsurprising loss and an unfair dismissal payout of $10,695 (roughly 13 weeks’ pay) to the dismissed employee. The costs did not stop with this amount, there was an additional $3,000 ordered against the business due to indiscretions and reneging on the settlement agreement.

Behind the scenes, there were no doubt plenty of other overheads proving the importance of remaining compliant with the legal system and having access to specialist advice.

Save yourself the headache and the hidden costs of remedy payments by seeking expert advice. Fresh HR Insights is well-versed in the legal ins and outs of the commerce sector and can help your business remain on the straight and narrow and avoid these kinds of costly expenses.

We have helped various business owners across various industries in the preparation of unfair dismissal claims and acted as an agent in the conciliation process. The ideal however is don’t go there in the first place and ensure you have the right documentation, the right process and approach all dismissals fairly and in line with legislation. Need pragmatic support – call Fresh HR Insights.