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SMS termination of employment by small business

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In an unfair dismissal application to Fair Work Australia it was held that the termination was a genuine redundancy despite the notification being by SMS.

The employee argued that she had been unfairly dismissed because:

  • At the time of termination she was in conflict with her employer;
  • She had not received any warnings or opportunities to improve her performance or conduct; and
  • Her employment was terminated by SMS message thus giving her no opportunity to respond to employer concerns.

The employer argued that:

  • The conflict with the employee had nothing to do with the termination of employment and the real reason for termination was redundancy caused by economic downturn; and
  • As a small business (less than 15 full time equivalent employees) it was subject to the Small Business Fair Dismissal Code (Code) which stipulates that termination for redundancy cannot be an unfair dismissal; and

The FWA found that the termination was for reason of bona fide redundancy of position and was consequently not an “unfair dismissal”. It was important that the employer’s “books” clearly established that there had been a significant downturn in business.

However, FWA confirmed that “it would be entirely inappropriate to convey any impression that (the employer’s) decision to inform (the employee) of the termination of her employment by SMS and then e-mail represents a fair or equitable approach”.

If you run a small business and follow the Code then you should be able to defend against unfair dismissal applications.

Following the Code is not particularly demanding. In the event that you wish to terminate an employee’s employment for performance or conduct reasons you need to consider the following:

  • Whether or not the employee has been working for you for 12 months or more. If they have less than 12 months service then they cannot make an unfair dismissal application.
  • Whether or not you have grounds for summary termination (i.e., the employee has done something very serious that justifies not only sacking them but also not giving the benefit of a notice period).
  • If you don’t have grounds for summary termination then you need to warn the employee that you are not satisfied with the employee’s performance and/or conduct and give them a reasonable opportunity for improvement prior to termination of employment. It may be appropriate to assist the employee to improve by, for example, providing training. In the event the employee does not improve, then you should ensure that you give the employee a “final chance” to respond to your reasons for your continued dissatisfaction prior to termination. You should also give the employee notice or payment in lieu of notice.
  • In the event that you don’t want anyone to perform a role within your organisation anymore you have a bona fide redundancy situation. If the redundancy is genuine then a decision to terminate cannot be challenged by an unfair dismissal application.

If you follow the Code you should not be vulnerable to unfair dismissal applications. However, please remember that to defend an unfair dismissal application you will need evidence. We suggest that you put performance management or redundancy communications with your employees in writing, keep notes of conversations and contact us if you are unsure of the appropriate action to be taken.

For further information please contact one of our Workplace Relations lawyers.

Author: James Hooper