Unfair dismissals – how to prevent claims

Following the re-introduction of the unfair dismissal laws from 1 July 2009 for businesses with less than 100 employees, there has been a significant increase in the number of unfair dismissal claims. There are some simple steps employers can take to prevent or effectively defend a claim that a termination was harsh unjust or unreasonable.

In the first instance, it is important to consider what Fair Work Australia will take into account in determining whether any termination of employment is harsh, unjust or unreasonable, these factors are:

1. whether there was a valid reason for the termination
2. whether the employee was notified of the reason
3. whether the employee was given an opportunity to respond
4. where the termination relates to unsatisfactory performance – whether the employee had been warned prior to the dismissal
5. whether there was an unreasonable refusal by the employer to allow the employee to have a support person present to assist in any discussions relating to the termination.
6. whether the process followed was reasonable, in light of the size of the business or presence of human resource managers
7. any other matters Fair Work Australia considers relevant

There are a number of exceptions to the types of employee able to make an unfair dismissal claim. These exceptions vary from those under prior legislation and it is important to seek advice to ascertain how the unfair dismissal laws currently apply to you or your employees.

The following are some basic tips that will help to avoid unfair dismissal claims:

1. Comply with the Small Business Fair Dismissal Code – Compliance with this Code provides small businesses with less than 15 equivalent full time employees with a complete defence to unfair dismissal claims. It also provides a great guide for larger businesses.
2. Keep detailed notes of discussions regarding conduct/performance – If an employee is given a verbal warning or there is a discussion about the employee’s performance or conduct, it is important that you keep detailed notes. These can then be used as evidence that issues were raised with the employee prior to termination.
3. Provide Written Warnings – In any Fair Work Australia conciliation conference or hearing it will be important to evidence that the employee was aware of issues in their performance and the company’s expectations moving forward. Following any meeting in which an employee is warned that their employment may be terminated, the employee should be provided with a letter or other written notice confirming the issues with the employee’s performance, any responses provided to the employee, the employer’s expectations moving forward and the potential consequences of further performance issues or misconduct. Warning letters should not be pre-prepared.
4. At the Final Meeting – To avoid unfair dismissal claims employers should go through the following process at termination meetings:

• Notify the employee of the meeting, and make them aware that the meeting is likely to discuss their continuing employment
• Ask the employee whether they would like to bring a support person to the meeting
• Discuss the on-going concerns with the employee’s performance or conduct, and allow the employee (or their support person) a chance to respond
• Make and keep detailed notes of the meeting
• Adjourn the meeting to consider the responses provided by the employee, and to seek advice where appropriate
  No decision to terminate should be made “off the cuff”
• Where the decision is made to terminate employment, advise the employee that their employment is to be terminated. The Employee should be advised whether they will be expected to serve their period of notice, or whether notice will be paid in lieu of service where notice is required
• An employee is required, pursuant to the Fair Work Act, to be provided with written notice of their termination. This written notice of termination should summarise the general reasons for termination
• Ensure all outstanding wages and leave entitlements are paid as soon as practicable, and the employee provided with a Centrelink Separation Certificate and statement of service

The most effective way to avoid a claim for unfair dismissal is to seek advice, from our Workplace Relations lawyers, when performance and conduct issues first arise. The effective management of performance issues will ensure that appropriate foundations are laid to avoid circumstances which may lead to a claim of unfair dismissal, or to effectively defend such a claim.

Authors: Katrina Sweatman and Louise Tolson