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Unfair Dismissal: When is Fair Fair?

Unfair dismissal is a legal action under the Fair Work Act 2009 available to employees who have had their employment terminated in a situation where their sacking is harsh, unjust, or unreasonable. Unfair dismissal is not the same as unlawful dismissal or wrongful dismissal. As ever, the devil is in the detail, so let’s take a closer look.

Unlawful Dismissal

You probably know already that an employee can only be dismissed for lawful reasons. It is unlawful to sack someone –

  • Because they have exercised a right they have under their terms and conditions of employment or under the general law, for example bringing an action in the Fair Work Commission or complaining to the Fair Work Ombudsman.
  • Because they are (or are not) a member of a trade union or are carrying out trade union activity which is allowed for under their terms and conditions or by the law.
  • Because of their gender, race, religion, or sexual orientation.
  • Because they are absent with a bona fide health reason.

Those are the major no-nos of unlawful or wrongful dismissal, though of course there is a whole forest of further detail. Don’t forget that, in some circumstances, putting an employee in a position where they have to resign can also be legally regarded as ‘constructive dismissal’.

Unfair Dismissal

But Australian employment law doesn’t leave dismissal there. It also forbids unfair dismissal, or sackings which are “harsh, unreasonable or unjust”. This phrase opens the field a lot wider than unlawful dismissal. A termination may be lawful, but still be unfair because it is harsh, unreasonable, or unjust. The term ‘a fair go all around’ is often seen in old industrial law cases. It refers to the thrust of our employment law that both employee and employer deserve a ‘fair go’ from each other, and a fair day’s pay for a fair day’s work. The essence of the idea is there in the unfair dismissal provisions of the Fair Work Act 2009. Section 394 allows an employee to bring an action against their employer if their dismissal was “harsh, unjust, or unreasonable”.

Now, before you start thinking that it’s impossible to sack anyone in Australia, take a breath and put down that Daily Telegraph. Here are 6 tips for employers contemplating ending the retainer of one of its employees:

  1. The unfair dismissal provisions can only be used by employees with at least six months service, or twelve months if they work for a small business with less than 15 employees.
  2. If the business has more than 15 employees and terminates somebody who then brings an action under section 394 of the Fair Work Act 2009 (Cth) for unfair dismissal, the Fair Work Commission will look at the whole situation between the employer and the employee. Where the business has less than 15 workers, the law regards any dismissal which is in line with the Small Business Fair Dismissal Code as being fair. The Code just outlines the proper way to deal with employees if there are problems and reflects the same principles which apply in cases involving larger employers.
  3. An employer is always entitled to dismiss somebody summarily (straight away, without notice) if they have committed serious misconduct like theft from the business, violence against co-workers, or wilful and dangerous OH&S breaches.
  4. The boss does not need to prove misconduct to the criminal standard (beyond reasonable doubt), only to the civil standard (more probable than not). Also, if an employee is charged with or convicted of a criminal offence, usually they can be let go without notice.
  5. If business is bad or the work of the business changes, the employer can retrench or make redundant any workers whose work is no longer needed. It must be a genuine redundancy and follow the redundancy procedures which apply, either under the worker’s terms and conditions or by law. Redundancy payouts are calculated based on years of service.
  6. Employees can also be sacked because they’re not doing their job properly, but the employer has to raise the matter with them as soon as possible and then allow them a fair time to come up to scratch. If the boss has meetings with workers about unsatisfactory performance, employees should be allowed to bring a support person who is not a lawyer acting for them. The employer has to be as precise as possible about the performance issue and define what the worker needs to achieve the required performance standard.
  7. Although the Fair Work Act 2009 or the Small Business Fair Dismissal Code do not insist on written allegations of unsatisfactory performance or conduct, they are usual. Contrary to popular belief, no ‘three strikes’ rule about the number of warnings exists, but a reasonable explanation of the problem and a reasonable time to straighten up and fly right have to be given before firing somebody for poor performance.

What Happens if the Dismissal is Deemed Unfair?

The remedies which can be ordered by the Fair Work Commission if it finds the termination to be unfair are:-

  • Reinstatement to the position or a comparable one. This is extremely rare because the FWC won’t put an employee and employer back together if there has been a breakdown in the relationship, which is very often the case.
  • They can also order payment of compensation of up to six months of pay. Full six-month payouts are rare and usually only given for very long-serving employees or very harsh treatment.
  • The most common compensation payouts for unfair dismissal are in the range of 4-12 weeks of pay.

What Should You Do If You Find Yourself in a Workplace Dispute?

Keep good records with copies of documents and diary notes in case the drama escalates. Don’t take any action without considering your legal position. Do not say or do anything in the heat of the moment!

Get onto us and we can advise you.

Disclaimer: N.B. The articles published on this website are general information only and are not intended to be definitive advice on the subject area. They do not constitute legal advice and should not be relied upon as such. For legal advice relating to your particular situation, please contact us today and talk to a business lawyer.

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