Avoiding Unfair Dismissal Claims

All employers will need to ensure that they are acting within the intention of the Fair Work Act and thereby limiting their exposure to unfair dismissal claims.

Who cannot claim?

1. Exempt Employees: Employees who earn more than the high income threshold, which in 2018 is $142,000 base salary per year, in the main are not eligible to make an unfair dismissal claim under the act. (There are some exceptions to this

2. Contractors, staff employed less than 6 months (or 12 months for small business)

3. Staff on probation, employees dismissed for serious misconduct, casual employees, employees assigned for a fixed term, task or season.
Minimising the risk:

When terminating an employee it is important that the employer:

1. Has valid reason: The employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job. Any other reason may fall into the category of unlawful dismissal.

2. Demonstrates procedural fairness: The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

3. Demonstrates proportionality: Does the crime fit the punishment? The act of dismissal must be proportionate to the operational risk to which the employee’s conduct or poor performance exposes the employer. Otherwise, the dismissal may be deemed to be “harsh”.

4. Understands what constitutes gross misconduct: Acts of gross misconduct include theft, fraud, verbal violence include abuse, physical violence, breaches in confidentiality, breaches of the OH&S act etc are subject to summery dismissal with no notice period required.

If you are a small business then you may which to review the fair dismissal code provided by the Fair Work Ombudsman which provides a procedural checklist to ensure a fair dismissal. Employees, who wish to make an unfair dismissal claim, must do so within 60 days of the dismissal.