Guest post by Ross Jackson

This article originally appeared in Leadership Matters, AIM’s bi-monthly magazine exclusively for AIM Members.

Unfair dismissals continue to keep the Fair Work Commission busy. Nearly 14,800 unfair dismissal applications were lodged last year, consistent with the previous year, but a 5 per cent increase on 2011-12. Most cases are settled before hearing but they are costly, unproductive distractions. Clearly unfair dismissals aren't going to go away.

CAN ANYONE CLAIM?

Not everyone has access to the unfair dismissal jurisdiction. But even for those usually denied access, there are some traps for employers. Staff earning more than $133,000 per year are generally denied access to the unfair dismissal jurisdiction unless they are covered by an award or enterprise agreement.

Casuals who have worked on a regular and systematic basis for more than six months are likely to have access to unfair dismissal.

A minimum employment period exists before employees are able to bring an unfair dismissal claim; six months for most employers and 12 months for small businesses. Employers should take care to make an informed decision about whether to keep on a new employee before this period expires.

WHAT IS UNFAIR?

A termination will be unfair if it was harsh, unjust or unreasonable. The Fair Work Act 2009 sets out factors that the commission must take into account when determining if this is so, including:

• whether there was a valid reason related to the employee’s capacity or conduct
• whether the employee was notified of that reason and given an opportunity to respond before a decision was made to terminate
• if the reason for dismissal is unsatisfactory performance, whether there has been a warning about it

While no one factor is determinative and unfair dismissal cases notoriously turn on their own facts, there are a number of areas where employers make mistakes in managing terminations.

WHERE IT GOES WRONG

Most employers understand that a valid reason must be one that is not “capricious, fanciful, spiteful or prejudiced” and must be “sound, defensible or well founded”. (Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371). But they sometimes fail to realise that a termination may still be “harsh” even when a valid reason exists.

For example, a recent case involved the termination of truck drivers for breaching their employer’s mobile phone policies. The commission found that the employer had terminated the employees harshly by not having sufficient regard to the individual circumstances of the drivers and the incident in question.

By simply applying the 'zero tolerance' policy, the employer had terminated the employees harshly. So, although breaching policy may amount to a valid reason, the termination might still be deemed harsh.

The answer lies in being able to demonstrate careful consideration of the individual incident, its surrounding circumstances and any other mitigating factors such as the employee’s length of service and previously clean record. Another area that causes problems is where the employer creates a document trail (often via internal emails) that shows the decision to terminate was made before the employee had an opportunity to respond to the alleged misconduct or underperformance. Wording used in internal communications is critical.

Allegations are just that – they are never reasons for termination until the employee has been given a full opportunity to respond and that response considered. Until then, the employer can only reach a preliminary view that termination might be justified, subject to what the employee might say about the matter. Too many employers still contemplate “making him/ her redundant” as a solution to what is, in truth, a performance or conduct issue. This is never a solution unless it so happens that the position the employee occupies is actually no longer required to be performed by anyone. Redundancies are about positions – what happens to the person who occupies that position is a separate question.

A rule of thumb is to ask whether the same result would have applied irrespective of who happens to be performing the job at the time.

Ross Jackson is a partner at Maddocks.

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