Current unfair dismissal laws came into practice on July 1, 2009. 

Under the Fair Work Act 2009 (FWAct), employers employing more than 15 employees are exposed to unfair dismissal laws, while employers of fewer than 15 employees must comply with the Small Business Fair Dismissal Code.

In order to defend a claim of unfair dismissal, an employer must have proper disciplinary policies and procedures in place which allow proper investigation of any under-performance, and provide the chance for an employee to achieve set performance criteria.

A person will be considered unfairly dismissed if  the Fair Work Commission is satisfied the dismissal was harsh, unjust, or unreasonable.

Principles of ‘fairness’ and ‘reasonableness’

For employers with 15 employees or more, the principles and body of case law regarding the ‘fairness’ or ‘reasonableness’ of a dismissal has been determined over the years by industrial courts and tribunals.

To defend a claim of unfair dismissal, an employer must have proper disciplinary policies and procedures in place which allow proper investigation of any under-performance, and the chance for an employee to achieve set performance criteria. However, if a matter does proceed to arbitration, the question of the ‘reasonableness’ or ‘fairness’ of a dismissal is often subject to the discretion of the individual tribunal member.

To be eligible to make an unfair dismissal claim, an employee must have been continuously employed by their employer (of 15 or more employees) for at least six months or, in the case of an employee whose employer employs fewer than 15 employees, 12 months’ continuous service with the employer.

Warning procedure

A warning procedure should be adopted by an employer in circumstances where the employee is not performing to an agreed satisfactory level.

Warnings are probably the most common form of discipline in a workplace. A warning can be verbal or written, which an employer delivers to an employee with a view to alerting the employee to certain actions which were not consistent with the employee’s duties.

Written warnings must be unambiguous. A disciplinary meeting may only be taped with the employee’s permission. A warning procedure is not relevant where an employee is instantly dismissed for ‘misconduct’.

Records are important, so a written record of warnings and follow-up should be recoverable as a matter of practice.

Matters that may result in warnings

Matters that may result in a warning include performing designated work poorly, refusal to carry out reasonable directions, lateness or chronic absenteeism, abusive or discourteous communication with an employer or manager/supervisor of the business or another employee, or presenting to work in a condition rendering the employee incapable of performing their designated tasks.

However, the seriousness of an employee’s actions may justify a ‘first and last warning’ or, in cases of serious misconduct, instant dismissal.

Good practice

A warning plays a critical role in the context of a fair dismissal, and an employer should be careful to warn an employee if there is a prospect the employee’s conduct could lead to a dismissal.

This is not an unbreakable rule, but an employer should be very reluctant to depart from this practice of giving an appropriate warning.

Failure to warn employees that their conduct may lead to their dismissal is usually considered a major employer omission by industrial tribunals. This means there should be a ‘written trail’ which tracks the relevant incidents leading up to a dismissal.

Any warning should not be restricted to the specific issue at hand, but should also cover other future behaviour which is deemed unsatisfactory and justifies the issuing of a second or subsequent written warning.

A disciplinary process should commence with a counselling session, which should be a flow-on from a prior performance evaluation meeting.

The employee must be informed about all problems, be given an opportunity to respond, and allowed a reasonable period of time to remedy them.

The employee should be told this is the first warning in a process which may end in termination.

Proper documentation is essential. It is advisable to have an employee sign the notes of the counselling session, although the employee is not legally obliged to do so. The employee should be given the opportunity to have a support person present, chosen by the employee.

Subsequent written warnings should refer to each previous warning.

How long is a warning valid for?

Under unfair dismissal law, there is no statutory period of time in which a warning (verbal or written) remains valid.

The period a warning remains enforceable will depend on a number of factors, including the seriousness of the problem and the nature of the offence. Between three and eight months is usually appropriate, but will obviously vary depending on the circumstances, such as how often the criteria for satisfactory performance can be applied to an employee.

A ‘shelf life’ of a year or longer for a written warning would be considered extreme in most cases before a tribunal.

The warning should have a review date. When setting a date for review, the seriousness of the problem and the length of time the behaviour has been apparent will determine the appropriate length of a warning.

If the employee reaches the review date without re-offending in any way, the warning should be withdrawn and the employee’s employment record regarded as ‘clean’. If the employee re-offends or other performance-related issues arise after the review date, the employer could re-issue another ‘first’ warning with reference to the previous warning.

Genuine redundancy and redeployment

Under the FWAct, a person’s dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the employee to be redeployed within the employer’s enterprise, or the enterprise of an associated entity of the employer. For employers with larger workforces, this new definition is potentially an area open to dispute.

Small Business Fair Dismissal Code

The Small Business Fair Dismissal Code  applies to employers with fewer than 15 full-time employees. 

Under the code, small business employers must ask the following eight questions to determine whether a dismissal is fair. This will help owners to determine if they are keeping within small business dismissal laws. These questions are:

1. How many full-time equivalent employees are employed in the business? If under 15 full-time employees, the code applies.

2. Has the employee been employed in this business as a full-time, part-time, or casual employee for 12 months or more? If no, the employee cannot make an unfair dismissal claim.

3. Did you dismiss the employee because of a genuine redundancy? If yes, explain the reason for the redundancy (for example economic downturn, introduction of new technology therefore requiring less staff, or another such reason) and whether redeployment was considered.

4. Do any of the following statements apply? I dismissed the employee because I believed on reasonable grounds that: a) the employee was stealing money or goods from the business, b) the employee defrauded the business, c) the employee threatened me or other employees, or clients, with violence, or actually carried out violence in the workplace, d) the employee committed a serious breach of occupational health and safety procedures.

5. Did you dismiss the employee for some form of serious misconduct? If yes, what was the reason?

If you answered yes to any question in parts 3, 4, or 5, you are not required to answer the following questions.

6. Did you dismiss the employee because of the employee’s unsatisfactory conduct, performance or capacity to do the job? If yes, a) did you properly warn the employee (either verbally or in writing) that the employee was not doing the job properly and would have to improve his or her conduct or performance, or otherwise be dismissed? b) did you provide the employee with a reasonable amount of time to improve their performance or conduct? If yes, how much time was given? c) did you offer to provide the employee with any training or opportunity to develop their skills? d) did the employee subsequently improve their performance or conduct? e) before you dismissed the employee, did you tell the employee the reason for the dismissal, and give them an opportunity to respond? f) did you keep any records of warning(s) made to the employee, or of discussions on how their conduct or performance could be improved?

7. Did you dismiss the employee for any other reason? If yes, what was the reason?

8. Did the employee voluntarily resign or abandon his or her employment? If yes, please provide details.

Although this checklist only applies to employers who employ fewer than 15 full-time employees, it could also be applied as a minimum requirement for all employers with respect to unfair dismissal laws.