One of the most important aspects to being an employer is knowing the intricacies of dismissals, which is when the employer ends the employee’s employment, and more particularly, if there are valid reasons for dismissal and if the dismissal process is fair. Dismissal is defined in the Fair Work Act 2009 (the Act), and there are many Fair Work Commission decisions to indicate that it can be risky for employers to terminate employment, so it is important that you understand the circumstances in which it may be appropriate to dismiss an employee.
Fair Reasons for Dismissal
As you would expect, employers should not dismiss employees without the appropriate grounds to do so, as you are essentially affecting someone’s livelihood. In a lot of instances, say if an employee behaves badly, you may be tempted to end employment contracts simply as a reaction to the event. However, the Fair Work Commission has determined that you should not dismiss any employee without a valid, sound, and defensible reason given the circumstances, and a fair dismissal process, in order to minimise the risks of a subsequent unfair dismissal claim. Valid reasons for termination are required for an employee who has access to unfair dismissal, for example if they have been employed beyond the minimum employment period, which is either six or 12 months, depending on the size of the business. Valid reasons are varied and come under four key areas:
Capacity – if the employee lacks the ability, or is incapable, of completing the the inherent requirements of their role;
Performance – if the employee’s skill level or quality of work is below what is required for the job, or if they are not meeting the standards outlined in their employment contract due to a lack of care or diligence;
Misconduct – when an employee partakes in behaviour that is out of line with company policy, goes against the terms of an employment agreement, or is unlawful; or
Redundancy – when an employer either decides they no longer need an employee’s job to be done by anyone, or the employer becomes insolvent or bankrupt.
Other reasons for dismissal may be valid if the employee does not have access to an unfair dismissal claim, provided those reasons don’t give rise to a general protections claim. The Fair Work Act 2009 provides protection from dismissal for employees in various circumstances, including in relation to workplace rights, industrial action and discrimination, amongst others.
How to Dismiss an Employee
Regardless of the reason for the dismissal, when considering whether a dismissal is unfair, the Fair Work Commission will assess whether it is “harsh, unjust or unreasonable”. What is harsh, unjust or unreasonable will depend on the circumstances of each case.
In most cases, it is accepted that an employer must follow a procedurally fair process PRIOR to terminating the Employee where you give reasons for the proposed dismissal as well as an opportunity for the employee to respond. This is because both the reason for the dismissal and the process adopted in coming to the decision to dismiss will be considered in determining whether a dismissal was a fair one.
Ideally, a fair and transparent dismissal process would be outlined and described in the employee handbook, and it should include notifying the employee in writing of the allegations against them in an invitation to a meeting to discuss the matter further and giving the employee an opportunity to respond to the allegations. There should be enough time between the invitation and the meeting for the employee to prepare a response and organise a support person if they wish.
Employees facing dismissal should have the chance to defend their case, and you should consider their responses before deciding on the balance of probabilities whether the allegations are substantiated, (ie. you believe based on the evidence and the employee’s responses that there is at least a 51% chance the allegations are true), but even then, a dismissal may still be considered harsh, unjust and unreasonable depending on the particular circumstances, and another outcome may be more appropriate.
It is important to follow a procedurally fair process and make sure that you are only dismissing employees for valid reasons. If you do not, an employee may have grounds for a claim of unfair dismissal.
As this is a complex area, we recommend you seek professional advice before considering dismissing an employee. We can help you better understand valid reasons for dismissal and help you put fair policies and procedures in place. Call us on 1300 651 415, for free initial advice, or book a Free Workplace Check here.
Frequently Asked Questions
What Are The 5 Fair Reasons For Dismissal?
In Australia, there are no legislated ‘5 fair reasons for dismissal’. There are many valid reasons why someone may be dismissed such as:
- Inability to fulfil the essential requirements of the role;
- Poor quality work performance or lack of skill, care or diligence;
- Misconduct or inappropriate behaviour at work;
- Redundancy, where the position is no longer required for the operation of the business.
Whether dismissal in the above circumstances is considered fair will depend on the specific circumstances (including the employee’s circumstances) and whether a fair process has been followed. Dismissing an employee can be tricky, and if employers don’t do it for a valid reason in a fair manner, they may potentially increase the likelihood of a successful claim against them.
What Can Be Classed As Constructive Dismissal?
A constructive dismissal is also referred to as a forced resignation and occurs when an employee has no real choice other than to resign as a result of the employer’s conduct. Constructive dismissal can include the acceptance of a resignation made in the ‘heat of the moment’ or under pressure, without the employer allowing some time to pass to allow the employee to cool off before accepting the resignation or confirming the employee’s intention to resign.
Whether a resignation will be found to be a constructive dismissal will vary depending on the specifics of the case. The onus is on the employee to prove that the employer forced their resignation. An example of constructive dismissal is when an employee resigns after not being paid their correct wages for four months.
What is Automatically Unfair Dismissal?
There is no such thing as an automatic unfair dismissal as each case needs to be considered on its individual merits and circumstances. Further, before a specific dismissal is determined by the Fair Work Commission to be fair or unfair, the employee must lodge a claim within a certain timeframe. There is no certainty that a claim will be lodged.
However, some key factors that may determine whether a dismissal is fair or not include, but are not limited to, the following:
- Whether or not a procedurally fair process has been undertaken (including an opportunity for the employee to respond to any allegations)
- Whether the reason for the dismissal is for a protected reason (such as the employee has exercised a workplace right such as taking sick leave and that sick leave is the reason for the dismissal)
- Whether you have evidence to support the reason for dismissal (for example a witness statement);
- Whether the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal
What is a Summary Dismissal?
The term summary dismissal is often used to describe a termination for serious misconduct, as provided in the Fair Work Act 2009 and in the Fair Work Regulations 2009. If terminating for serious misconduct the employer will not be required to provide an employee with a period of notice or payment of notice in lieu, though a fair process and written notification to the employee that their employment has been terminated are still required.
A summary dismissal is a severe form of termination as notice is not provided and should only occur when it meets the definitions set out in the regulations. An employer should be very cautious about enacting this right and should still ensure a procedurally fair process is undertaken.
Read more on summary dismissal here.
What Constitutes Wrongful Dismissal?
Wrongful dismissal is not a term found in the Fair Work Act. Wrongful dismissal is a term used in Australian contract law when a contract is breached (e.g. where the employer terminates the employee without satisfying the conditions of the contract) or there is a breach at Common Law.
Do Employers Have To Give Written Warnings Before Firing?
Whether warnings will need to be issued before dismissal will depend on the circumstances. Generally, employers should give employees warning and a reasonable chance to improve before finally dismissing them for poor performance or behaviour.
However, in the case of serious misconduct (summary dismissal), employers may not need to have provided previous warnings to the employee if the misconduct is serious enough, for example in the case of assault.
Can An Employee Take Leave During Their Notice Period?
An employee can request to take annual leave during their notice period as long as they follow the normal annual leave request process, and the employer agrees. If leave is approved this will not affect the notice period. Normal sick leave procedures will also apply during this period.
