What is wrongful termination?
Wrongful termination, also known as unlawful termination, happens when an employer terminates an employee’s contract without just cause.
Australian workplace laws protect employees from being unfairly dismissed in a harsh, unjust or unreasonable way. Violation of these laws can lead to the offending employer paying the victim a sum of money as compensation and a separate government fine.
Why are employees wrongfully terminated?
Wrongful termination can occur for a range of reasons. However, it normally involves an employer dismissing an employee in a way that breaches the terms of an employment contract or national and state labour laws.
In some cases, terminating an employee without the proper amount of severance pay or termination notice can also be considered wrongful termination.
Who can apply for wrongful termination?
The general protections of the Fair Work Act (2009) offer national system employees protection from unfair dismissal. The general protections are intended to:
Uphold workplace rights.
Protect freedom of association.
Protect against workplace discrimination.
Give effective relief for employees who have been otherwise victimised or experienced unfair treatment.
For more information about the general protections, see section 336 of the Fair Work Act.
If an employee is not eligible to apply for unfair dismissal under the general protections provisions, they can apply for wrongful termination.
When should an employee apply for wrongful termination?
Employees can make a wrongful termination application to The Fair Work Commision if all the following apply:
They are dismissed from a job.
The employer dismisses them for prohibited reasons.
The employee is not a national systems employee, or they are a national system employee and not entitled to make a general protections dismissal application because the reason for the dismissal is prohibited under the Fair Work Act.
It’s also important to note that employees applying to The Fair Work Commision for wrongful termination must:
Have worked with the same company for a minimum employment period of at least six months.
Have worked with the same company for a minimum employment period of at least a year, if the employer is a small business with fewer than 15 employees.
Do you understand the Fair Work Act?
Understanding the Fair Work Act (2009) can be complicated, but as an employer it’s vital that you grasp all the facts and remain compliant with workplace laws. If you’re unsure of where your business stands, Employsure’s FREE Fair Work E-Guide gives you a simple breakdown of everything you need to know.
Prohibited reasons for termination
Section 772 of the Fair Work Act lays out the following prohibited reasons for terminating an employee’s contract:
They are temporarily away from work with illness or injury.
They are (or are not) a member of a trade union.
They participated in trade union activities outside business hours.
They participated in trade union activities during business hours with the employer’s consent.
They are seeking office as, acting or have acted as, a representative of employees.
They filed a complaint or participated in legal proceedings against the employer.
The employee’s race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction, or social origin.
They plan to take or have taken maternity or other parental leave.
They are volunteering in an emergency management activity and temporarily absent from work for a reasonable period.
Examples of wrongful termination
Now that you understand what wrongful termination is, you might be wondering how it plays out in the workplace. Here are some examples:
Discrimination – Australian employment laws clearly prohibit workplace discrimination based on protected attributes. For example, if an employer fires an employee because they express a political opinion the employer doesn’t agree with, this could easily be interpreted as wrongful termination. In this case, the employee would be covered by general protections.
Illegal acts – If you ask your employee to commit an illegal act and then terminate them because they refuse, this could be considered wrongful termination. An illegal act might be asking the employee to avoid a tax payment, discriminate against another employee, or cover up another workplace law violation. If the employee reports an illegal act, or threatens to, and you respond by dismissing them, this may also be considered wrongful termination. In this situation, the employee may not be covered by general protection, but can apply for wrongful termination under the Fair Work Act.
Breaches of contact
Before deciding to terminate an employee, check their contact and employment agreement. To avoid any wrongful termination or unfair dismissal claims, it’s crucial to make sure that the grounds and process of termination do not breach any binding agreements.
A contract or employment agreement will normally clarify the steps you must take before terminating an employee. These might include giving the employee two verbal warnings and a written warning before being able to justly end their employment.
If steps are agreed upon in writing and you don’t follow them, you open the possibility of the employee raising a case of wrongful termination.
What should wrongfully terminated employees do?
Employees who believe they may have been wrongfully terminated should follow these five steps:
Step 1: Check the employment contract – Employees should carefully check their employment contract for any terms of dismissal. If the termination reasons or process are inconsistent with the terms of the contract, this could form the basis of the employee’s claim.
Step 2: Request a dismissal statement – The employee should ask the employer to lay out the grounds for their dismissal in writing. If the grounds described represent a breach of contract or law, this could also bolster the employee’s case for an unlawful termination claim.
Step 3: Raise a case with human resources – If the employee can supply enough evidence to prove that the termination is wrongful, they may be able to resolve the issue internally by raising a case with the company’s human resources department.
Step 4: Seek legal advice – If the employee is unable to settle the case with the employer, it may be time to seek out professional legal advice. An employment lawyer will be able to establish if the dismissal constitutes wrongful termination. They can also advise on next steps and help the employee build a legal case.
Step 5: Apply for wrongful termination – When all else fails, an employee can file a complaint with The Fair Work Commision. The employee needs to check their circumstances and eligibility, since their complaint will either fall under general protections or wrongful termination laws.
Employees should make their complaint within 21 days of termination. After this period, complaints are unlikely to be reviewed by the board.
As an employer, you should always follow the correct procedures and legislation before you terminate an employee. Employsure are experts in all aspects of employee dismissals. Call our FREE 24/7 Advice Line today on 1300 651 415 to get all your questions answered.
Frequently Asked Questions
What happens if an employee wins or loses a case?
If your employee wins a wrongful termination case, The Fair Work Commision may demand that you pay the employee compensation. Additionally, you may have to pay a separate fine to The Commision. If the employee loses the case, you do not need to take any further action.
What powers do The Fair Work Commision have?
The Fair Work Commision sets and enforces national employment standards. The Commision is an independent organisation that protects the rights of both employers and employees.
The Commision has the powers to investigate workplace complaints concerning a variety of issues. After analysing all the relevant evidence in relation to the Fair Work Act (2009), The Commision will give a case verdict and can issue orders and penalties.
What is constructive dismissal?
Constructive dismissal, sometimes called constructive resignation, happens when an employee resigns from their role, but the termination of employment is deemed to be initiated by the employer. Cases of constructive dismissal are often the basis of unfair dismissal and wrongful termination claims.