How to Conduct a Fair Dismissal
There are many regulations around dismissal. Hence, one of the most important aspects of employing staff is knowing how to perform a fair dismissal and understand exactly when it is appropriate to dismiss an employee.
Fair Reasons for Dismissal
As an employer, you cannot simply dismiss your employees without appropriate grounds to do so. (Or “valid, sound, and defensible reason” according to the act). These reasons generally come under three key areas:
- Performance / Capacity – The employee does not meet the standards or expectations of the job requirements. (e.g. productivity goals or can’t perform a task)
- Conduct – The employee’s behaviour is below your standards – This could be a series of events over time (e.g. Lateness) or a single event of serious misconduct. (e.g. stealing)
- Redundancy – The employee’s job doesn’t need to be done by anyone. (e.g. introduction of technology or slowdown in sales)
How to dismiss an employee fairly based on performance or conduct
Regardless of the reason for the dismissal, you need to follow a fair and transparent procedure for the dismissal.
The often-quoted ‘3 warnings before dismissal’ is not a legal requirement. The Fair Work Act does not set out any minimum number of warnings that must be issued for a dismissal to be considered fair. Instead, the number of warnings given to an employee will depend on the facts and circumstances of each case. For example, if an employee has committed gross or serious misconduct, you don’t need to give any warnings before dismissal.
Based on past case law by various industrial courts and tribunals, the disciplinary procedure of issuing warnings etc, would appear adequate on the issue of ‘procedural fairness’.
An employee that has been warned, must be given a reasonable chance to rectify the problem before being dismissed. This could involve counselling or providing additional training. Rectifying the problem might involve the employer ensuring the employee knows the job expectations. In the normal course of events, failure to warn an employee that their conduct or behaviour may lead to dismissal would be considered a major omission by FWA.
In discussions with an employee in circumstances where dismissal is possible, the employee should be offered to have a support person present to assist.
Always document your actions because:
You may be required to provide evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), file notes or signed witness statements.
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.
Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures.
Keep in mind the severity of the act and other factors will determine if you have reasonable grounds to dismiss an employee without notice.
Small Business Fair Dismissal Code
The Fair Work Act has specific rules covering the dismissal of employees of small businesses. The purpose of the Small Business Fair Dismissal Code is to give small businesses a framework to follow during the dismissal process to ensure the procedure is fair. If properly followed, the code also provides small businesses protection against unfair dismissal claims. Click here to download the checklist.
What is a small business?
A small business is defined as an organisation with fewer than 15 employees (by headcount). Casual employees are not counted unless they are engaged on a regular and systematic basis. Please also note that associated entities are taken to be one entity.
Who can make an unfair dismissal claim?
Not all employees are eligible to make an unfair dismissal claim. Employees excluded from accessing the unfair dismissal laws include:
- Employees who have not completed the qualifying period of employment of at least 6 months with the employer where the employer is not a small business or 12 months where the employer is a small business
- Employees not covered by a Modern Award or agreement whose guaranteed annual earnings exceed the ‘high-income threshold’.
- Employees employed for a fixed term, specified task or season
- Employees dismissed in cases of redundancy
- Contractors
Applications to claim unfair dismissal must be lodged with FWA within 14 days of the dismissal taking effect, although there is some discretion for FWA to extend the time in exceptional circumstances.
What is the maximum payout for unfair dismissal?
FWA has the power to order reinstatement, which is the primary remedy, or compensation where reinstatement is considered inappropriate. The maximum amount that an employee may recover is capped at $79,250, which is the lesser of 26 week’s pay at the current high-income threshold ($158,500 as of July 1st 2021)
WARNING
Dismissing an employee is a serious step, so make sure that you seek appropriate advice prior to taking any action.
Unsure of what you need to do?
Our team is here to help. Contact us here today or call 0419 659 388 for a free consultation.