Tips for employers: unfair dismissal claims and practical ways to avoid them

Source: AMMA

Under the Fair Work Act 2009 (Cth) (Act), eligible employees of 'national system employers' can lodge a claim with the Fair Work Commission (Commission) on the ground that their employment dismissal was unfair. Between 1 July 2018 and 31 December 2018, over 6,800 unfair dismissal claims were lodged with the Commission. That's an average of over 260 claims per week. Of those claims, almost 4,000 were settled at conciliation.[1]

The usual process following lodgment of a claim with the Commission is a voluntary conciliation, typically conducted by telephone, in order to reach settlement of the claim. In the same 2018 period, almost 80% of Claims were settled at conciliation.[2] The more legally sound a dismissal by an employer is, the more chance an employer has of keeping costs down and having the claim dealt with at the early conciliation stage.

This is particularly important in claims lodged by ineligible employees as standing is often not considered until after conciliation (and incurring of costs).In considering a claim for unfair dismissal, the Commission is required to determine if the dismissal was harsh, unjust or unreasonable.

‍When is a dismissal harsh, unjust or unreasonable?

‍In considering whether a dismissal is harsh, unjust or unreasonable, the Commission must take into account certain considerations, including but not limited to:

1. whether there was a valid reason for the dismissal;
2. whether the person was notified of that reason;
3. whether the person was given an opportunity to respond to that reason; and
4. if the dismissal related to unsatisfactory performance by the person, whether the person had been warned about the unsatisfactory performance before the dismissal.

What remedies are available?

‍Where the Commission determines a dismissal was unfair, a number of remedies are available to the employee. They include reinstatement, compensation and certain non-financial remedies such as a written statement of service. Remedies can also be agreed to that are more outside the box, such as an apology or a non-disparagement agreement.

‍Practical tips to avoid unfair dismissal claims

‍It is difficult (if not impossible) to prevent a disgruntled employee from making an unfair dismissal claim. However, there are some ways to protect your business from the costly and time-consuming nature of defending such claims.

These include by:

1. ensuring your employment agreements are lawful and robust;
2. ensuring there is a valid and concrete reason for the dismissal;
3. ensuring notice periods and other requirements set out in the employment contract, award or legislation are complied with;
4. ensuring the employee has the opportunity to respond to the allegations before the decision to terminate is made;
5. ensuring the dismissal is in writing;
6. maintaining contemporaneous notes to be utilised at any conciliation or hearing at a later date to support the validity of the termination (ie instances of behaviour justifying grounds for dismissal);
7. implementing sufficient levels of transparency between employees and managers in relation to expectations of work and opportunities for giving feedback (this is particularly important where dismissals are based on differences in personalities); and
8. avoiding on the spot dismissals where possible. It is imperative to comply with any requirements set out in an employment contract or by law.

If you need any advice on how to protect your business against unfair dismissal claims or are dealing with a claim already, contact Aaron McDonald at aaron@pragma.law.

‍.[1] Fair Work Commission, 'Quarterly Report', Unfair dismissals report Jul-Sep 2018, (Report),

<https://www.fwc.gov.au/documents/documents/quarterlyreports/quarterly-report-unfair-dismissals-1st-qtr-fyr-2018-19.pdf>; Fair Work Commission, 'Quarterly Report', Unfair dismissals report Oct-Dec 2018, (Report), <https://www.fwc.gov.au/documents/documents/quarterlyreports/quarterly-report-unfair-dismissals-2nd-qtr-fyr-2018-19.pdf>.[2] Ibid.