Work Wonders
Back in late 2021, we decided that instead of chatting to each other about the challenges and triumphs of people management in small businesses, we should invite you to join the conversation. And the Work Wonders podcast was born! Managing people is serious business. We bring you all the latest, practical advice without the pain. The podcast is brought to you by Aster HR https://www.asterhr.com.au/ and your hosts are Angela Gauci and Susan Rochester
Work Wonders
S5 Ep 10: How to avoid an unfair dismissal claim
In this episode, we delve into the complex world of unfair dismissal, a critical issue that we hear many business owners and managers think about, even worry about.
We explains what constitutes unfair dismissal, the legal framework surrounding it, and the rights of both employees and employers. Importantly we tell you just what we do with our clients to avoid unfair dismissal claims.
Tune in to learn about the steps to take if you find yourself in this situation and what help to seek.
You can find the show notes for this episode here
Would you like to submit a question to the show? Let us know on our website or via LinkedIn.
Brought to you by Aster HR, the Work Wonders Podcast is hosted by Angela Gauci & Susan Rochester and is recorded at Launch Pad at Western Sydney University.
All information or advice included in this podcast is general, has been developed as a starting point for your business, and should be tailored to your specific requirements. It should not be considered legal advice. We have made every attempt to ensure the accuracy and currency of this information at the time of recording. However, references to things like employment laws are subject to change. For specific advice relating to your business, please get in touch with us.
Welcome to the Work Wonders podcast brought to you by Asta HR, where we simplify the human side of business. I'm Angela.
Speaker 2:And I'm Susan. Let's dive into today's episode and find out what you've been wondering about. In today's episode, we're taking a closer look at unfair dismissal. What is it, what are the risks and how do you avoid it? So let's dive in. This is the Work Wonders Podcast. Hello Angela, Hi Susan. Well, today, unfair dismissal.
Speaker 1:It is something that we hear somewhat often that people are worried about.
Speaker 2:Yeah, exactly. Well, let's start off with a definition.
Speaker 1:Okay, good place to start, that's right usually is so.
Speaker 2:according to the law, an unfair dismissal is when an employee is dismissed from their job in a harsh, unjust or unreasonable manner. Three aspects to that.
Speaker 1:Right. What we're getting down to is the employee suing you or taking action because they're being fired. Yeah, that's right.
Speaker 2:And that's really what people are worried about, employers are worried about. That's what we hear quite often, actually. So what are the risks?
Speaker 1:for an employer. Well, I think the big one is a financial and legal risk. Oh yeah, to respond to that matter could require legal assistance, which in itself has a cost, and depending on the severity and the outcome of that hearing, of the proceedings, you could be forced to pay a financial amount to compensate someone if it's found that that was unjust or something, for example.
Speaker 2:Yeah, that's right. So that's a pretty big one. And so then there's that cost of the compensation, but there's also, if you end up having to defend it in legal proceedings, more costs there, and that's going to be regardless of the outcome. So if you end up in court or you end up before the commission, it's going to cost you money. Yes, whether you win or you don't.
Speaker 1:Exactly, so best avoided. There is a couple of things that can happen, isn't there? It's not always. We'll just give you money to make you say sorry, it's not like that. It could be reinstatement. It could be compensation. I think it's important to note compensation is equivalent, or it's maxed out to the equivalent of six months' pay. Yeah, so legal proceedings.
Speaker 2:It's not just the cost of the legal representation, though, is it so? It's preparing the documents and then the potential of having to pay some sort of settlement or compensation, as we're talking about yeah. So then there's the reinstatement of an employee. As you mentioned, Fair Work can actually, or the commission can, order you to reinstate an employee to their former position. I think that's usually based on whether they want that or not.
Speaker 1:Yeah, I think you're right. Is that right? Let's say the argument was I was unfairly dismissed because my job's still there, just someone else has got it, or something like that. The decision may be well, you should actually have to put the person back in that job because it was theirs. So yeah, that might apply in some cases.
Speaker 2:So that could be very uncomfortable for a couple of reasons. One you might have already put someone else in their job, so what are you going to do? Pay two wages for the same role or the fact that someone has made an unfair dismissal claim against you in the first place? It's going to be pretty damaging to the working relationship.
Speaker 1:Yeah, that's safe to say. That would be really awkward. Well, on that topic of morale, the unfair dismissal claim can have a further reaching effect than just between the person that's claiming it the ex-employee, and the employer. It can actually go further reaching to the other rest of the team, can't it?
Speaker 2:Yeah, I wonder how often that does have a negative impact. Wouldn't be interesting to know.
Speaker 1:Well you know it's not uncommon for staff in a team to talk about. I got this bonus, this one. You know whing not uncommon for staff in a team to talk about. I've got this bonus, this one, you know, whinged at me because I forgot to do this report this week and that sort of thing, Just like that. You know, people can talk and talk about the fact that there's a claim out there and wonder what it's about.
Speaker 2:Yeah, and so you could be looking at effects like reduced productivity, even if it's just from people gossiping, increased absenteeism or even other people going oh, this isn't really where I want to work if they perceive that the person has been treated unfairly.
Speaker 1:Well, look, we'd hope that none of our listeners would do this. But let's just imagine if an employer happened to have an unfair dismissal claim, and then another one, and another one. That's going to look really bad. That might be a situation where the rest of the team go. I don't want to work here if everybody's being fired and going for this sort of thing, yeah, good stuff to make them question, and I would just like to make a point here the perception is the important part.
Speaker 2:So there may not even be any unfair dismissal claims, but if there's the perception that someone who's left has been treated poorly, that's going to have an effect on morale.
Speaker 1:Yeah, absolutely, because they'll think they're next or could be next.
Speaker 2:And this is where it's important to be very transparent with staff about what's going on. You know, being open about someone leaving as in don't just let them disappear and then leave everyone wondering yeah, but on the other hand, you know you don't have to go into the grim details.
Speaker 1:No, and depending on who you're speaking to in your team, you know managers might need to know a little more than you know. Co-workers of the person that's left, for example.
Speaker 1:But it just makes me think about the reasons why an employee or ex-employee may claim unfair dismissal is usually when things get a bit yucky. You know, it might've been, maybe there was serious misconduct, or you know they were terminated rather quickly, or it was redundancy and it was unexpected from their side and all of a sudden they've got no job. It's usually quite emotional, isn't it that time for them?
Speaker 2:Oh yeah, definitely. So one of the other risks and this sort of carries on from what we were saying about what staff the remaining staff might think about there being an unfair dismissal claim is your reputation or damage, or you know just as look people talk, as we said, so it's going to be known somewhere. If it is a dramatic case or you know a high-profile organisational industry, you might even find that there's media attention on it. Yeah, which you don't really want.
Speaker 2:Nobody would want that, but even so, in a small community where a lot of our clients are based, like, your employees are part of the community right. So the word gets out about an organisation.
Speaker 1:And I'm not sure at what point, but it would become public knowledge through. If you're one of those people that likes to Google case law, you could eventually find it there too. Yeah, exactly.
Speaker 2:I wonder how many candidates look up their company? I wonder. Probably not many. Only sneaky people like us that would think of that. Another thing about unfair dismissal is that it's a big distraction from the day-to-day work if you're the manager who's dealing with it?
Speaker 1:That's a good point. Yes, it would be taxing both on time and your stress about it, and all of that taking the resources away from your day-to-day job just to deal with that.
Speaker 2:Having to get together whatever documentation you need. Yeah, it could be a lot of time that you don't really have. Who's got time for more?
Speaker 1:work. Yeah, yeah, you're right, because there is a fair bit to the process. You know you'll respond and then you'll be asked to participate in things, and it's a to and fro a lot. So it's not just kind of a case of filling out a form and not much else. There's a lot to it. So it's yeah, it's an ongoing sort of thing too.
Speaker 2:Yeah, yeah. And one thing most of us probably wouldn't think about is that if you have an employee or sorry, ex-employee who's willing to put in a claim for unfair dismissal, there's also the potential or could be the potential there for other claims. So it might be to do with adverse action or discrimination. So from that same person, that same situation, you could find yourself exposed in other areas as well.
Speaker 1:So this is where we get specific, because there is unfair dismissal, which has a very definitive list of things that make a person eligible to do that. They have to have obviously lost their job, and it needs to be within a certain period after they lost their job. And, as we said before, it's capped at certain things. Adverse action is a little bit more flexible in its definition, in that you could have been treated badly or lost your job because of something. There's a lot more that can be brought into that, and then there's other things as well.
Speaker 1:If you went and spoke to a lawyer, there's probably five more different ways that you could sue an ex-employer. So, yeah, if the unfair dismissal might not be something that they because it's fairly easy to start an unfair dismissal claim for an individual but if they don't have the successful ending that they were hoping for, you're right they may then go oh well, let's try something else. The other thing that comes to mind, susan, is that if you have an unfair dismissal claim, no matter the outcome, really it could bring your business in sort of under the spotlight, so there could be potential for further scrutiny, whether it be you know checking that you comply in other areas or you know being very sensitive to further unfair dismissal claims in the future.
Speaker 2:Yeah, so that would require you to make sure that all your compliance is up to date, I suppose really including that you're paying people the right pay rates because we know that's an area of focus at the moment. Yeah, yeah, gosh, there's a lot, isn't there? Yeah?
Speaker 1:And I guess look, I don't like to go there, but if it was a successful successful is not the right word, but if the claim was upheld and there was something that the employer needed to do differently, there'd be a certain amount of work. Then, after the fact, to go, okay, well, we need to change our practices in performance management or communication or whatever it might be, to prevent it from happening again.
Speaker 2:Yeah, changing policies, so there's actually a lot.
Speaker 1:Yeah, we've painted a pretty negative sort of picture.
Speaker 2:I shouldn't be laughing because you know, coming from an HR perspective, when people say I'm so worried about unfair dismissal, I tend to brush it off a bit, thinking well, if you're doing the right thing, you probably won't need to worry about it. But when you look at the risks that are there for business, I can see why people are worried about it.
Speaker 1:Yeah, and it's scary, I can imagine, because you're having to answer for something that you've done in the best interest of your business mostly, and having fair work coming and knock on your door is not something that happens every day. So I can understand that apprehension. But hang with us, because we do have a lot of tricks up our sleeve, because we know, susan, don't we? The things that we would work with our clients on to prevent a lot of all this stuff, keyword being prevent. And so, yes, look, there are a lot of things on the negative side that might be in your mind, you might have considered before, but there's also a lot that you can do to prevent it.
Speaker 2:How did you get into your business? Sometimes it's because you're great at a particular thing or you've got a passion for something and you know that you can do it a little better than what other people are already doing. Now that you're in business, you've discovered there's a lot more to it than just having the right skills. Especially when you've hired a team, you might have learnt the financial skills that you need because you had to, basically, but where do you go to develop the HR and the leadership skills that you need? If you're feeling overwhelmed in managing people and all the other things that come with running a business, we can help you. We'll guide you through the skills you need to feel more confident in leadership. Go and check out the coaching page on our website or schedule a call with us at astorhrcomau. Now it's back to the episode.
Speaker 1:Okay, susan. So we did talk about the risks and the fears, I guess, and associations with unfair dismissal, and they're all valid. Now let's get onto the good stuff. Let's paint a better picture, and can we start with thinking about? Let's define who is eligible to apply for an unfair dismissal claim.
Speaker 2:So obviously they're an employee.
Speaker 1:Mm-hmm. They have limitations that they need to apply within 21 days after they've finished up, so if their last day was yesterday, it's 21 days from there.
Speaker 2:Yeah, and also they need to have been employed for a certain minimum period. Ah, you're right. So for small businesses that minimum period is 12 months. A small business is fewer than 15 employees, so 1 to 14 employees minimum period 12 months. All other businesses it's six months.
Speaker 1:Okay. So if someone had only been with you four months, they couldn't go for this Right.
Speaker 2:So there is a thing called the Small Business Fair Dismissal Code and we will provide a link to this. But if again, as I said, 1 to 14 employees who qualify as a small business, if you can show that you have followed this code at the time the person was dismissed, then they can't claim unfair dismissal.
Speaker 1:Right, and it's a really handy guide, very practical. It has a lot of things in there that you can just implement, to which some of them will probably be going through, to reduce the risk of that being done.
Speaker 2:Yeah, it's a great document, and if you haven't looked at it, I recommend it. So now we've cleared who can and when. So, as for our list, then, what we would do, well, the first one is understanding the legislation, so knowing what the conditions are. So we finally covered that just then, didn't we?
Speaker 1:We did yeah. But I guess, holistically thinking about employing people, you want to know what the fair work is, what it includes, the awards that you're paying people under all those pieces of the puzzle. You've got different legislation about super, about long service leave, about workers' comp. If you're not sure about those and that's quite okay, because not everybody loves to read law get the help of somebody that knows about that.
Speaker 2:By which you mean us right.
Speaker 1:Oh yeah.
Speaker 2:Yeah, so you know the law. Well, you've got advice from somebody who knows law and knows what's what. You also need to have fair reasons for the dismissal, so let's have a look at what a valid reason might be. Sure, so it could be poor performance, misconduct or redundancy. So your reason doesn't just have to be a reason that you think is a good reason. Yeah, it does have to be sound and defensible and well-documented.
Speaker 1:Yeah, absolutely, and there's definitely room to have determinate employment if you need to. Those things are pretty clear. Yeah, Determination has to happen because you know misconduct is reserved for things that are of a serious enough nature and there we're talking instant dismissal, yeah. Yeah, and when it comes down to it, redundancy certainly is, but poor performance as well. When it comes down to it is a business decision because you're needing A to be done and it's not being done, or redundancy, you no longer need A to be done. Yeah, I.
Speaker 2:you no longer need A to be done. I was going to say we could do a whole podcast on performance management and I think we already have, but I think this is probably an area where a lot of business owners and managers get tied up. They really don't want to have those performance conversations. Oh, they're hard, yeah, when they do, it's put off and put off, and then it's not really done properly. And then it gets to the point where it's, you know it gets emotional.
Speaker 1:Yeah, absolutely Dealing with humans.
Speaker 2:Yeah, exactly, and this could be probably a very common scenario for what ends up as an unfair dismissal case, because people are just not clear on what you were really saying and why they were let go.
Speaker 1:So what you could do, saying and why they were let go. So what you could do instead is again having a very clear procedure of how you might go through that and again, if you're not sure, get the help of somebody that can help you and is an expert in that area, someone that can even walk you through that process. I know we've done that recently for a couple of clients. So, yeah, it's okay if it's not something that you're an expert in. Not everyone can be an expert in everything.
Speaker 2:No, but we're here to guide you through that, ideally, we'll have policies that already guide you through that, policies and procedures that cover what happens, what's your disciplinary process and what happens when you're approaching termination. And as well as having those policies, you need to know that they're compliant with the Australian law. Good point.
Speaker 1:Susan, a term that we are familiar with and we introduce our clients to a lot is procedural fairness.
Speaker 2:So perhaps we can explain what we mean by that it's a lot of things.
Speaker 1:The law, especially employment law, loves that word fair and reasonable you know, that sort of thing, but doesn't really define it. But anyhow, procedural fairness is a lot of things. It's an umbrella statement that really talks about what you're doing, that is evidence-based, that you can show that you were fair, you had a procedure, that it wasn't biased or discriminatory in any way, but actually based upon a business decision.
Speaker 2:And compliant with the law and compliant with the law. There's another piece to that, and that's that the person themselves has an opportunity to respond. Yes, that's valuable, yeah.
Speaker 1:Yeah, absolutely so. Some small things, like when you're holding a performance management meeting, you might offer the person to have a support person there.
Speaker 2:You might give them adequate notice of the meeting. Yeah, Let them know what the issue is that is going to be discussed. You might also make sure that the meeting is documented, and once it is documented once you've held the meeting, they're allowed to respond to whatever it is documented.
Speaker 1:Once you've held the meeting, they're allowed to respond to whatever it is Allowing them to respond and ask questions definitely important.
Speaker 2:The other important thing is that, although a support person can we would say should be present in the meeting, they're not there to participate in the meeting.
Speaker 1:No, that's interesting, isn't it? So they're not there to be an advocate? No, they're literally there to be an advocate. No, they're literally there to just support them. Emotional support.
Speaker 2:Yeah, exactly.
Speaker 1:Yeah, so not much else. They're not really there to well. In fact, we'd say don't let them participate in the conversation, more than to say let's take a break.
Speaker 2:Yeah, exactly so it's quite reasonable for the support person to do what you just said. So we need a break now and to discuss outside the room if they even want to. But yeah, they're not there to take part in the meeting or to be the advocate for the person with the performance issue.
Speaker 1:So you might have gathered from what we're saying about procedural fairness and holding meetings and documenting things, that documentation is so important yeah, you're going through this process and so all stages of it, really so you might be as formal as to have minutes of a meeting, but I know of cases where diary notes have been just as important, of when particular things happen. Let's say, even in the case of performance management, if an employee was not or didn't do something right or something occurred on a particular day, a diary note of when and where that happened and what it was is also a good piece of documentation.
Speaker 2:Yeah, well, that would be something, then, that I assume you'd be taking to the meeting where you're discussing the issue with the said employee and then warnings would need to be in writing.
Speaker 1:Yeah, if it gets to it, you're giving them a formal warning.
Speaker 2:And any other sort of correspondence. One mistake that I've seen happen a lot is people have the performance meeting, or whatever we want to call it, disciplinary meeting. Yeah, and in the manager's mind it's quite clear that they've warned this person, that this is their first warning, and blah, blah, blah.
Speaker 1:Yeah.
Speaker 2:However, at no point has it been mentioned, or even in the invitation to the meeting or anything like that, has it been mentioned that the person's employment is at risk if they continue with this behaviour or this poor performance or whatever. So until you've done that, you haven't really warned them at all.
Speaker 1:Yeah, yeah, you're right. Look, it's all really awkward and uncomfortable, isn't it, for someone that's not experienced in HR, like us, or comfortable with it. It's not easy to have these conversations, but you're right. Specificity and saying those particular things, giving the notice, saying it's in regard to performance.
Speaker 1:If it's a warning letter, like you say, it's very valid to say your employment will be at risk if this does not stop happening or those sorts of things are hard to say, but they're absolutely necessary, exactly so if again, if you're not feeling comfortable, that's where probably better to get some expert advice to to help you through that that's true, and just because you've said that to someone doesn't mean that you're being unfair. No, no, not at all, because, as you said, it's a business decision.
Speaker 2:If the performance isn't happening or there's behaviour that you don't want to see repeated, then you're well within your rights to say if this continues, this could result in you losing your job.
Speaker 1:Yes, yes, absolutely. And I would say to our clients if it's a business decision, it's because you know you need X, y and Z done. That's not being done. If you've given them a chance to improve that, because that's what you've needed and that's in the contract and so on, all of that stuff that we're talking about you've been procedurally fair. It's okay to make that decision.
Speaker 2:Yes, it's awful.
Speaker 1:Someone's losing their job and it's not great, but it's a part of a business and it's part of an avoiding risk, you know, for your business and serving your customers and all of that. So yeah, it's complicated because we're dealing with humans, but be assured, if you're doing it for the right reasons, that's okay.
Speaker 2:Yeah, so another way of avoiding an unfair dismissal claim would be to get legal advice, especially if it's a messy sort of situation.
Speaker 2:And by messy. I mean, you know there's so many grey areas in employment and it's not always exactly clear cut, and legal advice might help you to clarify just where you are in the dismissal process and what needs to happen to avoid an unfair dismissal claim. I'm not saying that you always should get or need legal advice. If you follow, for example, the small business code that we talked about, then you may not need it, but sometimes we can sense that there's an issue where the relationship's already broken down.
Speaker 1:Yeah.
Speaker 2:So you probably need to tread with care.
Speaker 1:Yes, every situation's different. Like I said earlier, there's so many pieces of the puzzle when it comes to legislation, and sometimes they fight against each other, whether it be a definition or which one takes precedent or priority. There's also case law, which is a lot relied upon, a lot. Someone like a lawyer would be across all of that and be able to support you. You can go to just a lawyer, or there are actually people that's… Industrial relations, yeah.
Speaker 1:They specifically assist people in industrial relations law, and so those sort of people would be well familiar with what the process is in front of the commission.
Speaker 2:Yeah, so related to that is being careful about all your communication.
Speaker 1:Ah, there's that word again Communication. Yeah, I think we're up to 52 this time. I don't know If this is your first episode you're listening to welcome. We talk about communication a lot, but you're right, respectful communication is important and definitely part of being procedurally fair.
Speaker 2:And you know making sure that you're communicating the reasons and things like that. I mean, it sounds like it should be obvious, but in the heat of the moment it doesn't always happen.
Speaker 1:Well, it's like if you think again about a performance management example, you know one might think oh, can I say that you know they had a really crappy attitude towards our team meeting the other day or something like that.
Speaker 1:Well, sure, but try not to put it into your words. You know if you're documenting that or you're even communicating it to them. Explain. The expectation is that everybody come with a professional attitude and participate in the conversation. Something like that is a lot more respectful in communication than to say listen, your attitude was crap and we can't have that right. Right, so yeah.
Speaker 2:Good point. I like that, okay. So anyone who has ever had to dismiss someone or let someone go will realise that there's certain legal requirements, quite aside from avoiding unfair dismissal and all the rest of it. So they come down to giving the correct notice period or payment in lieu of notice and any severance payments that might be due to that person, and so you need to be sure that you're complying with Fair Work and that employee's contract or the award or whatever instrument they come under.
Speaker 1:Yeah, so notice period for those who might not know applies both ways. So if a person resigns, they need to give you notice, right, that they're going to be doing that. Well, the same applies for you. If you're the employer going to terminate that employment, you give them notice as well, and if you can't do that, then you pay them in lieu of that. Yeah, which is equal payment for that notice period or what it would have been.
Speaker 2:Yeah, exactly, and please note that, as an employer, you can't claim unfair resignation. No, sometimes it would be nice to be able to. And all this comes down to the interaction between people, doesn't?
Speaker 1:it yeah.
Speaker 2:And just being careful about what you say and following correct process and communicating, and you might find that there's some training that's required for your managers and team leaders, or even for yourself. Yeah, really good point, and we can help you with that as well Just making sure that when a disciplinary matter happens or there's termination, that it can be done effectively but, also legally.
Speaker 1:Yeah, you know, if you have someone like us or a lawyer, that sort of thing in your corner, we can support you through the process to make sure that you're doing it in a fair way, so that, yes, it doesn't feel comfortable and it's a bit you're worried after this whether they're still going to try an unfair dismissal claim you might lose some sleep.
Speaker 1:You might. We might too, but you know, having someone in your corner to say, look, it's okay because we've got this piece of evidence and we've done this fairly and we've got this and done that and the decision you're making is not discriminatory, it's not whatever, it's fair All those things can hopefully help you feel a little bit more assured that you're okay.
Speaker 2:And I think you'd agree with me, Angela, that every single case is different. Oh yes, so you need to get advice for your specific circumstances in the situation that you find yourself in to avoid unfair dismissal.
Speaker 1:And let's end on a happy note. There are some unfair dismissal claims that go against the claimant. So the employer is found to have to do nothing.
Speaker 2:Yeah, exactly.
Speaker 1:Because it was fair and it was compliant. There's nothing to worry about, so that can happen.
Speaker 2:And I think it's really useful to keep those few words in mind.
Speaker 1:Those few words being harsh, unjust or unreasonable yeah, so hopefully that has not been too daunting a list. Hopefully there's something we've left you with there that gives you some assurance that if that's on the horizon for you, you're well equipped to deal with that. Make sure that we put that list in our show notes. So if you want to refer back to that, you can and, as we said, if you want to reach out to us, we'd love to have a chat with you and see how we can help you avoid or deal with these sort of matters, and we'll also put a link in the show notes to that small business dismissal code that we mentioned. Thanks for listening to the Work Wonders podcast brought to you by Asta HR. Hit the subscribe button now to never miss an episode, and if you'd like to continue the conversation with us, you can find us over at astahrcomau. See you in the next episode.
