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Unfair dismissal claims – Tips for minimising the potential risks

Unfair dismissal claims – Tips for minimising the potential risks

Under Australia’s employment law system, an eligible employee who believes that they have been unfairly dismissed, or that they had no option but to resign because of something their employer did, can lodge an application for reinstatement, compensation or both through the Fair Work Commission.

While there is no way to prevent an employee from lodging an unfair dismissal claim (with the exception of entering into a negotiated deed of release at the time of termination), there are steps that can be taken to minimise the potential risks. Following these steps will further support your business in developing a response should you be named as a respondent to such a claim.

In order to reduce the risk of an unfair dismissal claim being lodged, it is essential that the necessary steps be taken so as to ensure due process is followed and that procedural fairness has been applied. This requirement applies irrespective of the reasons for the termination, whether this be due to serious misconduct or due to continued underperformance or redundancy.

What is Unfair Dismissal?

S285 of the Fair Work Act 2009 (‘the Act’) provides that a person will have been ‘unfairly dismissed’ if:

a) The person has been dismissed; and

b) The dismissal was harsh, unjust or unreasonable; and

c) The dismissal was not consistent with the Small Business Fair Dismissal Code (if you are a small business for the purposes of the Act); and

(d) The dismissal was not a case of genuine redundancy.

When faced with the requirement to terminate the employment of an employee, the following steps can be taken, prior to termination occurring, so as to minimise potential risks and to protect both yourself, and your business, so far as is possible against a potential claim:

  • Ensure that there is a valid reason for the dismissal related to
    • the employee’s capacity
    • the employee’s conduct,
    • genuine operational requirements of the business (in the case of redundancy)

           and that the reason is communicated to the employee.

  • Ensure that due process has been followed and procedural fairness has been applied prior to terminating an employee due to underperformance, including by ensuring that:
    • the employee was notified of the allegations raised against them
    • the employee has been provided with the opportunity to respond to the allegations raised against them.
    • the employee is allowed to have a support person present to assist at any discussions relating to their dismissal
  • Prior to dismissing an employee on the grounds of unsatisfactory performance, it is important that steps have been taken to:
    • warn the employee that their performance was unsatisfactory prior to dismissal occurring
    • ensure that the employee was aware of what was expected of them in the workplace and that they had a clear understanding of the policies and procedures. 
    • give due consideration to any responses provided by the employee, including any mitigating factors raised prior to any determination being made as to the outcome of any disciplinary proceedings undertaken.
  • Where termination is required due to redundancy, ensure that you comply with your consultation obligations.
  • Ensure that documented warnings, where issued, detail the relevant aspect of the employee's performance which is of concern and make it clear that the employee's employment is at risk unless their performance improves.
  • Keep documented records and file notes of any performance discussions, disciplinary procedures (both informal and formal) and termination process undertaken.

Termination of employment is a complex matter, and in order to ensure that the required processes are being adhered to, we strongly recommend that you contact the HR Advice Online team on 1300 720 004 prior to ceasing the employment relationship for any reason.

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.                                                                                               

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