Blog

Articles and legal news from the Atkinson Vinden Team.

What is involved in an unfair dismissal?

Employment Law

PURPOSE

The purpose of an unfair dismissal application is to enable both the employer and employee to deal with the application in a flexible, efficient, informal and cost-effective manner.

To be eligible to make an application to the Fair Work Commission (Commission), first and foremost, an individual must be an employee of the employer. In certain circumstances, an individual who is considered to be an independent contractor, may actually be an employee.

CRITERIA THE EMPLOYEE MUST MEET

An employee can make an application for unfair dismissal if, in addition to the above, they satisfy the following criteria:

  • they have completed the minimum period of employment, which is 6 months (or 12 months if they worked for a Small Business); and
  • they earn less than the high-income threshold (currently set at $145,400 until 30 June 2019). However, if an employee earns more than the high-income threshold but a modern award or enterprise agreement covers their employment, then the employee can still be eligible to make a claim; and
  • they have been dismissed.

REQUIREMENTS THE EMPLOYEE MUST SHOW

For an employee to be protected from unfair dismissal under section 385 of the Fair Work Act 2009 (Cth) (Act), the employee must show that:

  • the employer dismissed the employee from his/her employment (termination must be at the initiative of the employer, unless the employee was forced to resign from their employment as a result of the employer’s conduct – constructive dismissal);
  • the dismissal was harsh, unjust or unreasonable;
  • the dismissal was not consistent with the Small Business Fair Dismissal Code (if the employer was considered a small business – meaning less than 15 employees); and
  • the dismissal was not a genuine redundancy.

A dismissal may be considered to be:

  • harsh –  if the punishment does not fit the crime (the outcome was disproportionate when considering the misconduct of the employee);
  • unjust –  if the employee was not guilty of the alleged misconduct; or
  • unreasonable –  if the evidence before the employer did not support a conclusion that the employee ought to be dismissed.

Casual employees are eligible to make an unfair dismissal application if they meet the above eligibility requirements and they were employed on a regular and systematic basis and had a reasonable expectation of continuing their employment with their employer.

Persons who are volunteers or serving a vocational placement are generally excluded from making an application as they are not considered to be an employee.

For the purposes of this LawAlert, unfair dismissal applications for employees who do not fall within the federal industrial relations system, such as local and State government employees will not be discussed. These applications are dealt with by State industrial relations commissions.

CRITERIA THE EMPLOYER TO SHOW

Section 387 of the Act sets out the following criteria the Commission must consider when determining if the dismissal of an employee was harsh, unjust or unreasonable:

  • whether there was a valid reason for the dismissal that related to the employee’s capacity or conduct;
  • whether the employee was notified of that reason;
  • an unreasonable refusal by the employer to allow the employee to have a support person present at any discussions relating to the dismissal;
  • if the dismissal related to unsatisfactory performance, whether the employee had been warned by the employer about the unsatisfactory performance prior to the dismissal;
  • the degree to which the absence of a dedicated HR management specialists or expertise in the business would be likely to impact the procedures followed in effecting the dismissal; and
  • any other matters that the Commission considers relevant.

Other Matters the Commission May Consider

There are also additional grounds which an employer can object to the eligibility of an employee to make an unfair dismissal application, these are as follows:

  • the person was not employed by the employer, but was an independent contractor or volunteer;
  • the employee was not dismissed but resigned from their employment voluntarily;
    the employee earned over the high-income threshold at the time of their dismissal and their position of employment was not covered by a modern award or enterprise agreement;
  • the employee was employed for a specified period, specified task, seasonal contract or traineeship arrangement and was dismissed by the employer at the end of that specified period, task, contract or traineeship;
  • the employee was not a national system employee (such as a person on vocational placement);
  • the employee was employed on a casual basis and their employment was not regular or systematic and there was no reasonable expectation of continuing employment;
  • the employee made an unfair dismissal application against the incorrect employing entity;
  • the employee made more than one application in relation to the dismissal (such as a general protections application and an unfair dismissal application); and
  • the employee made an application, but it was outside the specified time limit for making an unfair dismissal application and there are no exceptional circumstances.

TIME LIMIT(S)

An employee has 21 days from the date their dismissal took effect to lodge an unfair dismissal application with the Commission.

If an unfair dismissal application is lodged after 21 calendar days, a late application will only be accepted by the Commission if exceptional circumstances are involved such as:

  • the reason for the delay;
  • if the employee first became aware of the dismissal after it had taken effect;
  • any action (or steps) taken by the employee to dispute the dismissal;
  • if the employer would suffer prejudice (including prejudice caused by the delay);
  • the merits of the application for unfair dismissal; and
  • fairness between the employee and other persons in a similar position.

In accordance with the Commission’s 2013 Rules, Rule19, an employer must lodge its response within 7 calendar days with the Commission after the day it was served with the application.

For the purposes of this LawAlert, general protection applications involving a dismissal will not be discussed. Note however, these applications must also be lodged within 21 days from the date the dismissal took effect and in accordance with Rule21, employers must also respond within 7 calendar days.

REMEDIES

  1. Reinstatement is the primary remedy for unfair dismissal.
  • The Commission can order to have the employee’s job reinstated (if practical) or into a new position similar in hours, responsibilities and remuneration.
  • If this occurs, the employee will also be entitled to back pay.
  • The Commission may also make an order that the employee’s continuity of employment will be maintained and that there will be no break in their service or accrual of entitlements.
  1. If reinstatement is not practicable for the employee to be reinstated as the employment relationship is no longer tenable, then Compensation for unfair dismissal may be ordered as a remedy.
  • Compensation is capped at 26 weeks’ wage of the annual wage of the employee.
  • According to section 392 of the Act, the compensation cap is the lower amount between half of the employee’s annual wage and half of the current high-income threshold.

Therefore, and until 30 June 2019, the maximum dollar amount that an employee could be ordered to receive, and that is if he/she is awarded maximum payment, is $72,700.

An employer who is ordered to reinstate an employee, may also be ordered by the Commission to pay the amount of wages from the date of dismissal to the time of the order by the Commission. This is also capped at the maximum amount 26 weeks of wages.

When the Commission calculates the amount of compensation to be awarded to the unfairly dismissed employee, it will take into consideration any notice of termination payments paid by the employer to the employee at the time of the dismissal and any earnings earned by the employee post the dismissal.

Finally, the Commission will not award monetary compensation for shock, distress or humiliation.

Sometimes we get so lost in the factual scenario surrounding a dismissal that WE SEEM TO FORGET THE BASICS OF AN UNFAIR DISMISSAL.

If you require some “friendly reminders” regarding whether a dismissal was unfair, options and procedures to follow, contact the employment law team at AV Lawyers on 02 9411 4466 or by email at email@avlawyers.com.au.