What is unfair dismissal?
Unfair dismissal is when an employer dismisses an employee from their job for unreasonable, unjust or harsh reasons. Dismissal includes redundancy, as well as firing or terminating an employee.
The definitions for unreasonable, unjust or harsh are:
- Unreasonable: the evidence does not support the employer’s decision
- Unjust: the employee is not guilty of the action or behaviour that the employer bases their dismissal decision on
- Harsh: the dismissal is considered an extreme response by the employer or has a disproportionate impact on the employee’s economic and personal situation.
If an employee believes they have been unfairly dismissed, they can apply to the Fair Work Commission. Typically, they need to have been employed at the organisation for at least six months to be eligible to apply. If employed for less than six months, they cannot apply for unfair dismissal.
However, there are slightly different rules for employees of small businesses. A small business is considered to have fewer than 15 employees at the time the employee is dismissed. Small business employees need to have been employed for at least 12 months before they can lodge an unfair dismissal claim. If employed for less than 12 months, they cannot apply for unfair dismissal.
If a business changes ownership during either of these periods, the employee’s service for the previous owner may still be counted towards these employment periods.
The Fair Work Commission website offers an eligibility questionnaire that can help employees determine if they might have been unfairly dismissed. It can also be a useful tool for employers who are unsure whether the conditions under which they are dismissing an employee could be considered unfair.
Who determines if an employee is unfairly dismissed?
The Fair Work Commission decides if an employee has been unfairly dismissed.
The employee who believes they were unfairly dismissed is required to apply to the Fair Work Commission to decide on the case. Employees have 21 days – starting from the day after they have been dismissed – to do so.
About five weeks after the claim is lodged, the Fair Work Commission holds an optional conciliation meeting. If the meeting is refused or the case is not resolved at this point, the case is decided by a Commission Member.
Do other rules apply for small businesses?
In addition to the minimum employment period, other unfair dismissal rules differ for small businesses. This is because the Fair Work Commission recognises small businesses may not have the resources, such as the funds to provide redundancy pay or the staff to provide immediate training, to address employment issues.
The Small Business Fair Dismissal Code protects employers against unfair dismissal claims when they follow the code and can provide evidence of doing so.
Unfair dismissal examples
There are many instances in which an employee may be found to be unfairly dismissed. Here are three examples that may provide you with clarity about the three main pillars of unfair dismissal.
Unreasonable unfair dismissal
If an employee is dismissed for consistently poor performance without being informed of their shortcomings or given training to improve, it may be determined an unreasonable case of unfair dismissal.
Unjust unfair dismissal
If an employee is dismissed for misconduct, such as fraud or property damage, but it was another employee that was guilty of the misconduct, the claiming employee’s dismissal may be determined to be unjust.
Harsh unfair dismissal
If an employee with an unblemished record over a significant time period, such as 10 years’ service, is dismissed for a one-off mistake, it may be determined a harsh case of unfair dismissal. In such situations, a different penalty might be recommended instead.
Dismissal versus unfair dismissal examples
There are situations where a dismissal might be necessary but not considered unfair. These include when an employer has issued several formal warnings for poor behaviour or has taken steps to address the employee’s performance without improvement.
An employee can be made redundant if it is a genuine redundancy, and they cannot be redeployed reasonably within the organisation. A genuine redundancy means the job is no longer needed due to operational changes. If another employee fills the role or is hired for it, it may not be considered a genuine redundancy and could be seen as unfair dismissal.
An employee is not considered to be dismissed if they resign voluntarily. However, if an employer pressures or forces an employee to resign, it may be considered unfair dismissal.
Other end-of-employment situations to consider
There are situations where an employee is not considered to have been dismissed that employers may want to keep in mind when hiring staff, particularly if they are concerned about meeting future dismissal requirements.
When a contract ends, and it is not renewed or replaced with a new one, an employee’s position is considered complete, and they are not considered dismissed, either unfairly or otherwise.
Employees hired for seasonal work, such as Christmas casual or harvest jobs, also are not considered dismissed when the season ends. The same applies to workers hired for specific tasks or projects. In these instances, their employment ends as planned.
Apprentices and trainees who are employed only for the duration of their training or a specific time period are not considered dismissed when their training ends. In these cases, their job has ceased.
Unlawful termination is different to unfair dismissal. It includes dismissing an employee because of an attribute, such as race or religion; a temporary absence of work because of injury; or exercising a workplace right, such as participating in proceedings against the employer. It provides employees with similar protections to unfair dismissal.
How to avoid an unfair dismissal claim
Employers may be able to protect themselves from unfair dismissal claims or unfavourable decisions by taking a few measures.
Communicate policies and procedures
Ensure employees have every opportunity to be aware of what is expected of them under their conditions of employment. This may include issuing an employee handbook or advising them that policies and procedures are available on the intranet. These policies may include disciplinary rules and behaviours that may lead to immediate dismissal.
Follow appropriate dismissal procedures
Small business employers can check and follow the Small Business Fair Dismissal Code to dismiss employees when required. Other employers are required to understand the Fair Work Act, which states when and how it is appropriate to dismiss an employee. Business lawyers and HR personnel may be more qualified to understand appropriate dismissal procedures than general managers or business leaders. If possible, consider seeking their advice before dismissing an employee.
Conduct performance reviews
Regular performance reviews provide an opportunity for employers to address any concerns about an employee’s capability and productivity. Reviews can also allow employees to share any issues they are experiencing and request additional support. It’s important to listen to these requests and act on them when possible. While reviews are often held once a year, more regular check-ins can help ensure both parties understand their responsibilities, particularly if they frequently change.
Whether a dismissal is unfair can be unique to the situation, so try not to make hasty end-of-employment decisions and carefully reflect if issues arise. By following the rules in the Fair Work Act or the Small Business Fair Dismissal Code, you can reduce the chances of an employee submitting an unfair dismissal claim.
Read more: How to Conduct an Employee Evaluation
