Many Australian employees are protected by unfair dismissal laws encompassed in the Fair Work Act 2009 (Cth) and under the Fair Work Regulation 2009 (Cth). Part 3.2 of the Fair Work Act covers unfair dismissal. If an employee is not protected by the Fair Work Act, the employee may have a common law claim (such as in negligence or breach of contract) or a claim or complaint under a statute, such as the anti-discrimination legislation.
This article focuses on unfair dismissals under the Fair Work Act provisions.
For a claim for unfair dismissal to be successful, the former employee must show that:
a) they were dismissed; and
b) the dismissal was harsh, unjust or unreasonable; and
c) the dismissal was not a case of genuine redundancy; and
d) the employee worked for a small business employer who failed to comply with the Small Business Fair Dismissal Code.
Dismissal is when an employee’s employment has been terminated at the employer’s instigation, or the employee was forced to resign because of the employer’s conduct.
A small business employer is defined by the Fair Work Act as an employer that employs fewer than 15 employees at that time. The Fair Work Act specifies that when calculating the number of employees at the time of an employee’s dismissal, all employees are to be counted including employees of associated entities (as defined under section 50AAA of the Corporations Act 2001 (Cth)), the employee being dismissed, and any other employee(s) being dismissed at the same time.
Casual employees are not counted unless at the time of the relevant employee’s dismissal, the causal employee(s) are working on a regular and systematic basis at that time.
The Small Business Fair Dismissal Code sets out the procedure that is required to be followed by a small business employer when dismissing an employee. If a business is a small business employer, and that employer fails to follow the Small Business Fair Dismissal Code, it could be exposed to an unfair dismissal claim.
Full details of the Small Business Fair Dismissal Code can be found at the Fair Work Commission’s website by clicking here.
If the small business employer can evidence that it has followed the Small Business Fair Dismissal Code, the dismissal will not be found to be an unfair dismissal.
We recommend that small business employers complete the Small Business Fair Dismissal Code Checklist (the Checklist) when assessing and recording the reasons for the dismissal. The Checklist should be completed and retained for the employer’s records. A copy of the Checklist can be found at the Fair Work Commission’s website by clicking here.
To bring a claim, a dismissed employee must have been employed for a minimum period of time. The minimum time period depends on whether the employer is considered to be a small business employer or not.
If the employer is a small business employer, to be eligible to bring a claim for unfair dismissal the employee needs to have been working for the employer for at least 12 months.
If the employer is not a small business employer, an employee needs to have been working for the employer for a minimum period of 6 months before being eligible to bring an unfair dismissal claim.
Additionally, to be eligible to make an unfair dismissal claim, the employee must be either covered by a Modern Award, covered by an enterprise agreement, or have an income less than the high-income threshold. The high-income threshold is currently $148,700 (as at July 2019) and usually changes each July.
If an employee does not meet the above requirements, they cannot bring a claim for unfair dismissal. However, the employee may still have a claim under the general protections provisions of the Fair Work Act, or a common law claim, such as a breach of contract claim.
It is a common misconception that employers can terminate an employee who is on probation at any time during the probationary period without reason. Whilst an employee cannot bring a claim for unfair dismissal unless he or she has been employed by the employer for 6 months (or 12 months if the employer is a small business employer), an employee is eligible to make a claim for unfair dismissal after the minimum employment period (6 or 12 months respectively), whether or not the probation period extends past the minimum employment period.
The following example illustrates an occasion where an employee can make an unfair dismissal claim notwithstanding that the employee is still within the probation period:
a) An employee is employed under a Modern Award, and has a minimum employment period under the Fair Work Act of 6 months before being able to bring an unfair dismissal claim (this employer is not a small business employer);
b) The employment contract provides for a 12-month probation period;
c) The employee was terminated without reason or due process after being employed for 8 months;
d) Notwithstanding that the employee was still within the probation period when the dismissal took place, the employee has been employed for longer than the 6-month minimum employment period threshold under the Fair Work Act, and so the employee is eligible to make an unfair dismissal claim.
If an employee resigned due to the employer’s act(s) or omission(s), this might be deemed constructive dismissal or otherwise known as a forced resignation. This is when the employee has felt that because of the employer’s conduct they had no choice but to resign. An unfair dismissal claim can be made in the circumstances of a forced resignation.
Once an employee has been dismissed, they have 21 days from the date the dismissal takes effect to bring a claim for unfair dismissal via the Fair Work Commission, with the first day commencing on the day after dismissal.
The Fair Work Commission is a workplace tribunal with offices in each state.
In the context of an unfair dismissal claim against an employer, the Fair Work Commission will provide the employer with a copy of the employee’s application and a response form. Employers who have been served with an unfair dismissal claim should contact their lawyer as soon as possible to ensure that their rights can be properly protected.
The Fair Work Commission provides a conciliation service, whereby it will hear the employer and employee, and seek to assist in facilitating a resolution.
If a claim fails to resolve at the Fair Work Commission conciliation conference, upon request the Fair Work Commission has the authority to later conduct a hearing and make a determination in the matter once it has heard the employer’s and the employee’s evidence.
The employee lodges an application within the requisite time frame. The employer is then required to lodge a response.
The matter will then proceed to a conciliation conference with a Fair Work Commission conciliator, giving the parties an opportunity to voice their issues and try to resolve the matter.
If a resolution cannot be achieved, the employee will receive a certificate from the Fair Work Commission stating that conciliation has been attempted, and the employee will then have access to the Fair Work Commission or to the Federal Court of Australia, or Federal Circuit Court of Australia to seek that a determination is made in the matter.
Once the matter has proceeded to a hearing in the Fair Work Commission, Federal Court of Australia or Federal Circuit Court of Australia, the parties will be provided with a written decision which contains reasons for the decision.
The first thing an employer should do is seek legal advice. There are circumstances where an employer can lodge an objection to the matter being dealt with by the Fair Work Commission, such as the claim being lodged outside of the requisite 21-day time frame, the employee is not eligible to make a claim for unfair dismissal, or the claim is vexatious, frivolous or has no prospects of success.
The following forms are required to object to an unfair dismissal claim:
When the Fair Work Commission notifies the employer of the claim, it will also inform the employer of the conciliation conference date. The employer (and employee) are required to attend the conciliation conference, which often occurs over the telephone, but can be in person.
The employer can self-represent and is not required to have a legal representative present, however, we recommend that the employer retains a legal representative to attend so that the employer’s interests are properly protected.
The employer and employee can agree to pretty much whatever they wish, including terms that would not ordinarily be remedies that can be sought from the Fair Work Commission or a Court.
Once a resolution is agreed the Fair Work Commission or one of the party’s legal representatives will produce a terms of settlement. This sets out details of the agreement and prevents the employee from making any claims in the future with regards to the matter that is the subject of the claim.
Ideally, in terms of the settlement, the employer ought to have these terms as wide as possible, to prevent any claims arising out of the employee’s employment, not just the circumstances of this specific claim.
Before signing anything, we always recommend that the employer engages a lawyer to look over the agreement to ensure it properly protects the employer’s position.
The Fair Work Commission can order any of the following:
a) That the employee be reinstated, that continuity and period of service is be maintained, and restoration of lost pay;
b) An order for compensation if reinstatement is not appropriate;
c) The application be dismissed (the claim can no longer be progressed).
Reinstatement may not be appropriate if:
a) the employment relationship has broken down so much that the employer and employee would not be able to work together in the future;
b) termination would likely occur again;
c) the business is not operating any longer.
A number of factors will be considered when deciding on the amount for compensation, including the length of the employee’s service with the employer, how much the employee lost financially and will lose in the future due to the unfair dismissal, and any income the employee has received from other employment since the unfair dismissal took effect. If misconduct by the employee contributed to his or her dismissal, the amount in compensation can be reduced.
The amount of compensation is capped at the equivalent of 26 weeks’ pay, or half the amount of the high-income threshold immediately before the dismissal, whichever is the lesser. This means the maximum amount of compensation that can currently be awarded is $74,350 (based on the current high-income threshold of $148,700).
Unlike in claims for general protections, claims for shock, distress, hurt or humiliation cannot be awarded in unfair dismissal claims.
Generally, in employment claims, each party pays its own legal costs. If a party is found to have proceeded vexatiously, without reasonable cause, with no reasonable prospect of success, or if costs were incurred because of a party’s unreasonable action or omission, that party might be liable to pay a portion of the other party’s costs.
Yes, the Fair Work Commission’s order is legally binding.
If a party does not agree with a Fair Work Commission order, that party can seek permission to appeal the decision.
An appeal to the Fair Work Commission will be heard by a Full Bench of the Fair Work Commission. The members of the Full Bench of the Fair Work Commission will decide whether to grant the appeal, and whether the original decision was erroneous.
The Full Bench of the Fair Work Commission can confirm, quash or vary the decision, make a further decision, or refer the matter to a Fair Work Commission Member for further action.
The parties only have 21 days to lodge an appeal application from the date that the order was made.
The Form F7 Notice of Appeal needs to be lodged with the Fair Work Commission office, and a copy of this needs to be served on the other party.
If a party is unhappy with the appeal decision made by the Fair Work Commission, that party can apply to the Federal Court of Australia for a Judicial Review of that decision.
The Federal Circuit Court of Australia and Federal Court of Australia can make any orders it considers are appropriate, including injunctions, orders for reinstatement or compensation, or monetary penalties.
Holly Mylne at Blossom Lawyers is an experienced Unfair Dismissal and Employment Lawyer. Should you require general employment law advice, or legal advice and/or representation with regards to an employment law issue or claim, Holly Mylne is available to discuss your matter.
To contact Blossom Lawyers fill in our contact us form or contact us directly at admin@blossomlawyers.com.au or call on (07) 5636 5598.
