Most people, regardless of the circumstances, would find it difficult to dismiss an employee. But on top of everything else, the last thing you need to worry about is whether you could end up before the Fair Work Commission.
The decision to terminate an employee may be due to lack of performance, serious misconduct, dangerous behaviour or simply, the position is no longer required. Whatever the reason, it is important to be aware of the law of dismissal to avoid unnecessary legal action.
The Fair Work Commission considers four elements in a case of unfair dismissal:
- The individual must actually be dismissed.
- The dismissal must not be a case of genuine redundancy.
- If the employee worked for a small business, the Small Business Fair Dismissal Code needs to be followed.
- The dismissal must not be harsh, unjust or unreasonable.
When could a dismissal be considered ‘harsh, unjust or unreasonable’?
The term ‘harsh, unjust or unreasonable’ is quite broad and may be construed differently on a case by case basis. The Fair Work Commission may consider the employer’s reasoning for dismissal, whether the employee was notified, warned and/or provided an opportunity to respond to the reasoning provided, or any other matters that the Commission may find relevant.
So, what can you do?
Consider whether you have a valid reason for termination
Firing an employee for a minor mistake may be considered ‘harsh, unjust or unreasonable’. On the other hand, firing an employee for significant misconduct, such as bullying or breach of confidentiality, may be considered a valid reason for termination.
Comply with the law
Termination is considered unlawful if you dismiss an employee on the basis of discrimination. This includes, but is not limited to race, colour, sex, sexuality, age, disability and/or marital status; temporary absence from work due to illness or injury; trade union membership; absence for the purpose of parental leave or voluntary emergency management; and/or dismissal as a result of exercising your workplace rights to complain or enquire about any matters regarding your employment. All employees are protected from unlawful termination so, as an employer, it is your job to have a valid and appropriate reason for termination.
Put all communication in writing
It is good practice to put all communication with the terminating employee in writing. Relevant documentation may include a written warning in the event of underperformance, written notice of the last day of employment, or a document containing the reason for termination that the employee has read and signed.
An employer should provide written notice to the employee detailing the last day of employment. The Fair Work Act stipulates minimum notice periods when dismissing an employee on the basis of how many years of continuous service. However, if your employees are under an award, employment contract or enterprise agreement, they may have a longer minimum notice period.
Pay out entitlements
As an employer, you are obligated to pay out all applicable entitlements of a terminated employee. Entitlements to be paid may include any outstanding pay or remuneration, pay in lieu of termination notice, any accrued annual or long service leave (if any) or additional entitlements.
If you fail to correctly pay a terminated employee, you may face legal action and/or an investigation by the Fair Work Commission. Employers can be liable for hefty penalties for non-compliance, so it is important you get it right!
Still not sure?
If you are feeling unsure about the legal requirements when terminating an employee or are worried about how to lawfully dismiss an employee, the good news is that we can help. At AccountCom, we provide guidance in handling employee matters, including employee dismissal and termination. We can provide you with a comprehensive Employee Terminations Guide tailored to your business. If you have any questions, do not hesitate to contact our HR team who can provide you with ongoing support in HR management and compliance.