Dismissing an Employee – What to Consider

Dismissing an employee is an unfortunate but important part of business, and if not done correctly, can cost an organisation time, money and reputation. To avoid these issues, and to minimise any risk of unfair dismissal cases, there are a number of factors to consider when working through this process.

Procedural Fairness

Termination of employment will occur because of a capacity (i.e. performance) or a conduct (i.e. breach of policy) issue which needs to be addressed. The practical steps for managing each of these scenarios is different but both need to provide procedural fairness (sometimes called natural justice) to the employee. The Fair Work Commission (FWC) will consider this first when deciding whether the dismissal was harsh, unjust or unreasonable. To provide procedural fairness employers should:

  • abide by their own policies and procedures,
  • provide the details of why the disciplinary process is occurring (allegations),
  • ensure employees are given a chance to respond to the allegations,
  • allow a support person to be present if requested, and
  • only make reach a final decision on disciplinary outcomes after consideration of the employees’ response (no pre-determined outcomes).

Support Person

While the Fair Work Act (the Act) does not require employers to offer employees an opportunity to have a support person present during disciplinary meetings, it cannot reasonably refuse a request for one to be present. Best practice is to offer the opportunity to have a support person present at a disciplinary meeting, although an employee does not have to take up this offer.

Employees should be provided reasonable notice of any disciplinary meeting. Although there is no set time frame, common practice is to allow at least 24 hours. This allows enough time for the employee to find a support person if they would like one and meetings should be reasonably rescheduled to allow a support person to attend.

The role of a support person is to offer support – to clarify questions/allegations, take notes, help an employee formulate what to say, talk to the employee and/or assist them during the discussions, assist the employee with understanding the processes, ask for breaks and give emotional support. They are not an advocate and cannot speak on behalf of the employee.

Other factors to consider

When considering the termination of an employee, there are a number of other elements that need to be taken into consideration to ensure the decision, if challenged, is not found to be harsh, unjust or unreasonable in addition to procedural fairness. These include:

  • consistent application of policy/procedure to all employees i.e. is there a precedent set for this type of behaviour,
  • the employees length of service and prior disciplinary history, and/or
  • the impact of the dismissal on the employee’s personal or economic situation.

Potential impacts of a poor termination process

Regardless of the process followed, employees may still lodge an unfair dismissal claim against the business. In the last quarter (1 Jan 2022 to 31 March 2022), the FWC received 3645 applications for unfair dismissal. While only 18 of these were found to be genuine cases of unfair dismissal (versus 25 where the dismissal was found to be fair), 2939 were settled prior to being heard, which likely involved some form of pay-out from the employer.

Following a correct process and being able to show this during a conciliation conference (part of the unfair dismissal process with the FWC) will go a long way towards mitigating these potential costs and ultimately having the decision be judged fair, should the application proceed to hearing.

Should the matter proceed to hearing and the dismissal is found to be unfair, employers could find themselves having to reinstate the terminated employee and/or provide compensation.

Small Businesses

Employees of small businesses (less than 15 employees) can also lodge an application for unfair dismissal, although the minimum employment period is 12 months (versus 6 months for larger employers). Employers must abide by the Small Business Fair Dismissal Code (the Code) when considering termination of employees. Under the Code, except in cases of summary dismissal, employees must be provided with a warning and given an opportunity to improve their behaviour or performance. All other factors above should also be considered and addressed when taking a decision to terminate. A link to the Code (including the Small Business Fair Dismissal Code  Checklist) can be found here.

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