GROUNDS FOR UNFAIR DISMISSAL

The Act is the piece of legislation that covers the federal industrial relations system and sets out the minimum workplace conditions and protections for employees and it also sets out certain employer obligations. The Act applies to the majority of workplaces in Australia.

An unfair dismissal application can be filed with the Fair Work Commission (the FWC). The FWC is the federal workplace relations body that has been created to regulate most workplace matters. Once an application is filed, the FWC will then deal with the matter.

The purpose of this type of application is to provide (where possible) a remedy to employees, but it also provides a framework that enables businesses and employees to deal with these applications in a flexible, efficient and informal manner.

To be eligible to make an application, first and foremost, an individual must be an employee of the employer. That is, there is likely to be a contract of employment between the individual and the employer, either oral or in writing. In certain circumstances, an individual who is considered to be an independent contractor, may actually be an employee. If this is the case, then the FWC could have jurisdiction to deal with the unfair dismissal application. 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 an employee to be protected from unfair dismissal under the Act:

  • you were dismissed from your employment.
  • the dismissal was ‘harsh, unjust or unreasonable.
  • your dismissal was not a genuine redundancy and
  • the dismissal was not consistent with the Small Business Fair Dismissal Code (if your employer was considered a small business).

National System Employer

The legislation applies to ‘National System Employers’. The meaning of a National System Employer varies slightly from State-to-State. If an employer falls within the definition of a National System Employer, they are bound by the Act.

A National System Employer includes:

  • private sector employers in Queensland, New South Wales, South Australia and Tasmania. This includes employing entities who are sole traders, Pty Ltd entities and partnerships;
  • local government employers in Tasmania;
  • the Commonwealth and Commonwealth authorities;
  • all employers in Victoria (with limited exceptions in relation to some State public sector employees), the Northern Territory and the Australian Capital Territory;
  • all employees on Norfolk Island, the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands;
  • employers that are constitutional corporations in Western Australia (including Pty Ltd companies)—this may include some local governments and authorities; and
  • the employers of waterside employees, maritime employees and flight crew officers in interstate or overseas trade or commerce.

What type of employer is not a National System Employer?

The employing entities who fall outside the definition of a National System Employer are not covered by the Act and therefore other legislation (such as State based legislation) applies to them.

Employers who are not National System Employers include, for example:

  • local government employers in Queensland, New South Wales and South Australia;
  • State government employers in New South Wales, Queensland, Western Australia, South Australia and Tasmania;
  • employers that are individuals, sole trader, partnerships and trusts in Western Australia; and
  • employers of employees in the public sector in Victoria who hold high managerial positions.

For the purposes of this article, 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 canvassed. These applications are dealt with by State industrial relations commissions. For example, the Queensland Industrial Relations Commission is the jurisdiction for Queensland Government employees to file an unfair dismissal application, not the FWC.

WHAT ARE THE ELIGIBILITY REQUIREMENTS TO MAKE AN APPLICATION?

An employee can make an application for unfair dismissal if they meet the following criteria (in addition to being an employee):

  • they have completed the minimum period of employment. The minimum period is either six months if the employee works for an employer who employs 15 or more employees or 12 months if they work for an employer who has less than 15 employees. The number of employees are calculated by a simple headcount of all employees and includes casual employees who are employed on a regular and systematic basis; and
  • they earn less than the high income threshold (which is currently $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. 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.

WHAT ARE THE ELIGIBILITY REQUIREMENTS TO MAKE AN APPLICATION?

For an employee to be protected from unfair dismissal under the Act:

  • the employee was dismissed from their employment;
  • the dismissal was ‘harsh, unjust or unreasonable’;
  • the employee’s dismissal was not a genuine redundancy; and
  • the dismissal was not consistent with the Small Business Fair Dismissal Code (if the employer is a small business employer).

A Small Business Employer is defined as an employer who employs less than 15 employees at the time of the employee’s dismissal. This includes casual employees who are employed on a regular and systematic basis with the employer. The criteria as to what constitutes unfair dismissal is explored further below.

What does ‘dismissed’ mean?

An employee is dismissed from their employment if:

  • their employment was terminated at the initiative of their employer; or
  • the employee was forced to resign from their employment as a result of their employer’s conduct or a course of conduct engaged in by their employer.

What is ‘harsh, unjust or unreasonable’?

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.

Section 387 of the Act sets out a number of criteria the FWC must consider when determining if the dismissal of an employee was harsh, unjust or unreasonable.

CRITERIA THE FWC WILL CONSIDER

Each of these criteria are explored in further detail below.

WHAT IS A VALID REASON?

A dismissal will be seen to be harsh, unjust or unreasonable if there is no valid reason for the dismissal.

A valid reason for dismissal may relate to an employee’s conduct, capacity or performance. The reason must be sound and well founded, not fickle, fanciful or prejudiced.

Below is a discussion on some examples that relate to conduct, capacity or performance and how these may amount to a valid reason for dismissal.

Conduct

Misconduct of an employee is behavior of an employee that is not appropriate at the workplace or in breach of the employee’s contract of employment. Below are a few examples of what may constitute misconduct by an employee:

  • breaching a company policy;
  • engaging in an activity that poses a serious risk to the health and safety of a person or to the reputation or viability of the business;
    dishonesty;
  • having a poor attitude and engaging in poor behavior towards your employer and/or other employees whilst at work;
  • failure to follow a lawful and reasonable direction given by your employer;
    being intoxicated at work;
  • stealing; or
  • fighting or assaulting another person at work.

In the decision of O’Keefe v Williams Muir’s Pty Ltd T/A Troy Williams The Good Guys, the conduct of an employee who made comments on Facebook that were of a negative and threatening nature towards another colleague, was held to be conduct that could not be tolerated in the workplace. Accordingly, this was a valid reason for the employee’s dismissal.

In another case, an employee who had been warned a number of times and counselled on their behaviour by their employer was found to have been dismissed for a valid reason for a continued breach and a disregard of the employer’s policies. The employee on a number of occasions was absent from his work station without authorisation, used his mobile phone in the factory which was prohibited and failed to wear personal protective equipment when using an open blade at work (see Aperio Group (Australia) Pty Ltd (T/a Aperio Finewrap) v Sulemanovski).

On the other hand, in the decision of Walker v Mittagong Sands Pty Limited T/A Cowra Quartz an employee was dismissed for stealing from the employer. However, as the employer had obtained the evidence by searching the employee’s vehicle without the employee being present, the employer was not entitled to rely on this evidence to prove misconduct and accordingly, it was found that the theft was not a valid reason for dismissal.

Out of Hours Conduct

In certain circumstances an employee’s out of hours conduct may be considered to be grounds for a valid reason for dismissal. However, there needs to be a connection that is relevant to the employment relationship and the misconduct that has occurred. In the decision of Rose v Telstra, out of hours conduct was considered. Vice President Ross of the Australian Industrial Relations Commission (the predecessor to the FWC) held that for out of hours conduct to be considered as a valid reason, the conduct:

  • must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employee and employer;
  • damages the employer’s interests; or
  • is incompatible with the employee’s duty as an employee.

Despite the above examples provided in relation to conduct, each individual circumstance is different and the FWC will consider each case on its merits in determining if there was a valid reason for the dismissal. Whether a dismissal for misconduct amounts to a valid reason to terminate the employee’s employment depends on the nature of the conduct in the particular circumstances and the employee’s work history.

CAPACITY

Capacity relates to the ability for an employee to perform the ‘inherent requirements’ of their position of employment and the work they were required to do.

It is an objective test of determining whether the work performed by the employee was satisfactory. When looking at whether an employee has the capacity to perform their role, it is the substantive position of employment that is considered, not a modified position, restricted position or temporary alternative position that the employee may have been performing for a period.

If an employee is unable to perform the inherent requirements of their role, then this may be considered a valid reason for the employer to terminate the employee’s employment.

Incapacity to perform a role may be on a medical basis. The Act provides workplace protections for employees who are absent from work due to illness or injury. The Act provides protection from dismissal if:

  • an employee is temporarily absent from work for a period of up to three months (or up to three months in total over a 12 month period); or
  • if an employee is absent on paid personal/carer’s leave for the duration of their absence from work.

If an employee is absent from work for more than three months it then becomes a consideration of when the employee is likely to return to work and their duties. Medical evidence may have bearing on determining the likelihood of a return to duties and whether the reason for dismissal is adequate when considering the evidence.

In the decision of Harte v Forbes Australia Pty Ltd T/A Hunt Boilers an employee was employed as a technician. His substantive position of employment as a technician involved both administrative and site-based duties. The employee seriously injured his foot at work and as a result he was solely placed on administrative duties. Subsequently, he resumed his technical role, however, a few years later he had further surgery on his foot. Following this, the employee thought he would never return to his pre-injury duties and in light of this settled a permanent disability claim. The employer sought advice from treating medical practitioners. It was held that the employee could not perform the inherent requirements of his position of employment, as his substantive role required both administrative and site-based work. As a result, this was considered a valid reason for dismissal and his dismissal was not harsh, unjust or unreasonable in the circumstances.

Capacity may also relate to unsatisfactory performance.

Performance

An employee may also be dismissed on the grounds of poor performance. Poor performance is when it is established that an employee has not been performing their role to a satisfactory standard. That is, they have not been performing their role diligently, with care and quality.

If an employee has been under-performing in their role, the Act provides that an employee ought to have been warned about their poor performance by their employer and have been notified of the need for the employee to improve their performance prior to their dismissal.

Generally, when determining an application for unfair dismissal, the FWC likes to see that an employee has been given a period of time in which to improve their performance. If an employee has not been warned that their performance at work is sub-standard and given a chance to improve their performance, then this may render the dismissal unfair, as the employee was not given the opportunity to understand their employment was at risk and given the chance to improve their performance.

In Fichera v Thomas Warburton Pty Ltd, a Branch Manager had been under-performing in their role and as a result the branch had low sales. It was found that the dismissal of the Branch Manager was valid as the Branch Manager did not have the leadership required to improve the performance of the branch. However, the dismissal was ultimately found to be unfair as the Branch Manager was not given a warning by their employer that his employment was at risk and given a chance to improve.

  • must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employee and employer;
  • damages the employer’s interests; or
  • is incompatible with the employee’s duty as an employee.

Despite the above examples provided in relation to conduct, each individual circumstance is different and the FWC will consider each case on its merits in determining if there was a valid reason for the dismissal. Whether a dismissal for misconduct amounts to a valid reason to terminate the employee’s employment depends on the nature of the conduct in the particular circumstances and the employee’s work history.

GENUINE REDUNDANCY

If an employee’s position of employment is made ‘genuinely redundant‘, then this will be viewed as a valid reason for the dismissal from employment. This is a jurisdictional issue and if an employee has been made genuinely redundant within the meaning of the Act then an unfair dismissal application should not be made. In such a circumstance, the employer objects to the application for unfair dismissal on the ground that the requirements of section 389 of the Act have been complied with.

  • an employee is temporarily absent from work for a period of up to three months (or up to three months in total over a 12 month period); or
  • if an employee is absent on paid personal/carer’s leave for the duration of their absence from work.

If an employee is absent from work for more than three months it then becomes a consideration of when the employee is likely to return to work and their duties. Medical evidence may have bearing on determining the likelihood of a return to duties and whether the reason for dismissal is adequate when considering the evidence.

In the decision of Harte v Forbes Australia Pty Ltd T/A Hunt Boilers an employee was employed as a technician. His substantive position of employment as a technician involved both administrative and site-based duties. The employee seriously injured his foot at work and as a result he was solely placed on administrative duties. Subsequently, he resumed his technical role, however, a few years later he had further surgery on his foot. Following this, the employee thought he would never return to his pre-injury duties and in light of this settled a permanent disability claim. The employer sought advice from treating medical practitioners. It was held that the employee could not perform the inherent requirements of his position of employment, as his substantive role required both administrative and site-based work. As a result, this was considered a valid reason for dismissal and his dismissal was not harsh, unjust or unreasonable in the circumstances.

Capacity may also relate to unsatisfactory performance.

Section 389 of the Fair Work Act provides that a redundancy is a genuine redundancy if:

  • A.  the employer no longer requires the employee’s job to be performed by anyone due to operational changes in the workplace;
  • B.  the employer complied with any obligation in a modern award or enterprise agreement to consult with the affected employee about the proposed redundancy; and
  • C.  it was not possible to re-deploy the employee into another job in the employer’s business or an associated entity of the employer.

If a dismissal was not a ‘genuine redundancy’ within the meaning of the Act, then the FWC does have jurisdiction to hear the application for unfair dismissal and determine if the dismissal was fair or not in the circumstances.

Accordingly, if an employer employs someone else to do the same role as the dismissed employee, then it is likely that the redundancy will not be considered a genuine redundancy.

The majority of modern awards and enterprise agreements provide that consultation is required if there are any significant changes to be made at the workplace. If a modern award or enterprise agreement applies to the employee’s terms and conditions of employment, the employer more than likely had an obligation to consult with the dismissed employee about the redundancy. That is, discuss with the dismissed employee the proposed change (i.e. making their position of employment redundant) and if there were any alternative options or ways to minimize the adverse effect of this change on the employee, prior to making their position of employment redundant.

The final factor in determining whether a redundancy is genuine, is if it was reasonable in the circumstances to re-deploy the employee within the employer’s enterprise or an associated entity of the employer’s business. If there was an alternative job available then it may mean the redundancy was not ‘genuine’ within the meaning of the Act.

In the decision of UES (Int’l) Pty Ltd v Harvey, there was a decline in business and as a result the employee’s position was made redundant due to the employer no longer requiring the employee’s job to be performed by anyone in light of the change in operational requirements. However, the employer failed to consult with the employee about the changes and the proposed redundancy. Consequently, it was found not to be a genuine redundancy within the meaning of the Act.

In Patti v Vincent Chrisp & Partners P/L t/a Vincent Chrisp Architects, when considering re-deployment opportunities, the employee’s skills were relevant in determining whether an alternative position would be suitable for redeployment. It was held that the alternative position was not suitable as it was for a contract administrator position which the employee did not have the skills for. The employee was employed as a drafter. Consequently, redeployment was not reasonable in the circumstances.

Nonetheless, the employer must properly consider redeployment options at the time of the dismissal.

THE SMALL BUSINESS FAIR DISMISSAL CODE

If an employee is dismissed in accordance with the Small Business Fair Dismissal Code, then their dismissal will be considered to be fair.
The Code applies to employers who have a business that employs less than 15 employees (a Small Business Employer). If the employer has followed the Code when dismissing the employee, then it is more than likely the employee’s dismissal will be deemed to be fair.
If an employee works for a Small Business Employer, then they are not eligible to make an application for unfair dismissal unless they have worked for their employer for a period of 12 or more months.

OTHER MATTERS

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 (see section titled ‘Time limits for lodging an application” for further information).

If the employer is successful in objecting to any of the above grounds or if the dismissal was a genuine redundancy, consistent with the Small Business Fair Dismissal Code or the employee was terminated during the minimum employment period, then this means that the FWC does not have the jurisdiction or power to deal with the unfair dismissal application.

TIME LIMITS FOR LODGING AN APPLICATION

An employee has 21 days from the date their dismissal took effect in which to lodge an application for an unfair dismissal remedy with the FWC.

If an application is lodged after 21 calendar days, a late application will only be accepted by the FWC if there are exceptional circumstances.

Exceptional circumstances

Exceptional circumstances are those circumstances that are ‘unusual’ or ‘out of the ordinary course’, however they do not need to be ‘unique, unprecedented or rare’. Exceptional circumstances may be a series of events or a single exceptional event. Section 394(3) of the Act sets out the criteria the FWC will take into account when considering exceptional circumstances, these are:

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

Generally, after an employee lodges an application and the employer files their response to the application, the next step is for the employee and the employer to participate in a Conciliation Conference to try and resolve the dispute in relation to the dismissal.

If the matter cannot be settled at Conciliation then a formal hearing will take place. At the hearing, the Commission will hear from both parties and on the evidence before it, make a decision as to whether the dismissal in the circumstances was unfair or not.

REMEDIES FOR UNFAIR DISMISSAL

  • reinstatement; and
  • compensation (capped at 26 weeks wages).

Reinstatement of an employee’s position of employment is the primary remedy for unfair dismissal. The FWC will seek to have the employee’s job reinstated (if practical) or into a new position that is similar in hours, responsibilities and pay. If this occurs, the employee will also be entitled to back pay. The FWC 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.

If it is not practicable for the employee to be reinstated as the employment relationship is no longer tenable, then compensation may be ordered as a remedy.

Compensation for unfair dismissal is capped at 26 weeks’ wage of the annual wage of the employee. However, the total amount of compensation that the FWC is able to award an employee is half of the high-income threshold amount that applies at the time of dismissal. The maximum amount of compensation the FWC can currently award is $72,700, because at the time of writing, the high-income threshold is (and will remain until 30 June 2019) $145,400.

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

The FWC will not award monetary compensation for shock, distress or humiliation.
If you think you have been unfairly dismissed and require any assistance, contact Anderson Gray Lawyers today.