How to avoid an unfair dismissal claim

Do you operate or manage a business? Are you considering terminating an employee because they are causing you grief by always arriving late, or just not competing their work to the high standard you require? Be careful about an Unfair Dismissal Claim.

Then, you should exercise a high degree of care if you do choose to terminate that employee. Otherwise you may run a serious risk of being on the receiving end of an expensive Unfair Dismissal Claim.

Serious misconduct

Serious misconduct is conduct that is considered sufficiently serious to warrant immediate dismissal, without the provision of notice. The Fair Work Act defines serious misconduct as:

 “….an employee deliberately behaving in a way that is inconsistent with continuing their employment.”[1]

Therefore, serious misconduct can include theft, fraud, violence, or a serious breach of occupational health and safety laws. [2]

Should you believe an employee has engaged in serious misconduct, we recommend you seek professional advice first, as the boundaries of what may be considered serious misconduct are often blurred.

Don’t forget, even though an employee may have committed serious misconduct, they are still entitled to their employment entitlements, such as annual leave and long service leave. [3]

What if the employee has not engaged in serious misconduct?

A high degree of caution must be exercised where an employee has not engaged in serious misconduct. [4]

While certainly not intended to be a definitive guide, the following may assist you in reducing the likelihood of being on the receiving end of an unfair dismissal claim:[5]  

1. Do you have a valid concern about the employee’s capacity or conduct in the workplace?

A valid reason will be well-founded, defensible and not spiteful or fanciful, and related to the employee’s capacity or conduct. Dismissing an employee for a reason not related to their capacity or conduct is often a guaranteed way get yourself before the Fair Work Commission.

• Have you adequately warned the employee about your valid concern? 

Putting your employee on notice about your valid concern is absolutely critical to ensuring any subsequent dismissal is fair. How can an employee be expected to improve their capacity or conduct if they are not aware of your concern? In addition, rather than simply handing your employee a warning letter, consider sitting down with them to discuss, in a non-confrontational manner, your concerns.

• Have you notified the employee that they could be terminated, should they fail to improve their capacity or conduct?

It goes without saying that people should be told the risk their capacity or conduct poses to their continuing employment. Being open and straightforward with your employee about this is often the deciding factor in whether any subsequent dismissal was fair.

• Have you given the employee sufficient time to improve their capacity or conduct?

Generally speaking, this is a matter of common sense, as people should be allowed a reasonable opportunity to rectify their poor performance and improve. How much time you should give an employee to improve their performance will be dependent on the duties they perform and what, in particular, needs improvement.

What happens next?

You should only consider proceeding with the termination of an employee once you have satisfied the above requirements and the employee’s capacity or conduct has not improved. [6]

Importantly, if you are a Small Business Employer (you employ fewer than 15 people), we recommend you read and follow the Small Business Fair Dismissal Code Checklist. [7] Doing so may further reduce the risk posed by any subsequent unfair dismissal claim.

Even armed with this information, we recommend employers still seek legal advice, prior to terminating an employee. Every workplace and employee is different, and every termination requires a targeted and bespoke approach.

How can DSA Law help?

If you have an employment law issue or are being unfairly treated and believe you could benefit expert legal assistance, please Contact Us or one of our Employment Lawyers at DSA Law on (03) 8595 9580.

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[1] Fair Work, Dictionary <https://www.fairwork.gov.au/Dictionary.aspx?FirstLetter=s>.

[2] Fair Work Regulations 2009 (Cth) reg 1.07.

[3] Fair Work Act 2009 (Cth), s 61(2).

[4] Ibid s 381.

[5] Ibid s 387.

[6] Ibid s 385.

[7] Ibid s 23.