From 1 July 2009, a new unfair dismissal system commenced. If employees work continuously for 12 months or more and are dismissed, then they may claim unfair dismissal (except, for example, in the case of a genuine redundancy), according to REBECCA McKENZIE.
An employee has a time limit of 21 days from the date of termination to make a claim for unfair dismissal.
Any application for unfair dismissal is made to Fair Work Australia. An employee has been unfairly dismissed if Fair Work Australia finds that:
- The employee was dismissed; and
- The dismissal was harsh, unjust or unreasonable; and
- The dismissal was not a case of genuine redundancy.
In order to be eligible to make an application for unfair dismissal an employee must have completed a minimum employment period of:
- One year – where the employer employs less than 15 employees (a small business employer); or
- Six months – where the employer employs 15 or more employees.
In addition, if an employee earns more than $129,300 per year (calculated and indexed annually), at least one of the following must apply:
- An award covers the employee; or
- An enterprise agreement applies to the employee.
There is a different regime in relation to ‘small business’. A small business is classified, for the purposes of unfair dismissal, as one with fewer than 15 employees (as from 1 January 2011 it is now a simple headcount). A casual employee is not counted, unless that casual has been employed on a regular and systematic basis.
Insofar as a ‘small business’ is concerned, a dismissal will be deemed to be ‘fair’ if the employer follows the Small Business Fair Dismissal Code. This Code sets out steps an employer should follow in the event the employer wishes to terminate an employee. The purpose of the Code is to provide some protection for employers in relation to the termination process.
In assessing what is harsh, unjust or unreasonable, Fair Work Australia must take into account:
- Whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
- Whether the person was notified of that reason; and
- Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
- Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
- If the dismissal related to unsatisfactory performance by the person, whether the person had been warned about that unsatisfactory performance before the dismissal; and
- The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
- The degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
- Any other matters that Fair Work Australia considers relevant.
Recent case law from Fair Work Australia highlights that a person’s personal circumstances, such as their economic situation, can be taken into account in determining whether an action taken by an employer was harsh, unjust or unreasonable.
Even where someone may be found to have engaged in ‘relatively serious misconduct’, and therefore able to be dismissed without notice, a finding may still be made that the circumstances surrounding the dismissal were harsh or unjust.
If a dismissal is found to be unfair, then Fair Work Australia must consider the viability of reinstatement of the employee in the first instance. However, if reinstatement is not reasonable, then the employer can be required to pay compensation up to a maximum of the lesser of 26 weeks’ pay (at the employee’s former ordinary rate of pay) or $59,050 (currently, which is half the ‘high income threshold’).
