Legally Fit: getting it right with your employees (part 3)

Unfortunately, employment relationships do not always work out – so how do you, as employer or employee, stop things getting worse in that situation?

This is the third and final instalment of the ‘Getting it right with your employees’ articles in the Legally Fit series. The first two articles discussed getting the hiring process right and things to consider to give the employment relationship the best chance to succeed.

Sometimes, however, despite the best intentions, things just don’t work out.

Here we look at some of the issues that should be considered to make sure you (as employer or employee) do not make things worse in an already unfortunate situation. To read previous articles in this series search ‘Legally Fit’ at

fitnessnetwork.com.au/resource-library.

Probation/minimum employment period

It is a common misconception that employees can be dismissed for any reason and without notice or fear of reprisal during a probationary or minimum employment period.

The Fair Work Act 2009 (FWA) provides that in order for an employee to have an ‘unfair dismissal’ claim they must have completed a ‘minimum employment period’. The minimum employment period for an employer with fewer than 15 employees (small business employer) is one year, and the period for an employer with 15 or more employees is six months.

So an employer can just dismiss an employee for any reason during that period, right? Well, no, as discussed below under ‘General Protections/Adverse Action’.

The FWA also requires that an employer give an employee written notice of termination of no less than one week (or pay in lieu) during the minimum employment period (unless the termination is because of serious misconduct). Longer notice periods apply if an employee has worked with the employer for more than one year. The Fitness Industry Award 2010 (Award) also generally requires an employee covered by the Award to give the same amount of notice as an employer is required to give.

Casual

Another common misconception is that casual employees can also be dismissed (for instance, by just not giving them any further work) for any reason. However, a casual employee will be protected from unfair dismissal if the employee was employed for the minimum employment period, and had a reasonable expectation of continuous employment, on a regular and systematic basis.

A casual employee also has rights under the General Protections provisions of the FWA discussed below.

Unfair dismissal

In addition to having to complete the minimum employment period, an employee must be covered by an award or enterprise agreement or earn less than the high income threshold ($136,700 as at 1 July 2015) to be protected from unfair dismissal.

An unfair dismissal is: (a) where a person has been dismissed; (b) the dismissal was harsh, unjust or unreasonable and (c) was not consistent with the Small Business Fair Dismissal Code.

It should be noted that a genuine redundancy is not an unfair dismissal. However, even if the redundancy is otherwise ‘genuine’ it can be found to be an unfair dismissal if the redundancy requirements of the FWA are not complied with.

Dismissed

A dismissal is not only when an employer terminates an employee, but can also be found where a person is constructively dismissed (for instance, by decreasing an employee’s pay) or otherwise where the circumstances are such that an employee is (essentially) forced to resign because of the conduct of the employer (e.g. ‘We can terminate you or you can resign!’).

Harsh, unjust or unreasonable

The FWA requires the Fair Work Commission (FWC) to take into account and weigh up each of the following factors in determining whether a dismissal was unfair:

  • Whether there was a valid reason for dismissal relating to the person’s capacity or conduct. A valid reason has been found to be one that is sound, defensible or well founded, not capricious, fanciful, spiteful or prejudiced.
  • Whether the person was notified of that reason (before any decision was taken to actually dismiss the employee).
  • Whether the employee was given an opportunity to respond (again, before any decision is taken to actually dismiss the employee).
  • Any unreasonable refusal by the employer to allow the employee to have a support person present to assist at any discussions relating to dismissal. The employer is not, however, required (although it may be appropriate depending on the circumstances) to offer a support person.
  • Whether the employee had been warned about unsatisfactory performance (or conduct) before the dismissal.
  • The degree to which the size of the employer’s enterprise and absence of HR expertise would likely impact on the procedures followed in effecting the dismissal.
  • Any other matters that the FWC considers relevant. For instance, the FWC may consider whether the dismissed employee was treated differently to other employees, the impact of the dismissal on the employee’s personal or economic situation and the employee’s work performance or history.

It is therefore important to ensure that each of those factors is considered and appropriately addressed (and able to be proved) in any dismissal.

Small Business Fair Dismissal Code

If an employer is a small business employer and complies with the Small Business Fair Dismissal Code (Code), the FWC cannot find that the dismissal was unfair, but the small business employer will be required to show compliance with the Code if an unfair dismissal claim is made.

The Code, and a useful checklist to assist in complying with the Code, can be obtained from the FWC (fwc.gov.au/about-us/legislation-regulations/small-business-fair-dismissal-code).

General Protections/Adverse Action

The ‘General Protections/Adverse Action’ provisions of the FWA, in the context of dismissals, prevents an employer from dismissing an employee ‘because’: (1) the employee has, or proposes to exercise a ‘workplace right’ or (2) engages in industrial activities, (3) of discriminatory reasons or (4) of temporary absence due to illness or injury. (Other General Protections may also apply.)

For instance, if an employee is dismissed because they complained about not being paid wages or allowances required by the Award (or at all), monies being withheld from wages (for instance, for use of or lost towels) without written authorisation of the employee, not being engaged for the minimum period required by the Award, not consulting with the employee before changing the employee’s roster or being bullied, the employer may be in breach of the General Protections and exposed to an order that the employee be reinstated and/or compensation paid.

One of the above reasons does not need to be the sole reason in order for the General Protections to apply to a dismissal (including constructive dismissal), but need only be a reason.

There is also no income threshold or minimum employment period requirement for the General Protections to apply. Thus, even if an employee is not protected under the unfair dismissal provisions of the FWA, the employee may still have a General Protections claim. If an employee makes such a claim it also is presumed that the employer has taken the action unless the employer proves otherwise.

It is therefore important when an employer decides to dismiss an employee (including a casual employee and an employee who has not completed the probation/minimum employment period) that the employer can prove there was a valid and lawful reason for the dismissal.

The remedies for an unfair dismissal application are reinstatement or compensation to the lesser of up to six months’ wages or half of the high income threshold, whereas the scope of compensation which may be awarded is not limited for dismissal in breach of the General Protections.

Unfair dismissal/General Protections applications

An application for unfair dismissal or dismissal because of breach of the General Protections must, except in exceptional circumstances (which are generally rarely found to exist), be made within 21 days of dismissal, failing which the application may be dismissed.

The FWA also provides that an employee can only make one application in relation to a dismissal. Thus, only an application for unfair dismissal or a General Protections application can be made to the FWC.

It is therefore important that all the above things (together with the FWA) be very carefully considered by both employers and employees where dismissal is being considered or put into effect.

This article has provided a general outline only of some of the issues relating to the rights and obligations in dismissals. It does not constitute legal advice and should not be relied upon as such. Specific legal advice should be obtained in relation to the particular details of each employment situation.


Leon Ponte, Juris Doctor (Law) is the founding principal of Ponte – Business Lawyers for Business and is in a select group of approximately only 110 lawyers accredited as specialists in business law by the Law Institute of Victoria. He has a strong personal interest in the fitness industry, holding Certificates III and IV, and has provided advice to the industry. ponteblfb.com.au