7 steps to handling unfair dismissal claims

by Kate Thomson, Senior Associate, Australian Business Lawyers & Advisor

The spectre of an unfair dismissal claims looms large for any employer considering termination of an employee.

This year, that threat is even more ominous, with Bernadette O’Neill, general manager of the Fair Work Commission (FWC) reporting in May that there had been an increase of more than 70% in unfair dismissal claims.

It’s to be expected that the pandemic-related increase in retrenchments and a rising unemployment rate have correlated with an uptick in the number of unfair dismissal claims. 

Businesses are making decisions on the run, in difficult circumstances, in a jurisdiction where even perfect processes can’t guard against a claim.

Putting this aside, there are a still a number of strategies the savvy HR manager or business owner can implement, in an effort to dissuade former employees from making a claim.

Communication
Discussions about disciplinary matters, a downturn in the business or poor performance are never easy.  However, one of the simplest strategies to reduce the risk of a claim is to ensure your communication is prompt, responsive, clear and gets to the heart of the issues. 

Read more: Pilot who failed drug test loses unfair dismissal claim

Ensuring issues are brought to an employee’s attention as they arise, that they understand the concern and are offered an opportunity to provide a proper response will not only help to satisfy your procedural fairness obligations, it may also assist the employee to understand and accept the ultimate decision. 

Valid reason
The criteria for considering the harshness of a termination found at section 387 of the Fair Work Act 2009 (Cth) (the Act) can basically be divided into two categories;

• whether there was a valid reason for the dismissal,
• and the procedural fairness considerations. 

A decision maker should satisfy themselves of the existence of a valid reason before consideration of any of the other factors. This conclusion should be based on sound and defensible evidence, the nature of which will vary depending on the circumstances of the termination.

Opinions and subjective views will not be sufficient - you need objective data, or at the very least, conclusions which have been informed by a thorough investigation. If you are terminating for conduct reasons, you will need to be able to prove on the balance of probabilities that the alleged conduct did in fact occur.

Vagueness
This factor could fit under ‘Communication’ or ‘Valid reason’ but it’s so important we have elevated it to a point of its own.

A termination that relies on vague and general assertions about policy breaches or poor performance will be difficult to defend.  Correspondence to an employee must clearly spell how they have fallen short of their obligations. 

Draw their attention to the specific paragraph of their position description outlining the task they’re overlooking, or the precise clause in the policy which has been contravened.  Give an example of the behaviour that demonstrates the basis for your assertion. Pedantic? Perhaps. Important?  Very.

Delay
Termination is one of those areas where time really is of the essence.  It’s no good relying on an incident six months ago, or behaviour which has been ongoing for years without proper intervention.  As we have all been told, the standard you walk past is that standard you accept, and sudden righteous indignation won’t be regarded favourably by the FWC.

Failure to consider the rest of the harshness factors

While a conclusion about ‘valid reason’ needs to come first, the decision-making process can’t stop there. Due regard needs to be had to all of the other section 387 factors, including the elusive “any other matters that the FWC considers relevant”. 

This is where the decision-maker needs to think carefully about the employee’s personal circumstances, and whether the valid reason is sufficiently grave to justify termination having regard to all of those other factors.  In the current economic climate, the employee’s age, length of service and capacity to obtain suitable alternative employment will be particularly relevant considerations. 

Read more: Napping employee wins $5k payout for unfair dismissal claim

Consistency
Does the business have a consistent approach to disciplinary matters or are some employees allowed to get away with (figurative, hopefully) murder? 

A zero-tolerance approach to issues such as drug and alcohol policy contraventions or serious safety breaches might get you a long way in terms of defending assertions of ‘harshness’, but inconsistent application will put you right back in the FWC’s firing line. 

If there are certain behaviours which are a solid ‘no go’ for your business, ensure the appropriate policies are properly implemented and consistently applied.  And yes, that does mean to the boss’s son who partied too hard the night before a shift.

Seek advice early
The horse has already bolted once a claim is made.  Obtain advice early in the process to avoid some of these pitfalls and you will be better placed to avoid (or at least defend) a claim.