FWC looks into employer's dismissal procedure
The Fair Work Commission (FWC) recently dealt with an unfair dismissal case involving a worker who was abruptly terminated after a heated discussion about overtime pay.
The case highlighted the importance of proper dismissal procedures and the potential consequences for employers who fail to follow them.
In this case, a long-term employee found himself suddenly out of a job following a dispute with management. The FWC's decision sheds light on what constitutes unfair dismissal and the factors considered when determining appropriate remedies.
Worker's sudden termination
The worker had been employed by the company for over five years, from 25 February 2019 until 24 April 2024, when the incident occurred. On 23 April 2024, the worker was working in Batlow, New South Wales.
After finishing work, he contacted the general manager about overtime for the previous week. The worker informed the manager that he wouldn't be doing any overtime while away because the company refused to pay for it.
This conversation sparked an angry response from the general manager, who reportedly yelled at the worker, saying, "What have you guys been doing down there, there's 3 of you, what the fuck have you been doing? Bring your ute to the office on Monday. I'm finishing you up."
Shortly after this heated exchange, the worker attempted to contact another manager to clarify if he was being terminated. Unable to reach him directly, he received confirmation of his dismissal through the company's Business Services Manager.
On 14 May 2024, the worker applied to the Commission for a remedy for unfair dismissal under section 394 of the Fair Work Act 2009. The employer did not respond to the application. On 16 July 2024, the employer advised the Commission that it had entered voluntary administration.
Is it unfair dismissal?
The FWC considered several factors in determining that the dismissal was unfair:
- Lack of valid reason: The employer did not provide any reason for the worker's dismissal.
- No opportunity to respond: The worker was not given a chance to address any concerns before being terminated.
- Absence of prior warnings: There was no evidence of unsatisfactory performance or previous warnings given to the worker.
- Abrupt termination: The sudden nature of the dismissal left the worker emotionally distressed and financially strained.
- Failure to pay entitlements: The employer did not pay the worker's accrued entitlements upon termination.
The FWC also noted that the worker had completed the minimum employment period of 6 months and there was no evidence that his income was more than the high income threshold.
The dismissal was not a case of genuine redundancy, and the Small Business Fair Dismissal Code did not apply because the employer was not a small business employer at the relevant time.
"Having considered each of the matters specified in section 387, I am satisfied that in the absence of both valid reason and procedural fairness and having regard to the failure to give [the worker] notice of termination or pay his accrued entitlements, the dismissal was unjust and unreasonable," the FWC stated in its decision.
Determining appropriate compensation
While reinstatement is typically the primary remedy for unfair dismissal, the FWC deemed it inappropriate in this case due to the employer's entry into voluntary administration. Instead, the Commission ordered compensation as the suitable remedy.
The FWC considered various factors in calculating the compensation amount. It said the worker would have likely remained employed for at least 12 weeks had he not been dismissed, until the business entered voluntary administration on 16 July 2024.
Additionally, the worker's five-year tenure was taken into account. A four-week reduction was applied, considering the separate obligation for notice of termination.
The FWC noted the uncertainty of the employer's financial position due to voluntary administration. Since no evidence was provided, no adjustments were made.
"When these factors are taken together, the compensation amount to be awarded to [the worker] is 8 weeks' pay. This is less than the compensation cap of 26 weeks' pay and is neither excessive nor inadequate," the FWC concluded.
This case emphasises the importance of following proper dismissal procedures, even in heated situations. The FWC's decision highlights several crucial points:
"I am not satisfied that [the employer] had a valid reason for dismissal. No reason was given to [the worker] for his dismissal. If, as might be inferred, the reason was his refusal to work overtime without reward, it is hard to see how this could constitute a valid reason for dismissal."
This quote underscores the need for employers to have a valid and clearly communicated reason for termination.
"[The worker] had no opportunity to respond in circumstances where no advance warning or reason for dismissal was given."
The FWC's statement emphasises the importance of providing employees with an opportunity to respond to concerns before making a dismissal decision.
"The abrupt manner of the termination left [the worker] emotionally distressed and financially strained, including because [the worker] was not paid his accrued entitlements on termination."
This observation highlights the potential emotional and financial impact of improper dismissal procedures on employees.
The case serves as a reminder for employers and HR professionals to ensure fair and lawful dismissal processes are in place, regardless of the circumstances. Proper communication, valid reasons for termination, and adherence to procedural fairness are crucial elements in avoiding unfair dismissal claims and potential financial penalties.
