Unfair Dismissal

What constitutes Unfair Dismissal?

The definition of unfair dismissal according to section 385 of the Fair Work Act 2009 (Cth) is that an employee is dismissed (employment terminated by employer/resignation of employee), harshly, unjustly, or unreasonably, inconsistent with the Small Business Fair Dismissal Code, and the dismissal is not a case of genuine redundancy. In determining whether the dismissal meets the harshness requirement, some questions to be asked include:

• Was there a valid reason for dismissal in relation to conduct or capacity?
• Was the employee notified of the reason for dismissal and given an opportunity to respond?
• Was there an unreasonable refusal of employer to allow a support person to be present with the employee when discussing dismissal?
• Was the dismissal in relation to unsatisfactory performance of employee? Was the employee warned of this?
• What is the size of enterprise and what are the impacts of this on dismissal?
• Would the presence of HR management specialists during or before the dismissal have made a difference?

An employee is protected from unfair dismissal if they have been employed for the minimum employment period (small business: 1 year, larger businesses: 6 months), and either a modern award or enterprise agreement applies, or the employee is earning less than the high income threshold (which as of July 2010 is $113,800). A small business is one which employs less than 15 employees. The period of employment must be continuous; it is disrupted if the person has transferred from another employer, who is not associated with the new employer. For service with the previous employer to be disregarded, the new employer must inform the employee in writing before the new employment commences that the period of service with the prior employer will not be recognised.

Remedies for Unfair Dismissal

The remedies for unfair dismissal include reinstatement and compensation. In order to successfully obtain a remedy however, Fair Work Australia (the body created by the Fair Work Australia Act to deal with employment matters) must be satisfied that the employee has been unfairly dismissed. The application for a remedy for unfair dismissal must be made within 14 days of dismissal.

Reinstatement involves reinstating the employee to the same position that the employee held before the dismissal, or another position (not lower than that originally held) if the original position no longer exists. FWA can order for the period of service to continue, in order to maintain continuity in employment. It can also order that the employer pay the employee any lost pay as result of dismissal- any amount likely to have been earned.

Compensation by the employer to employee takes place in lieu of reinstatement. Compensation may be paid in instalments. However, caps apply to compensation amounts. Compensation must not be more than the lesser of a) the total amount of remuneration received/to which the person was entitled for 26 weeks prior to dismissal PLUS any remuneration to be received for leave or b) half the amount of the income threshold immediately before the dismissal.

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