Unfair Dismissal – Why is Procedural Fairness Important?

In the period between October to December 2018, the Fair Work Commission (FWC) received 3251 unfair dismissal applications . Claims from disgruntled employees can be costly, time-consuming and bad for corporate reputation. Employers need to take proactive steps to develop robust policies and procedures to assist in mitigating successful unfair dismissal claims.

When determining whether a dismissal is unfair, unreasonable or harsh, the FWC is required to consider certain criteria. This criteria, as outlined under section 387 of the Fair Work Act 2009 (Cth) (the FW Act), constitutes procedural fairness. Employers should consider this criteria when developing and/or reviewing policies, practices and procedures. The details of each criteria are as follows.

Valid Reason

One of the most critical criteria of procedural fairness is the requirement for the employer to have a valid reason for dismissing an employee. The reason for dismissal must be justifiable and based upon an objective review of the employee’s conduct or capacity. An employer is additionally obligated to notify the employee of the reason/s for dismissal relating to their conduct or capacity. The notification must be in clear, explicit and plain terms and must occur prior to making the decision to dismiss.

Right of Response

An employee must be afforded a right of response, by the employer, to provide any mitigating reason/s related to their capacity or conduct in question. To provide an employee a right of response, an employer is required to genuinely consider any response from the employee before taking any action.

Practical Tips:

  • Notify the employee that you wish to meet with them to discuss their conduct or capacity – e.g. 24 hours’ notice of the meeting
  • Provide the employee with reasonable time to respond
  • Holding two separate meetings with the employee can be useful – e.g. one for the employee’s response and one to provide the outcome. Use the time between meetings to genuinely consider the employees response

Support Person

The FW Act states an employer cannot unreasonably refuse a support person requested by an employee, where discussions relate to dismissal. For example, the employee has requested the meeting be postponed a month as their support person isn’t available. It may be reasonable to refuse the employees support person in this instance on the grounds that the employees request is unreasonable in the circumstances. The role of a support person is to provide emotional support to the employee during discussion related to dismissal. A support person is not permitted to act on behalf of the employee, unless a policy, contract or agreement contains a provision that permits this.

Practical Tips:

  • Inform the employee of the support person’s role in discussions relating to dismissal
  • Attempt to accommodate the employees request for a support person if they wish to postpone the meeting due to their availability
  • Remind the support person of their role in discussions relating to dismissal and that any behaviour that contradicts this will not be tolerated

Warnings

If the reason an employer is looking to dismiss an employee relates to unsatisfactory performance, the FWC will consider whether the employee was warned about the unsatisfactory performance prior to the dismissal. A common myth is that employers must provide three written warnings prior to a dismissal. While there is no legislative requirement for an employer to provide any written warnings, an employer is encouraged to consider the facts of each case and issue warnings as appropriate.

Practical Tips:

  • Consider the following points when deciding how many warnings should be given before dismissal:

o History of past performance/conduct
o Seriousness of the performance/conduct
o Employee’s response
o Policies and procedures
o Custom and practice
o Any other mitigating factors

  • Have a robust procedure on disciplinary action to ensure both employers and employees understand the process and likely outcomes of poor performance/conduct

Size of the Business & HR Team

The FWC will consider the size of the employer’s enterprise and the presence or absence of a dedicated human resources expert. When reviewing these two elements of procedural fairness, the FWC will take into account the company’s policies and procedures and whether the employer has consistently applied them.

Practical Tips:

  • Develop and implement a comprehensive list of policies and procedures
  • Ensure consistent application
  • Consult with a human resources expert, whether internal or external before making a decision to dismiss

Other Considerations

The FWC hold the legislative power to consider any other matters they find relevant to the unfair dismissal case. Other considerations may include (but not limited too):

  • Differential treatment compared to that given to other employees
  • Impact the dismissal has on an employees personal or economic situation
  • History of work performance

A successful unfair dismissal claim, where procedural fairness was not followed, could result in an employer being liable for up to six months of lost wages (currently capped at $72,700) in compensation, as well as the possibility of having to reinstate the dismissed employee. As such, compliance with the criteria for procedural fairness places the employer in a more favourable position to successfully defend a unfair dismissal claim.

Small business employers are subject to the ‘Small Business Fair Dismissal Code’ that contain different rules for procedural fairness when dismissing an employee. For further information regarding the ‘Small Business Fair Dismissal Code’ or any other queries, please contact the CCIWA Employee Relations Advice Centre on (08) 9365 7660 or email advice@cciwa.com

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