Knowledge is power when it comes to managing claims risk
Unfair dismissal applications are all too common and employers regularly find themselves in hot water when they are on the receiving end of one. Whilst the outcome of every unfair dismissal case tends to turn on its own individual merits, opportunities to learn and refresh one’s knowledge consistently arise – and knowledge is power when it comes to managing claims risk. To assist you in managing your unfair dismissal claims risk, we have set out some important lessons and reminders compiled from a number of recent unfair dismissal decisions made by the Fair Work Commission.
If an employee has “gotten away” with certain conduct in the past, it can be difficult to later justify their dismissal for such conduct.
In West v Holcim (Australia) Pty Ltd  FWC 2346, the applicant employee allowed a casual labour hire worker to operate a crane without adequate supervision. This was despite the fact that the labour hire worker had no training and then did not properly report a resulting incident where steel being carried by the crane nearly struck another employee. The evidence presented by the employee, and accepted by the Commission, was that the employer had allowed non-trained casual labour hire employees to operate cranes in the past with the knowledge of the supervisor and at least two managers, without incident or reprisal. The employee was reinstated.
Lesson/reminder: Ensure that all instances of poor (and particularly dangerous) employee conduct are properly addressed as and when they arise.
If terminating an employee’s employment in reliance upon CCTV footage, ensure that the employee is given an opportunity to examine and respond to the footage before the dismissal.
In Walker v Salvation Army (NSW) Property Trust t/as The Salvation Army – Salvos Stores  FWC 32, the employer dismissed a store manager for serious misconduct amid allegations of theft. The employer relied on CCTV footage that purported to show the store manager holding four $50 notes. The store manager was not given an opportunity to properly view the CCTV footage nor respond to it during the investigation or prior to her dismissal. The unfair dismissal claim succeeded.
Lesson/reminder: It is only in very rare instances that it will be unnecessary for an employer to give an employee the opportunity to respond properly to allegations made against them.
The larger the employer, the higher the expectation as to the disciplinary process.
Whilst many a case cites it, the case referred to previously (Walker v Salvation Army (NSW) Property Trust t/as The Salvation Army – Salvos Stores  FWC 32) is an example of this principle in play. In that case, Senior Deputy President Hamberger of the Commission was critical of how the incident was handled by the Salvation Army. As a large employer, he expected the Salvation Army to adopt “rigorous procedures” in investigating misconduct.
Lesson/reminder: Whilst being a small business will not excuse the adoption of a poor disciplinary process, the expectations of a larger employer as to process will be elevated.
When terminating for poor performance, ensure that the employee has first been put on notice that a failure to improve performance could lead to termination.
In Welsby v Artis Group Pty Ltd  FWC 2251, the following extract of the decision says it all:
“The failure of Artis to warn Mr Welsby that his employment was in jeopardy as a result of the SA Branch’s continued poor financial performance denied him an opportunity to improve and/or respond to the allegations and thus rendered the dismissal harsh, unjust or unreasonable.”
Lesson/reminder: In warning letters around poor performance (particularly final warning letters) as well as in meetings around performance, employers should always communicate that a failure to improve performance could have the result of termination.
High income does not prevent an employee being covered by an award.
An employee can be in a senior or executive role, earn far in excess of the high income threshold, and still be covered by an award. The significance of this is that an employee covered by an award is, regardless of whether they earn more than $138,900 (the high income threshold amount at the time of writing), still entitled to make an unfair dismissal claim.
This was explained in detail in the recent case of Kaufman v Jones Lang LaSalle Pty Ltd T/A JLL (2017) FWC 2623 where an employer, unsuccessfully, argued that a real estate agent with significant managerial and executive-level responsibilities was outside of the reach of the Real Estate Industry Award 2010.
Lesson/reminder: Before proceeding with an employment termination, always properly satisfy yourself as to whether the employee is covered by an Award – and if there is any chance that they may be covered, adopt the process as though unfair dismissal is an available remedy – just in case.
Labour hire companies do not have an automatic right to dismiss employees where the host employer no longer wants the employee around.
In Tasmanian Ports Corporation Pty Ltd v Gee  FWCFB 1714, the Full Bench of the Fair Work Commission stated, essentially, that where a host employer no longer wants the employee to work for them:
- where a termination is for conduct reasons: before dismissing the employee, the labour hire company must do more than simply accept the views of the host employer and must form its own independent view about the allegations following a proper process; and
- where a termination is for capacity reasons (rather than conduct reasons): the labour hire company must properly look for redeployment opportunities for the employee, in consultation with the employee, before proceeding to dismiss the employee.
Lesson/reminder: If you are a labour hire employer and a host employer no longer wants an employee to work for them, ensure that you nonetheless follow an appropriate process in accordance with what is outlined in Tasmanian Ports Corporation Pty Ltd v Gee  FWCFB 1714.
Managing risk is quintessential in all facets of a business, and when it comes to unfair dismissal claims, knowledge is the best way to combat risk.
If you or your business lack the requisite knowledge to deal with a particular employee disciplinary issue or termination, our experienced team members would be happy to assist you. A phone call to us could prove to be a terrific investment by reference to the possibly significant distraction and expense of dealing with an unfair dismissal claim.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.