Australia: Valid Reason but Summary Dismissal found to be Unfair

Adam Ramsey v AVA Systems Pty Limited [2010] FWA 7448 (8 October 2010)
Last Updated: 1 March 2011
Article by Scott Puxty
Performance issues valid reason for termination, though summary dismissal harsh and unjust

Adam Ramsay (previously known as Adam Attia) was employed by AVA as an IT professional from August 2008, on terms described in a common law employment contract drafted by a HR consultant with legal assistance.

The applicant's employment was terminated on 26 February 2010 for alleged "gross incompetence".

The termination letter described the basis of the termination to be:

"... lack of willingness to learn the product and related topics and therefore not improving the ability in resolving problems and issues in time and in accordance with the specifications and / or business requirements and company's procedures".

It was the respondent's contention that the applicant's alleged performance failures amounted to serious misconduct as provided for in the contract as a basis for summary dismissal.

The applicant denied all allegations made against him and maintained that his employment was unfairly terminated. He sought reinstatement to his former position and compensation for lost wages.

The Small Business Dismissal Code applied. The Code provides for:

  • Summary dismissal – without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures.

    For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation (with reasonable grounds) of theft, fraud or violence be reported to the police

  • Other dismissal – in other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job. The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

It was noted that the applicant was often late for work.

Various performance issues requiring vast improvement were raised in a performance appraisal on 25 November 2009. Although his punctuality improved in the short term, the issues largely remained. The applicant was advised on three occasions that he was still not meeting expectations, during January and February 2010.

In terminating Mr Ramsay's employment summarily, AVA relied on the terms of its employment contract with him. At clause 14 (Termination of Employment), the contract provided for four weeks notice on termination, except if there was a breach of the agreement, a wilful failure to properly discharge any duties, or serious misconduct.

Circumstances which may amount to serious misconduct were described as including dishonesty, gross misconduct, gross incompetence and wilful neglect of duty.

Commissioner Roberts found that the respondent complied with the Code by warning the applicant that his performance was an issue, and the applicant had adequate opportunity to respond to the warnings and rectify the problems.

The applicant's performance and conduct were found to amount to a valid reason for the termination of his employment.

However, the Commissioner was unable to determine, on the available material, that there was conduct justifying summary dismissal. As such, the summary dismissal was found to have been harsh and unjust.

Reinstatement was not considered an appropriate remedy. Instead, the applicant was awarded an amount equal to four weeks wages, in lieu of the notice he should have received under the contract, when his employment was terminated.

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.

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